Factors Affecting Small and Micro Enterprise Performance with the Mediating Effect of Government Support: Evidence from the Amhara Region Ethiopia

Abstract

This paper aims to examine Factors Affecting Small and Micro Enterprise Performance with the Mediating Effect of Government Support; Evidence from Amhara Region Ethiopia. This study used both qualitative and quantitative research methodology. The proposed research model used a Structural equation model, growth path modeling analysis, and correlation matrix. The study also used both primary and secondary data sources. The study employed 384 determined entrepreneur leader and employee respondents through purposive sampling techniques and simple random sampling to estimate the required clusters. The findings of the study show that the mediating role of government support affects the independent variables by 0.971 *** enterprise performance. Moreover, the independent variables entrepreneur competence, 0.841 ***, microfinance, =0.714 **, infrastructure, 0.861 ** and entrepreneur training 0.831 ** have a positive and significant impact on enterprise performance. Microfinance and entrepreneur training are major factors that influence the enterprises’ performance next to the mediating role of government support. Therefore, the Small and micro enterprise besides government supporting role have gaps in enterprises’ performance due to lack of long-term loans, access to lease machines, unfair interest rates, production and selling the place, shortage of defining SMEs, and structural limitations. To solve currently existing limitations, the regional government should take policy measures to supply long-term loan financing, access to lease machines, fair interest rate, and working and selling places through a cluster management approach, re-define and restructure the existing SMEs strategy. This study suggests to executives, policymakers, SMEs, and microfinance to use the for enterprises’ performance based on the proposed recommendation. Further research should be conducted for knowledge gap of the field in the study area.