CHAPTER TWO REVIEW LITERATURE 2

CHAPTER TWO
REVIEW LITERATURE

2.1 Overview of Enterprise
Individuals in a community have many and different interests, needs and wants in their lives. It is the role of establishing and enterprising them to identify and satisfy these interests, needs and wants (David and Nyong, 1992; Lussier, 1996; Adam Isaac, 1996). All enterprises provide satisfying rewards for individuals who successfully establish them. Depending on the above idea, enterprise is a business venture or undertaking that brings profit or an idea that is translated into a planned and implemented activity (Gardenne, 1998; Hamilton, et, al. 1998; Kinyanjui, 2000).
There are different terms and classifications of enterprises, in which they succeed, irrespective of their nature, come up with irresistible and valued approaches that contribute to providing solutions to problems, as well as satisfying the desired needs and wants. The key difference between all types of enterprise lies in the rewards they provide. Business ventures provide profits as rewards, while non-business ventures provide other types of rewards which could be either physical or psychological rewards. Enterprising men and women will therefore engage in enterprises depending on what kind of rewards they expect from them (Thiongo, 2005).
Depending on this general overview and to meet the objectives of the study, since most of the time small and micro enterprises share common characteristics, therefore, the small business literature can provide a speculative frame work to guide the investigation.
2.2. Definition of Micro and Small Enterprise (MSEs) MSE……1
There is no single and universally acceptable definition of a small enterprise (Kayanula and Quartey, 2000:35). This is so because the criteria and ways of categorizing enterprises as micro and small differ from institution to institution and from country to country depending essentially on the country’s level of development. Even within the same country, definitions also change overtime due to changes in price levels, advances in technology or other considerations (Emma
et al., 2009:1-9). Firms differ in their levels of capitalization, sales and employment. Hence, definitions that employ measures of size (number of employees, turnover, profitability, net worth, etc.) when applied to one sector could lead to all firms being classified as small, while the same size definition when applied to a different sector could lead to a different result.
2.2.1 The Improved Definition of MSEs in Ethiopia
Micro and Small scale enterprises are categorized into industrial sector and service sector. Under industry sector (manufacturing, construction and mining) micro enterprises are defined as an enterprise that operates with 5 people including the owner and/or their total asset is not exceeding Birr 100,000.Under service sector (retailer, transport, hotel and Tourism, ICT and maintenance service micro enterprises are defined as an enterprise that operates with 5 persons including the owner of the enterprise and/or the values of total asset is not exceeding Birr 50,000.Under the industry sector (manufacturing, construction and mining) small enterprises are defined as operates with 6-30 persons and/or with a paid up capital of total asset Birr 100,000 and not exceeding Birr 1.5 million. Under the Service sector (retailer, transport, hotel and Tourism and maintenance service) Small enterprises are defined as operates with 6-30 persons or/and total asset, or a paid up capital is with Birr 50,001 and not exceeding Birr 500,000.When ambiguity is encountered between manpower and total assets as explained above, total asset is taken as primary yardstick (MSEDS strategy, 2011).
Table2.1: The improved definition of MSEs in Ethiopia

Level of enterprise Sector Human Power

Micro Enterprise

Industry ; 5 ; Birr 100,000 ($ 5000)
Service ; 5