Nexus between business development service and women entrepreneurs’ performance: Implication for MSMEs growth and inclusive economic development in Ethiopia

In many Micro, Small, and Medium Enterprises (MSMEs) studies, the focus tends to be on assessing issues related to access to finance as a primary challenge to their development. Nevertheless, studies on non-financial services i.e., Business Development Services (BDSs) that might help to tackle many non-financial challenges MSMEs face and promote their growth through enhanced competitiveness is often ignored. This study therefore shed lights the effect of BDS on the performance and growth of women owned MSMEs and factors that impede their decision to use BDS. To do so, a cross sectional data from 412 MSME owner women’s found in Eastern part of Ethiopia was used. The data was analyzed using PSM and ESR model. Analysis results of these models shows that BDS users’ capital, annual income, and number of employees are increased by 75208 ETB, 33964 ETB, and 5.69 individuals, because of the service, respectively. Therefore, policymakers and development practitioners should consider promoting the accessibility and effectiveness of BDS to empower women owned MSMEs and promote inclusive economic growth. As both logit and probit model result indicates, MSME owner women’s decision to use BDS is positively determined by the manager status, government and/or NGO support, size of working place, credit, awareness in BDS, tenure or work place secureness and age of the manager, and negatively by education level of the manager. The study recommends providing networking opportunities for non-aware business enterprises by connecting with BDS providers and other successful BDS user enterprises.