Article Review Assignment

Business Research Method

12/15/2018
Group 4

Group Members
1. Marta
2. Dejene
3. Rosa
4. Eden
5. Tadese
6. Yakob Seman
 ARTICLE REVIEW ASSIGNMENT

Table of Contents
1. Full Bibliographic Reference .................................................................................................................... 3
2. Introduction ............................................................................................................................................... 3
3. Brief Summary .......................................................................................................................................... 5
4. Results ....................................................................................................................................................... 6
5. Contributions ............................................................................................................................................ 7
6. Foundation ................................................................................................................................................ 7
7. Synthesis with Class Materials .................................................................................................................. 8
8. General Critique ........................................................................................................................................ 9
9. Issues (listed by the author) .................................................................................................................... 12
10. Questions .............................................................................................................................................. 12
11. Annotated Bibliography ........................................................................................................................ 13

2|Page
 ARTICLE REVIEW ASSIGNMENT

1. Full Bibliographic Reference

GetinetB., Rao V.,Abera A.,SileshiE., (2015). Opportunities and Challenges of Small and
Medium Business Enterprises in Gedeo Zone-Ethiopia: From Policy, Regulatory and
Institutional Perspectives. Asia Pacific Journal of Applied Finance.Vol. IV Issue 2, PP12-22

2. Introduction
The major objectives of the articles were to identify the policy and institutional opportunities
for small business and to analyze the policy and institutional challenges in small business in
Gedeo Zone; SNNPRS, Ethiopia.
The small business sector is described as the natural home of entrepreneurship. It has the
potential to provide the ideal environment for enabling entrepreneurs to optimally exercise; the
SMEs are seen as an essential spring board for growth, job creation and social progress. This
sector is also seen as an important force to generate employment and more equitable income
distribution change and through the combination of all of these measures
During the Derge time in the country private sector industrial activities, consisting mainly of
SMEs, were openly discouraged through restrictive policies, including regulations and direct
controls that prevented access to credit and imported inputs by private enterprises. Not
surprisingly, therefore, during this phase, the number of officially registered small-scale
manufacturing enterprises was reduced.
Since 1991, there has been significant improvement in the incentive system and the
macroeconomic environment with positive implications for manufacturing activities. A
liberal investment code has been introduced. Domestic price controls have been removed.
The financial system has been partially liberalized. Tariffs have been reduced and non-tariff
barriers have been removed. A public sector reform programme has also been introduced and
one of its main objectives being to privatize SMEs that were nationalized in the 1970s. All
these reforms have immensely improved the domestic policy environment for SMEs. In fact,
the Government has gone a step further in its support for small enterprises by formulating a
National Micro and Small Enterprises (MSEs) Development and Promotion Strategy. This is
an important beginning and should be Followed by refinements of micro-policies and
incentive schemes aimed at promoting learning and technical change at the enterprise level.
Some of these policies are identified below.
According to the CSA survey, over 89% of the informal sector operators are concentrated in
manufacturing, trade, hotel and restaurant activities. Of the small scale manufacturing
industries 85% are engaged in the manufacture of food, fabricated metal furniture and

3|Page
 ARTICLE REVIEW ASSIGNMENT

wearing apparels. The survey also revealed that the number of people earning their livelihood
from the informal sector activities and small scale manufacturing industries is eight times
larger than those engaged in the medium and large scale industrial establishments. (Survey
conducted by the CSA, May 1997 E.C)
The survey also indicated that the increased role and contribution that the MSE sector could
have provided to the national economy is largely constrained by the various policy, structural
and institutional related problems and bottlenecks. Lack of smooth supply of raw materials
and working premises were reported to be the major bottlenecks facing small scale
manufacturing industries, while lack of sufficient capital and working Premises were the
leading problems of the informal sector operators to start their businesses.
The article also confirms the aforementioned challenges and opportunities are the major
findings in the Gedeo Zone SMEs. The article is an empirical research since it provides
substantial detailed evidence on the challenges and opportunities of SME

4|Page
 ARTICLE REVIEW ASSIGNMENT

3. Brief Summary
Little research exists that examines challenges and opportunities of small and medium
enterprises (SMEs) in developing countries, especially in Ethiopia. SMEs occupy a prominent
position in the development agenda of many developing countries like Ethiopia. SMEs are long
recognized as important vehicles of economic diversification, employment creation, income
generation and distribution, and poverty alleviation.
Objectively the study addresses the challenges and opportunities of SMEs in Gedeo zone which
are very important for further development of SMEs in the country economy.
Even though SMEs were considered as the potential to provide the ideal environment for
enabling entrepreneurs to optimally exercise, essential spring board for growth, job creation and
social progress the researcher identified so many challenges in the implementation of SMEs
financial factors, marketing, management and HRM factors, environmental factors and the like.
High taxation, insufficient tax administration, price of input, lack of raw materials, bureaucratic
burden, inadequate skill, high interest rate and high collateral requirements are the major
problems identified in the study, However, the small business sector in Ethiopia appears to be
fraught with a number of policies, regulations, laws, rules and related challenges that stifle its
rapid growth and development as a means of overcoming poverty and unemployment.
The research used cross sectional study design and information were collected using interviews
so that the investigator summarized the study findings using numerical values and categorized
major findings.
The researcher made a clear conclusion and policy recommendations as creating conducive
environment for small business will result in reducing the number and simplifying the
compliance process. capacity building for the selected sector by initiating and organizing regular
training, work shop and experience sharing from successful enterprises, and provision of advice
and consultancy services for small businesses enterprises, encourage establishment of small
business sector, specifically export oriented marketing companies by providing matching grants
to conduct marketing research, developing marketing strategies, participating and conducting
trade fairs and undertaking promotional and marketing strategies,

5|Page
 ARTICLE REVIEW ASSIGNMENT

4. Results
Although the performance of SMEs can be affected by a series of factors, the scope of this
study is limited to only the major factors. The respondents rated the perceived impact of each
factors on the performance of their business. All the factors grouped in to six categories of
Environmental, Marketing, Financial, Managerial & HRM, Control & evaluation and other
factors. The study showed that environmental factors like intensity of competition,
availability/affordability of business license, rapid and costly technological changes, climate
conditions and bureaucracy in company registration & licensing are their major problems.
Problems related to business license and company registration procedure can be easily solved
by the government.
Human resource development and managerial factors were also considered by the
respondents as impacting the performance of SMEs. These are lack of strategic business
planning ,lack of low cost and accessible training facilities ,lack of experience in owning/
managerial a business and lack of well trained & experienced employees in the market. Any
educational or material assistance to the development of SMEs should also address these
problems.
Overemphasis on short term profitability and high family commitment and responsibility also
the other challenges of the sector. Since most of the owners are unemployed house holds,
they have high family commitment and responsibility.
The study showed that marketing activities such as product marketing, demand and supply
forecasting and knowledge of market were perceived by the respondents to have greater
impact on their business than any other factor. Service and merchandising firms spent much
time and resources to retain their customers. Customer loyalty and retention have been the
main strategy for these firms to achieve competitiveness.
Financial factors and related problems were also rated by the respondents as having
significant impact on small business performance. These factors are inadequacy and costly of
credit facilities and sources, shortage of working capital, high investment in fixed assets
during start-up time, lack of record keeping , documentation and failure to analyze financial
statements and the like. Proper management of fixed capital may lead to proper
implementation of strategic plans. While proper management of working capital minimizes
short-term obstacles to achieve competitive advantages in the market place.
Other factors like lack of business development services, poor waste disposal system and tax
burden challenge the performances of SMEs sector.

6|Page
 ARTICLE REVIEW ASSIGNMENT

Finally collateral requirement by financial institutions, conflict with neighbors and lack of
transparency among SMEs office at the time allocating working place also identified in the
open ended part of the questionnaire.

5. Contributions
The major contribution of this study is by examining the opportunities and challenges of small
business in Gedeo Zone-Ethiopia identifying the policy and institutional opportunities and the
policy and institutional challenges of for SME and hence the paper identifies the need of capacity
building for selected sector by initiating and organizing regular training, work shop and
experience sharing from successful enterprises, and provision of advise and consultancy service
for small business enterprises. The other point indentified by this researcher is the need to
encourage for the establishment of small business sector, specifically export oriented marketing
companies by providing matching grantees to conduct marketing research, developing marketing
strategies,
As far as our knowledge this study clearly outlines the major challenges and policy opportunities
on SME in Gedeo zone particularly in four selected towns namely; Dilla, Yergacheffe,Wonago,
and Gedeb. Even though the study findings are universal to the country as identified by other
surveys this study particularly contributes to understand the SME condition in Gedeo Zone.
The study may be used as a reference or a start point to investigate further about SMEs in similar
zone in different part of the country

6. Foundation
Innovation and entrepreneurship are the major driving forces of growth and prosperity, and the
core elements of national economic development policies in both developed and developing
nations (Tesfa Yohannes, 1998). Maslow (1968) found that the most valuable 100 people to
bring into deteriorating economy are not politicians, economists, scientists, engineers, but self
motivated, talented and forceful entrepreneurs.
The small business sector is described as the natural home of entrepreneurship. It has the
potential to provide the ideal environment for enabling entrepreneurs to optimally exercise; the
SMEs are seen as an essential spring board for growth, job creation and social progress. This
sector is also seen as an important force to generate employment and more equitable income
distribution change and through the combination of all of these measures, to stimulate economic
development (Zewde and associates, 2002).

7|Page
 ARTICLE REVIEW ASSIGNMENT

As we learn during our review SMEs were linked with so many theoretical concepts and
principles while the study mentioned little about the theoretical foundations. Different
approaches and theories were forwarded for the evolution of small enterprises at different time.
There are two perspectives that are mentioned for the emergence of small enterprises. The first
perspective views it as an outcome of improved opportunity for people (including the poor and
disadvantaged) to participate in “ways that empower and nourish” them and the other perspective
consider it as an indication of failed of an economy to provide jobs (LIDholm & Mead, 1999).
Additionally, Classical and recent views on SMEs have also conflicting outlook on the
emergence and importance of the sector.
Classical theorist describes SME in connection with micro- economic stricture and its
development (Ozcan 1995). They believe as the capitalist economy become dominant Small and
Medium enterprise are eventually disappeared. Similarly, the dependency theorists believe large
scale industries, national and international cooperation as the only means for changing the world
economy (Pederson, 1989). On the contrary, Modern Theories gives much attention to the role of
small and medium enterprises in promoting local, regional and national development. In the
recent years when the economies of most industrialized countries have shown varies sign of
stagnation and structural decline, a verity of studies have been undertaken which demonstrate
clearly that small and medium sized enterprises may be regarded as generator of new growth, as
primary source of technological change and via job creation as one of the major factors in
maintain socio-economic stability (Rothwell and Zegvel cited by Giaoutzi, N & Storey 1988).
The number of SMEs in Ethiopia is steadily growing. But, much more important than their
number is their current status, stage and pace of development. The rate of development of
SMEs in Ethiopia is very slow. This has to be supported by theoretical foundations and
principles.

7. Synthesis with Class Materials

Title: During our review we observe that there are studies with the same title in different part of
our country this shows that the issue and the title is not new or original.
Introduction: As we have learnt in the class the researcher outlined the economic and business
related information about the study area while we were expecting more information about the
Gedeo Zone socio economic condition, geographic location, situation of SMEs as a country and
regional level in relation to the study area. He clearly described about the statement of the
problem, research question and objectives of the study.

8|Page
 ARTICLE REVIEW ASSIGNMENT

Literature review: As discussed in the class the researcher must see available articles around
the basics of SMEs as international, national, regional and the zone situation but his literature
review section were so brief and did not addressed all available articles.
Methodology: The researcher used a cross sectional study design to collect information about
the SMEs while this design does not allow him to see the situation of the SMEs in seasonal
variations, important factors affecting the SMEs and the like. As discussed in the class it would
have been better if he used a longitudinal design to collect data over time to study seasonal and
other related factors associated with the SMEs
Result: The result section were written empirically which good to see the performance of the
SMEs clearly while he did not show thematic categorization of interview points which will give
us further challenge in the implementation of policies and strategies related to SMEs
Conclusion and Recommendation: As discussed and learnt in the class conclusion must be inline
with the finding of the study and recommendations must be clear and addresses important point
that can be taken by responsible body. The researcher clearly concluded the research findings
and made clear recommendations which are clearly in line with the current policies and strategies
with SMEs.

8. General Critique
The researches choice of study topic was timely and the objective of the study also can
explore policy opportunities and challenges which are very important to transform the
economic independence of every citizen and the country too. The introduction made about
the country, the region and the zone related with SMEs were little even though the researcher
clearly identified the research questions and objectives.
In the literature the investigators did not clearly address the situations of SMEs at Global,
Continental and country level. More importantly they did not address the situation in SNNPR
and Gedeo zone. As per our review there are lots of proceedings and studies conducted in
different parts of the country and the study and government reports identified similar sets of
problems with the investigators. The number of SMEs in Ethiopia is steadily growing. But,
much more important than their number is their current status, stage and pace of
development. The rate of development of SMEs in Ethiopia is very slow. This could be
attributed to several factors. The business environment in which SMEs are operating today is
different. Considerable changes have taken place in the world economic order during the past
two or three decades. The growing intensity of international competition and globalization is
affecting the growth of SMEs in developing economies. There are also firm-specific factors
such as financing problems, lack of managerial capabilities and entrepreneurial orientations.
9|Page
 ARTICLE REVIEW ASSIGNMENT

The survey by the Central Statistical Authority of Ethiopia (CSA), in May 1997 indicated
that the increased role and contribution that the SMEs sector could have provided to the
national economy is largely constrained by the various policy, structural and institutional
related problems and bottlenecks. Lack of smooth supply of raw materials and working
premises were reported to be the major bottlenecks facing small scale manufacturing
industries, while lack of sufficient capital and working premises were the leading problems
of the informal sector operators to start their businesses.
As we learn during our review SMEs were linked with so many theoretical concepts and
principles while the study mentioned little about the theoretical foundations. Different
approaches and theories were forwarded for the evolution of small enterprises at different time.
There are two perspectives that are mentioned for the emergence of small enterprises. The first
perspective views it as an outcome of improved opportunity for people (including the poor and
disadvantaged) to participate in “ways that empower and nourish” them and the other perspective
consider it as an indication of failed of an economy to provide jobs, forcing people to “take
refuge in activities that provide only minimal subsistence support” (LIDholm & Mead, 1999).
Similar to this perspective, (Ozcan 1995) considers small firms as the function or outcome of
underdevelopment that exist in developing countries. Additionally, Clasical and recent views on
MSEs have also conflicting outlook on the emergence and importance of the sector.
Classical theorist describes SME in connection with micro- economic stricture and its
development (Ozcan 1995). They believe as the capitalist economy become dominant Small and
Medium enterprise are eventually disappeared. Similarly, the dependency theorists believe large
scale industries, national and international cooperatios as the only means for changing the world
economy (Pederson, 1989). The assumption in this theory is that corporation headquartered in
the capital cities of developed countries, while production units spread over the countries where
there is cheap factor production that enable them to achieve economies of scale as well as to be
more profitable than small local enterprises.
On the contrary, Modern Theories gives much attention to the role of small and medium
enterprises in promoting local, regional and national development. In the recent years when the
economies of most industrialized countries have showen varies sign of stagnation and structural
decline, a verity of studies have been undertaken which demonstrate clearly that small and
medium sized enterprises may be regarded as generator of new growth, as primary source of
technological change and via job creation as one of the major factors in maintain socio-economic
stability (Rothwell and Zegvel cited by Giaoutzi, N & Storey 1988).
The researcher used a cross sectional study design to collect information about the SMEs while
this design does not allow him to see the situation of the SMEs in seasonal variations, important

10 | P a g e
 ARTICLE REVIEW ASSIGNMENT

factors affecting the SMEs and the like. As discussed in the class it would have been better if he
used a longitudinal design to collect data over time to study seasonal and other related factors
associated with the SMEs
Even though the investigator did not mention anything about the limitation we think that the
study had the following limitations. The registered and actual SMEs are not equal. Most of
SMEs were closed due to different problems. The SMEs office doesn’t have updated information
and hence it affects the sampling of the study and most of the time unwillingness of the
respondents to fill the questionnaire if they are rented the working place from others may
happen.
The study findings were written empirically which is good to see the performance of the SMEs
clearly while he did not show thematic categorization of interview points which could give us
further challenge in the implementation of policies and strategies related to SMEs. The findings
were common and universal type in the country because its more or less the same with other
studies. The researcher clearly concluded the research findings and made a clear
recommendation directed to policy makers and implementer

11 | P a g e
 ARTICLE REVIEW ASSIGNMENT

9. Issues (listed by the author)

The investigators area of interest were policy issues specially opportunities and challenges
related with SMEs which is really a priority agenda for the government and also each and every
citizen involved in SMEs
The author clearly identified challenges of SMEs implementation in Gedio zone while most of
the challenges identified were universally acceptable to the country as we prove in our review
process. The researcher were also identified a clear opportunities to implement SMEs in the
study area and also other part of the country. Specially the policy opportunities, unmet need for
market business and job opportunity in the country.
The issue of innovation and entrepreneurship in business and market development were very
important to the country’s economic development which is well mentioned by the researchers.
The author tries to mention about the benefit packages related to SME development in the
country and the effect of wealth distribution among the citizens in the development of the
country economic and citizens satisfaction.

10. Questions
During our review we have seen lots of article with plenty of challenges raised in the implementation of
SMEs in the country. Here below are some of the questions raised by the reviewer after analyzing the
review findings
 What restrain peoples from investing on SMEs?
 What are the problems to run SMEs?
 What are the opportunities of SMEs?
 Even though the SME are among the major sectors for employment opportunities but still
the investment made by the government is not as expected why is that?

12 | P a g e
 ARTICLE REVIEW ASSIGNMENT

11. Annotated Bibliography

 Star and M. Massel, “Survival Rates for Retailers”, Journal of Retailing 57 (1981), pp. 87
- 99.
 Abdullah M.A and Baker M (2000), Small and Medium Enterprises in Asian Pacific
Countries (Eds), Science Publishers Inc., Huntington, New York.
 American Journal of Small Business, 5(Winter): 33-42.
 Beyene, A. 2000b, ‘Enhancing the Competitiveness and Productivity of Small and
medium Scale Enterprises (SMEs) in Africa: An Analysis of Differential Roles of
national Governments Through Improved Support Services, ECA.
 Boardman, C.M., J.W. Bartley and R.B. Ratliff. 1981. “Small business growth
characteristics.”
 Carson, D. (1985) The evolution of marketing in small firms. European Journal of
Marketing, 19, 5, pp.7-16
 Central Statistical Authority (CSA) [Ethiopia]. 1991. The 1984 Population and Housing
Census of Ethiopia. Analytical Report at National Level. Addis Ababa, Ethiopia: Central
Statistical Authority.
 Daft, Richard L and Karl E. Weick, 1984, ‘Toward a model of organizations as
interpreting systems’, Academy of management Review, 9, 284-295.
 Dodge H.R. and Robbins J. E. (1992), An Empirical Investigation of The Organizational
Life Cycle Model For Small Business Development and Survival, Journal of Small
Business Management, 30 (1), pp. 27-38.
 Elenkov Detelin S (1997) “Strategic Uncertainty and Environmental Scanning: The case
for Institutional Influences on Scanning Behaviour,” Strategic Management Journal,
18(4), pp.287-302.
 Fay (2000), Clark (2000) Small and Medium-Sized Enterprises and the
Environment: Business Imperatives, Published Feb 2000
 Ford, D., Rowley, T.P. (1979), "Marketing and the small industrial firm", Management
Decision, Vol. 17 No.2, pp.144-56
 Gartner, William B. and Subodh Bhat (2000) "Environmental and Ownership.
Characteristics of Small Businesses and Their Impact on Development
 Gaskill.A.R., Van Auken H.E and Manning A. (1993), A Factor Analytic Study of the
Perceived Causes of Small Business Failure, Journal of Small Business Management, 31
(4), pp. 18-32.

13 | P a g e