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

Factors Predicting Profitability of Enterprises Funded by Microfinance Institutions in Burkina Faso by Fulgence Kabore MBA, Metropolitan College of New York, 2011 BA, University of Ouagadougou, 2004 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University December 2017 Abstract 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 MonkeyIn 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 R2 (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. Factors Predicting Profitability of Enterprises Funded by Microfinance Institutions in Burkina Faso by Fulgence Kabore MBA, Metropolitan College of New York, 2011 BA, University of Ouagadougou, 2004 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University December 2017 Dedication I dedicate this study to the memory of my father, Weoghin Kabore, who passed away in 1998. When I was 11 years old, my father told me how important a doctorate is, and he encouraged me to pursue it one day. He believed in my ability to achieve this level of education, and I thank him for his guidance and support. Acknowledgments I would like to acknowledge and thank my committee members for the strong support. A special thank you to my chair, Dr. Michael Lavelle, for his hard work and support, as I wouldn’t be here today without his guidance. Also, I would like to thank my second committee member, Dr. Alen Badal, for his timely reviews and support and feedback along the way, and my URR, Dr. Lionel de Souza, for the significant role he’s played in increasing the quality of the study through his expert reviews. I would also like to express a special thank you to my first chair, Dr. Dorothy Hanson, for her guidance and availability. I would also like to thank my classmates for the support they gave me to achieve this stage, specifically Dr. Cynthia Young and Dr. George Lightfoot. Lastly, I would like to thank my family for the sacrifice and support to further my education.