Performance of microenterprises in Ghana

First, three dummy variables indicating the enterprise’s use of hired labour (hired), household members (hhworkers) and apprentices (apprentices) enter the model to capture the knowledge and experience skills mix in the firm.13 The resource-based theory of the firm suggests that a large part of the firm’s internal knowledge base is embodied in its employees(Carmel and Tishler, 2004), while the mix [...] We include the age of the firm (ent_years), a dummy variable if the firm reported having capital stock (assets),15 and dummy variables indicating the credit to which the enterprises had access in the preceding year to capture leverage and scale effects. [...] Given that our main focus is on examining the importance of the firm’s resources relative to market/activity effects, following the resource-based theory of the firm, we discuss each of the constructs in the following order - entrepreneur characteristics, organizational factors and sector/market factors. [...] However, the magnitude of the coefficients for food and accra drops precipitously, suggesting that manufacturing activities in the food and beverages sub-sector tend to be conditioned by the number of months of operation. [...] The results suggest that the magnitude of profits depends on certain resources that are internal to the firm, that are reflected in the characteristics of the entrepreneur and the enterprise itself, as well as the - 26 - location of the firm and the sector in which it operates, the capture market-level and business environment effects.