THE INFLUENCE OF FAMILY ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES

Abstract

Family owned business play an important role in economic development of a country. The purpose of this study was to determine the influence of family on the performance of small and medium enterprises. The study employed descriptive analysis. The survey questionnaire was designed based on the literature and on the information collected through the interviews conducted to the Employees and owners of sole proprietorships family owned business. The research made it more specific by making the research on family owned small and medium enterprises that are sole proprietorship. The survey questionnaire was distributed to 384 employees and owners of family owned business of Addis Ababa City specifically Addis Ketema was identified as sample population. The data gathered through the questionnaire was analyzed by Statistical Package for Social Science (SPSS).The key objective of this study is to determine the influence of family involvement on firm’s performance. Also to describe the influence of family involvement on firms financial, managerial, operational performance and level of competition, which are achieving project goals, within agreed time and budget finally, recommendations were forwarded based on the major findings so as to implement successful family owned business. This paper addressed performance of family businesses in Addis Ababa specifically on Addis Ketema. Studies that were conducted to examine factors influencing performance have majorly built on factors derived from managerial performance, financial performance, operational performance and level of competition. The study tried to see on the family involvement in the business on firm financial performance, managerial performance, operational performance and level of competition. the finding show that family involvement in the business has a positive impact on decision making, embracing change, Monitor and evaluate the efficiency of its day-to-day operations, collaborative workforce and holistic environment, Growing net profit margin and generating revenue, while it has a less influence on higher market share and keeping old loyal customers. Family influences positively firm financial performance, while it does not have a significant impact on the level of competition.