Abstract:
In developing countries, micro & small enterprises are informally organized commercial
operations owned and operated mostly by the poor. They are mainly challenged by
different factors to transformed to medium enterprises. The aim of this study to identify
success factors in transforming micro and small enterprises to medium enterprises in
Burayu town. Two stage random sampling technique was used to select the sample
respondents. For this study, a total of 132 micro and small-scale enterprises and 116
medium enterprises with a sum of 248 sampled enterprises were selected randomly. Both
primary and secondary data sources were collected for this study. Primary data were
collected by direct interview of sample respondents; whereas, secondary data were also
collected from published and unpublished documents. Descriptive statistics were used to
summarize the explanatory variables used in the study. Logit model was employed to
identify success factors in transforming micro and small enterprises to medium enterprises
in the study area. The main success factors identified in the study by the model was owned
capital, access to different types of infrastructural facilities, access to market for product
produced, training and educational level of the manager positively and significantly
influenced transforming of micro and small-scale enterprises to medium enterprises in the
study area. In addition, the study identified lack of adequate finance, lack of working
premises, selling at less price compared with other similar enterprises, shortage of raw
material and limited access to working premise as a major bottlenecks for enterprises
found in Burayu town. Therefore, the study recommended as micro and small scale
enterprises are focused on the identified variables and work on it in order to easily
transformed to medium enterprises and also the government bodies give special attention
for micro and small scale enterprises development
