A Qualitative Analysis of the Success Factors for the SME

Development in Addis Ababa

A PROPOSAL SUBMITTED TO RIFT VALLEY UNIVERSITY SCHOOL

OF GRADUATE STUDIES IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF MASTER DEGREE IN
BUSINESS ADMINISTRATION (MBA)

By Zerihun Hailu

ADVISER: - Nurziman

June, 2021

Addis Ababa, Ethiopia

INTRODUCTION

Both in developed and in developing countries most of the enterprises are Small and Medium
Enterprises (SMEs). SMEs have become important as sources for employment and as
contributors to economy.

Researchers have found out that the failure ratios of SMEs are greater than the ratios of Large-
Scale Enterprises. Financial problems are one of the most critical factors in the failure ratios.
Overcoming challenges, sustaining growth and barriers to entrepreneurship and SME growth
such as legal environment, administrative burden, external financing, tax, burden and unfair
competition are among the examined titles affecting the success of SMEs. Financial crisis
periods also play a vital role in failures (Ipek & Ilknur, 2016). Styles of management, leader
characteristics such as entrepreneurs’ personal characteristics affecting SMEs’ growth play a
critical role in local, regional or global financial crisis periods. Examples about the leaders’ and
employees’ characteristics in the SMEs during the global financial crisis have been examined
qualitatively in one of the studies. Researchers have also figured out that 57% of the SMEs have
become unsuccessful in the first five years of their establishments. That’s why in their life cycle
the first five years are very important for SMEs. The basic reasons for failure are summarized as
follows:

 Insufficient management
 Insufficient capital
 Job-related crisis
 The problems in the payment to credit side
 Competition

General Objectives

The general objective of this study will be to investigate factors affecting the performance of
micro and small enterprises development in Addis Ababa city.

Specific objectives:

The specific objectives of this study will be:

 To examine factors affecting the performances of SME
 To identify success factors for the development of SME