Determinants of economic achievement for women entrepreneurs in Ethiopia | Journal of Innovation and Entrepreneurship | Full Text

Descriptive statistics results

Results of the study show that out of the 698 sampled households, 22%, 7%, 30%, and 41% were married, single, divorced, and widowed, respectively. The distribution of religion sample households shows that 60% are Orthodox, 24% are Muslim, 14% are Christian Protestant, and 2% belong to other religious groups. The average family size in the study area is 4.72 with a standard deviation of 2.67. The mean age of the household head is 45.86 years with a standard deviation of 15.58. The average number of financially dependent people on households is 1.60 with a standard deviation of 1.56. Although, distribution of parents’ educational level shows that 81 %, 9%, 7%, 2.6% were illiterate, basic/adult education, elementary, and secondary and above, respectively (see Table 1).

Results in Table 2 reveal that among 698 sampled women entrepreneurs, 53% of them were running their business in rural whereas 47% of them run in urban areas. The results also show that 46% of the women entrepreneurs were offered entrepreneurship training before starting a business while 54% of them were not received the training. The mean number of training received is 0.66 with a standard deviation of 0.754. The distribution of the main source of capital to start-up enterprises was 38% were agriculture, 42% were non-farm self-employment income, 15% were family/friends in the community, and 5% belonged to others.

The Table 3 presents that raising initial finance (64%), access to market (54%), lack of business information (51%), access raw materials (52%), lack of supporting institutions (60%), and livelihood condition of entrepreneurs’ (73%) are the major the challenges that faced women entrepreneurs in entrepreneurial activities.

Table 4 presents the estimated effects of the multiple linear regression model on factors affecting the economic achievement of women entrepreneurs. In what follows, the researcher presents and discusses the determinants of the economic achievement of women entrepreneurs. Then, the author concludes and recommends.

The multiple linear regression model result shows that among the proposed explanatory variables for affecting yearly income (capital) of women entrepreneurs: educational level, family size, entrepreneurial area (rural), region (Afar, Amhara, Oromiya, Southern Nations Nationalities and Peoples, Gambella, Harari, Dire Dawa, and Addis Ababa), marital status (divorced and widowed), parents educational level (basic/adult education, secondary school and above), number of financially dependent people, entrepreneurship training (no), previous business experiences (no), enterprise’s license (yes), the supply of raw material (no), and lack of supporting institutions (no) significantly affected the capital or income of women entrepreneurs (see Table 4 for a summary of the main results).

Entrepreneurship is a mechanism of economic growth and it is used to reduce unemployment and poverty through job creation. The involvement of women entrepreneurs in business activities is not only reducing poverty and unemployment but also increasing success stories of women entrepreneurs has encouraged other women to run their own businesses (Baron, 2007; Eshetu & Zeleke, 2008; Nieman & Nieuwenhuizen, 2003; Normaizatul et al., 2017; Wang et al., 2006). The current study is in agreement with the results of the above researchers which imply that the women entrepreneurs play an important role in the economic growth of countries.

Improving access to the education level of entrepreneurs is essential to combating and preventing factors that affecting women entrepreneurs’ economic growth (Nchimbi, 2002; Ray & Ray, 2011; Roomi & Parrott, 2008; Sumaira et al., 2013; Tambunan, 2009; Wasihun, 2010; Wolday et al., 2015; Zewde and Associates, 2002). This is consistent with the current study. The result of the present study shows that the educational level of entrepreneurs is positively related with the economic achievement of women entrepreneurs which implies that higher education may facilitate entry in the business activities, can enhance the managerial ability of the individual, and hence increase the propensity to undertake to participate in entrepreneurial activity.

The current study is in agreement with the previous studies which pointed out that a large number of women who engaged in small enterprises affect the entrepreneurs’ economic achievement (Coleman, 2002; Desta, 2010). The current finding shows that family size positively determines the economic growth of women entrepreneurs. This may imply that an increasing number of entrepreneurs in different business activities from family help households to generate more income and develop their economies. Table 4 tells us that the number of financially dependent people negatively related to the economic achievement of women engaged in business activities.

This study found evidence that entrepreneurial area or residence is an important component of economic achievement. Results in Table 4 reveal that women entrepreneurs who run their entrepreneurial activities in the rural area were generating less income as compared to those who run their business activities in an urban one. The reason might be that women entrepreneurs who run their entrepreneurial activities in the rural area have not got access to raw materials, access to finance, access to the market, and others. These findings are also supported by previous studies (Nelso & Ikandilo, 2011; Singh & Belwal, 2008).

The business experience gained from their family members, friends, and others may influence the economic achievement of women entrepreneurs. This is in agreement with the findings in other studies (Nchimbi, 2002; Roomi & Parrott, 2008; Wasihun, 2010). In addition to this, the findings show that the income of women entrepreneurs who have the enterprise’s license less than those who do not have the enterprise’s license controlling for other variables in the model. This result is in agreement with a previous study (Wole, 2004). This reason might be that entrepreneurs who do not have the license they fail to pay tax for the government, whereas entrepreneurs who have licenses pay tax for the government.

Entrepreneurship training improves the economic growth of entrepreneurs (Nchimbi, 2002; Singh & Belwal, 2008; Tambunan, 2009; Teresia, 2014; United Nations, 2006; Zewde and Associates, 2002). This is in agreement with the current study which implies that women entrepreneurs who did not take entrepreneurship training were generating less income than women entrepreneurs who took entrepreneurship training while keeping other variables constant. This implies that trained women entrepreneurs will have a better opportunity to manage their enterprises and generate more income when compared with those not trained.

The current findings also pointed out that women entrepreneurs who do not have the availability of raw material or lack of access to raw material generated less income as compared to women entrepreneurs who have available raw materials while controlling other variables in the model. This finding is also in line with other previous studies (Roomi & Parrott, 2008; Sumaira et al., 2013; United Nations, 2006). The present study result shows that the availability of raw materials positively influences the economic achievement of women entrepreneurs. On the other hand, the current study revealed that the entrepreneurs who do not have supporting institutions were generating less income than those who have supporting institutions keeping constant other variables in the model. The other findings also support the current results (Desta, 2010; Jemal, 2013; Melat, 2015; Roomi & Parrott, 2008; Singh & Belwal, 2008; Sumaira et al., 2013; Wolday et al., 2015).

Furthermore, the present study finds out that the marital status of entrepreneurs negatively affects the economic achievement or growth of women entrepreneurs. This indicates that divorced and widowed entrepreneurs women are found to generate less income as compared to single groups. Generating less income may not allow the divorced and widowed women entrepreneurs to concentrate on different enterprises or other works as required. Besides, improving the educational level of parents is important for combating and preventing the determinants of economic growth of women entrepreneurs.

Moreover, the current findings illustrated that the region where the women entrepreneurs run their enterprises significantly affects in generating their income of women entrepreneurs. This result shows that women entrepreneurs who engaged in entrepreneurial activities around Afar, Amhara, Oromiya, SNNP, Gambella, and Harari regions were generating less income than women entrepreneurs in the Tigray Region while controlling other variables in the model. Similarly, women entrepreneurs who run their entrepreneurial activities in Dire Dawa administration town and Addis Ababa City were generating less income as compared to those in the Tigray Region keeping other variables constant. In conclusion, even if the current finding is in agreement with different previous studies or literature mentioned above, but contradict with regard to the model they employed to analyze the results, and other variables such as the number of financially dependent people on women entrepreneurs, region, marital status, and educational level of parents.

Therefore, education level, family size, enterprises residence, region, marital status, educational level of parents, number of financially dependent people, entrepreneurship training, previous business experiences, enterprise’s license, availability of raw materials, and lack of supporting institutions are some of the crucial barrier determinants that affect the women entrepreneurs. On the contrary, age of women entrepreneurs, region (Somalia and Benishangul Gumuz), marital status (married), number of training attended access to market, raising initial finance, enterprises registration and permit regulations, harmful traditional culture, and economic policy (uncertainty) do not have any significant impact on the economic achievement of women entrepreneurs.