Factors Predicting Profitability of Enterprises Funded by Microfinance Institutions in Burkina Faso

• Main Author: Kabore, Fulgence
• Format: Others
• Language: en
• Published: ScholarWorks 2017
• Subjects: Finance and Financial Management
• Online Access: https://scholarworks.waldenu.edu/dissertations/4642; https://scholarworks.waldenu.edu/cgi/viewcontent.cgi?article=5922&context=dissertations

In sub-Saharan Africa, only 13% of new businesses show profitability and survive beyond start-up. Such a low rate of success has an adverse impact on the region economy as small and medium enterprises comprise 90% of African businesses. Understanding the cause of business failure can help existing and new entrepreneurs to focus on factors that may help to overcome barriers to business growth and increase entrepreneurs' chances of success. The purpose of the correlation study was to examine the relationship between business ownership characteristics, resources and professional management, timing, and profitability. The resource-based theory served as the theoretical lens for the study. A random sample of 238 micro-, small, and medium enterprises in Ouagadougou, the capital city of Burkina Faso, completed the questionnaire via the Survey Monkey website. Analysis revealed R-² (15, N = 238) = 94.9, p < .005 (p = 0.000) supported the validity of Lussier's model in predicting profitability. The data analysis showed that 14 out of 15 independent variables made a unique statistically significant contribution to the model at p < 0.05. The implications for positive social change may include the potential to reduce entrepreneurship failure, increase employment opportunities, improve standards of living, and increase economic growth. New or existing businesses may benefit from the findings of the study in increased entrepreneurship success and job creation due to greater awareness of effective business success and failure models. Sustainability of micro-, small, and medium enterprises may increase the number of successful entrepreneurs who can provide regular meals for the families and send the children to school, which may lead to an increase in educational attainment.