What Determines Innovativeness of Micro and Small Enterprises (MSEs) in Ethiopia? Evidence from Debre Berhan Town, Ethiopia

Abstract

Innovation is considered to be the driving force of competitiveness and growth of firms as well as countries. However, most of MSEs in Ethiopia particularly in Debre Berhan town they were not innovative. Thus, the aim of this article was to identify determinants of innovativeness of MSEs in Debre Berhan town. Data were obtained using questionnaires primarily. The sample consists of 326 MSEs, but the response rate was 90.18%. Both stratified and simple random sampling techniques were employed in the study. Both descriptive statistics and econometric analysis were employed. From descriptive statistics percentage and frequency and chi-square test and from econometric analysis, binary logistics analysis was used. The binary logistics results confirmed that competition in the market (OR=0.035, P<.01) and engagement in research (OR=0.126, P<.001), access to finance (OR=0.190, P<.005) respectively found to be major factors of innovation. However, vocational training and consultancy service did not have statistically significant influence on innovation behaviour. Based on the findings of the study, possible solutions were recommended to the concerned government bodies to enhance innovativeness of MSEs in the study area. DOI: 10.7176/RHSS/11-19-03 Publication date: October 31 st 2021