Policy and entrepreneurs in MSEs in Ethiopia: Does gender moderate the relationship between policy component of the entrepreneurial ecosystem and the performance of MSEs?

Abstract The entrepreneurial ecosystem’s policy dimensions contribute to the performance improvement of Micro and Small Enterprises (MSEs). The social feminist theory argues that females fundamentally differ from males in their entrepreneurial attitude and business performance. Studies in the area are coming up with contradictory results in this regard. Investigations that addressed the moderating effect of gender on the relationship between the policy component of the entrepreneurial ecosystem and the performance of MSEs are not adequately available. Based on a sample of 498 MSEs in the metropolitan cities of Amhara Region, Ethiopia, the result suggests that the entrepreneurial ecosystem’s policy component is less conducive to MSEs. We also found that gender does not moderate the relationship between policy and MSEs’ performance. There exists no difference in the entrepreneurial ecosystem among the metropolitan cities and the sectors that MSEs are engaged. The study contributes to a greater understanding of the policy component of the Entrepreneurial Ecosystems, its significance for women entrepreneurs in MSEs and gender differences attributed to policy direction.


Introduction
Micro and Small Enterprises (MSES) are more labor-intensive than medium and large businesses and require fewer technical skills; as a result, they are an increasing source of productive employment, particularly in low-income countries (Ullah, 2019;Vandenberg, 2009).They stimulate broadbased growth, greater competitiveness, and entrepreneurship, while also offering external benefits such as increased overall productivity, innovation, and efficiency (DESA, 2019).Furthermore, MSE ABOUT THE AUTHORS Mulugeta Chane Assistant professor of Management, Wollo University, Ethiopia.Phd Candidate at Punjabi University, Patiala, India.Have more than 17 years of experience as researcher, trainer, consultant and administrator.Heena Atwal Assistant professor of Management, Punjab University, Patiala.Have more than 15 years of experience as a researcher, consultant and advisor.employment is around twice as high in many African nations as total employment in registered large-scale enterprises, implying that micro and small businesses constitute a significant source of income for a big section of the people in these areas (EU, 2016).As a result, MSEs are seen as vital to kicking off broad-based growth and promoting job creation.However, the gender balance between men and women in MSEs is still questioned in that most enterprises are owned by men (Ethiopian Economic Association (EEA), 2022).In balancing this disparity, countries are developing policies (International Development Research Center (IDRC), 2020).Governments are crafting policies in facilitating business licensing and permits, customs and trade regulations, labour regulations, tax administration, and tax rates plays in an effort to improve the entrepreneurial ecosystem (Aspen Network of Development Entrepreneurs (ANDE), 2013).
In this regard, some countries are working to empower women through affirmative action initiatives.Countries use various policies that encourage women to participate in various developmental activities in order to compensate for the various obligations that have been placed on women as a result of sociocultural obstacles (Abrha, 2017).The social feminist theory has a stand that women are more oppressed than men consciously or unconsciously attributed to sociocultural, political and economic challenges levied on them (Foss et al., 2017).However, policy implications from women's entrepreneurship research are mostly vague (Foss et al., 2017) When we analyze the Ethiopian context, the relevance of MSEs in employment creation is expanding.According to surveys, MSEs employ more people in Ethiopia next to the agricultural sector and account for more than half of the country's industrial output (Tekele, 2019).According to Hagos et al. (2014), small enterprises account for 65% of all firms in Ethiopia and 98% of business entities.As a result of their expanding ability to create decent work, contribute to poverty eradication, and create jobs, the government is paying more attention to MSEs (Ageba & Amha, 2006;Tarfasa et al., 2016).However, the participation of women, who make up half of the population in Ethiopia (World Development Indicators (WDI), 2021), is still being questioned.
Despite the fact that a significant number of MSEs are established each year in Ethiopia in general and the Amhara region in particular, their transition to the next stage of growth and overall productivity as well as profitability is hampered by a variety of factors such as finances, the market, workspaces, and others (Esubalew & Raghurama, 2020).In other words, despite the government's efforts to enhance the entrepreneurial environment, the formation and expansion of MSEs in most emerging nations are not as such promising.
Ethiopian policy in various areas, including self-employment opportunities, is attempting to address women.Women's participation in MSEs has increased since the first MSEs' strategy was implemented in 1997.However, as the region's yearly reports show (MOUDH, 2016), women's participation is minimal, particularly in MSE priority sectors (manufacturing, construction, and urban agriculture).
Despite the fact that women have the potential to be entrepreneurs, contributing to job creation and economic advancement, there is a large gender gap in their participation and the success of enterprises owned by them (EEA, 2022;IDRC, 2020).However, initiatives aimed at empowering women in the economic sphere are yielding progress.For example, research suggests that 90% of employees in Ethiopia's Bole Lemi Industry Park are female (IDRC, 2020).This is an improvement over the previous result that men controlled the manufacturing sector of MSEs 91% of the time (Amha, 2011).However, research continues to demonstrate that women's overall engagement is lower than men's (EEA, 2022;IDRC, 2020).
Such investigations help to identify the effects of policies that the government is developing to boost the performance of women entrepreneurs in MSEs.Furthermore, whether the policies brought significant improvements for women in MSEs as compared with their male counterparts is examined.As a result, the purpose of this study is to examine the entrepreneurial ecosystem from a policy standpoint and determine whether gender moderates the relationship between policy and MSE success.

Literature review
The entrepreneurial ecosystem, taken from the biological origin, is interactive and interdependent among different elements in the process of creating a conducive climate for entrepreneurs in starting, opening and sustaining their venture (Cavallo et al., 2019;Lai & Vonortas, 2019;Ostergaard & Marinova, 2018).The policy component of the entrepreneurial ecosystem should be conducive enough to improvise the performance of entrepreneurs (Isenberg, 2013).Policies of the government are showing a significant effect on the performance of entrepreneurs (Kim et al., 2022).Countries having a workable policy are showing improvements in the performance of MSEs and those lacking such policies and strategies are recording low achievements in the overall entrepreneurial performance (SÃ¡ & Kretz, 2015;Sarfati, 2012).
Developing the entrepreneurial ecosystem above all improves the ease of doing business in a country.According to the World Bank report, Ethiopia ranked 159 out of 190 countries in the world in ease of doing business (World Bank, 2020).This is attributed to the time and excessive bureaucracy in business licensing and permits, cumbersome customs, trade and labour regulations together with poor tax administration and unreasonable tax rates that are commonly used as criteria in showing the ease of doing business (World Bank, 2019).
The social feminist theory supported the view that women are oppressed consciously or unconsciously attributed to sociocultural, political and economic challenges levied on them (Foss et al., 2017).Hence, they require special privileges in all aspects to compensate for the burdens so far (Tong & Botts, 2018).Hence, policies that the government is formulating concerning entrepreneurship are required to give special attention to women (Thomas & Ehrkamp, 2013).The policy dimensions of the entrepreneurial ecosystem should favor women (Mohajan, 2022).The instrument to balance men-led enterprising is designing a system that encourages women to engage in high-priority and value-adding sectors through policy and regulations that favors them (Martínez et al., 2022).
Empirical pieces of evidence are showing that Men and women perform differently in business, which is linked to personal, economic, social, and psychological factors (Robb & Watson, 2012).Gender has also been shown to affect firm performance (Hassan et al., 2021;Hoque & Awang, 2019;Gottschalk & Niefert, 2012).According to social feminist theory, women and men vary fundamentally (Mohajan, 2022).
Female entrepreneurs have fundamentally different attitudes towards risk and growth than male entrepreneurs, and so adopt different techniques to improve firm performance (Gottschalk & Niefert 2012).Various researchers are investigating gender inequalities in entrepreneurship.Despite ongoing arguments about the policy implications of entrepreneurship, studies reveal that women are less entrepreneurial than men (Boudreaux & Nikolaev, 2019).
The role of government policy in supporting women entrepreneurs has been studied and shown to be beneficial (Zaato et al., 2022).The impact of gender on business development aspirations was found to be moderated by gender identity, and the implications of the mediation depend on how independently motivated the business owners regard themselves to be.As a result, women employ a different approach than males to make decisions about the expansion of their businesses (Zampetakis et al., 2015).Furthermore, the role of gender as a moderator in the relationship between entrepreneurial marketing and MSE success yields a significant finding.However, the significance of gender as a moderator in the relationship between the policy dimensions of the entrepreneurial ecosystem and the performance of MSEs has received little attention (Hoque & Awang, 2019).
The government of Ethiopia's MSEs strategy and policies underlined that affirmative action should be offered to women because cultural and other impacts on them restrict their ability to compete equally with males (MOUDH, 2016).The policy clearly states that women are given precedence in the formation of businesses, the mobilization of loans, the arrangement of working spaces, and the creation of market links (Figure 1).

Method
The study's targets were MSE operators in the metropolitan cities of Amhara region, Ethiopia: Dessie, Gondar, and Bahir Dar which had been in operation for more than 5 years.A total sample of 498 was drawn from a population of 4,086, using Daniel Super's sample determination formula for structural equation modelling (Soper, 2023), with an expected effect size of 0.23, a desired statistical power level of 0.95, and a probability level of 0.05.A proportional stratified sampling technique has been used to take samples, taking the three sectors (manufacturing, construction, and urban agriculture) as strata for the reason that these sectors are the priority sectors in Ethiopia according to the MSEs strategies (MOUDH, 2016).The study's questionnaire was adapted from the Aspen Network of Development Entrepreneurs (ANDE), 2013) and Pranowo et al. (2020), p. 484 (97%) of the 498 surveys distributed were returned.Only 447 (89.58%) of the collected data were judged to be valid for analysis during the screening phase.A descriptive approach to examine the entrepreneurial ecosystem of MSEs from a policy viewpoint (Harley, 2015) and an explanatory design to establish the causal relationships between policy and MSE performance (Genot et al., 2018).The mean and standard deviations were used in the descriptive analysis.ANOVA has been used to investigate differences in entrepreneurial ecosystems between cities and sectors of MSEs.Moderation test using multi-group analysis has been employed by applying Structural Equation Modeling (SEM).

Result
The objective of this study was to assess the moderating role of gender in the entrepreneurial ecosystem on the relationship between the policy component of the entrepreneurial ecosystem and the performance of MSEs.Besides, whether there existed an ecosystem variation among the cities and sectors that MSEs are engaged in is tested.Thus the following hypothesis has been tested (1) H 1 : There is a difference in the entrepreneurial ecosystem of MSE among the metropolitan cities in the Amhara region.
(2) H 2 : There is an entrepreneurial ecosystem difference among the three priority sectors MSEs in Amhara Region.
(3) H 3 :Policy component of the entrepreneurial ecosystem has a significant effect on the performance of MSEs (4) H 4 : Gender Moderates the relationship between the Policy component of the entrepreneurial ecosystem and business Performance.

Background information of respondents
Males made up the majority of respondents, accounting for 341 (76.3%).Even though the study was limited to the three Amhara region metropolitan cities, the majority of respondents (156, or 34.9%) came from Bahir Dar, with Dessie city respondents coming in second (152, or 34%).Gondar received the fewest responses (139, or 31.1%).According to the study's findings, the majority of respondents (203, or 45%) work in manufacturing, followed by construction (125, or 28%).The urban agriculture sector had the fewest respondents, with 119 (26%).Table 1 shows an overview of the general profile of respondents.

Policy and the performance of MSEs
Policy, as a component of the political-legal dimension of the entrepreneurial ecosystem of MSEs, displays the simplicity and applicability of the government's various rules and regulations in fostering MSEs.As shown in Table 2, the sample mean values of all components that explain the conduciveness of policies to MSEs are less than the average of 3.For the ease of obtaining company licenses and permits, the highest mean value is (2.4), with a standard deviation of (0.93).The lowest mean value is (1.96) with a standard deviation of (0.87) that accounts for the tax rate's reasonableness.The overall mean (2.16) and standard deviation (0.94) figures suggest that the policy as a component of the entrepreneurial ecosystem growth in Ethiopia's Amhara region's metropolitan cities is less supportive of MSEs.
In terms of MSE policy, the present study's findings are consistent with those of Ascarya and Rahmawati (2018) and Simeon and Lara (2005), who found that government regulations and policies impede the overall operations of MSEs.Similarly, Das (2017) studied the idea that burdensome regulatory practices have a significant impact on MSEs.It is inferred that the policy component of the entrepreneurial ecosystem is not encouraging in terms of attracting MSE operators.New tactics and policies are being introduced in the country to entice young people and the  unemployed to work in these fields (MOUDH, 2016).However, the actual outcomes of policies and initiatives are far from reality.
As shown in Table 3, five common parameters (profitability, capital, market share, sales volume, and income level) were used to assess the performance of the MSEs under consideration.The study discovered that MSEs' overall performance is below average, as evidenced by the individual mean scores in all five items.Income has the greatest mean score (2.26) with a standard deviation of 1.02 and sales volume has the lowest mean score (1.93) with a standard deviation of 0.86.The aggregate mean value (2.09) and standard deviation (0.93) both support the same conclusion: MSE performance is poor.Baylie (2019) discovered that financial and non-financial measures indicate the performance of MSEs.According to the study, financial measures such as profitability, capital, sales, and income level are indications of MSE performance that are affected by various impediments or facilitators.Furthermore, the findings of Audretsch and Belitski (2017) are consistent with the present study in that the performance of MSEs is weaker due to a variety of bottlenecks.Because of this and other related circumstances, MSEs in various parts of the world, including Ethiopia, are obliged to suspend operations even before they have completed their first year (Esubalew & Raghurama, 2020).The current study implies that MSE performance in the areas under study is poor.The finding is consistent with other studies undertaken by other researchers.

The ANOVA test
In this section, a one-way ANOVA has been used to analyze the variations in the entrepreneurial ecosystems of MSEs among metropolitan cities and the industries in which MSEs operate.Hence the first two hypotheses of the study has been tested as presented in the following paragraphs H 1 : There is a difference in the entrepreneurial ecosystem of MSE among the metropolitan cities in the Amhara region.
H 2 : There is an entrepreneurial ecosystem difference among the three priority sectors MSEs in Amhara Region

Is entrepreneurial ecosystem different among the metropolitan cities
A one-way ANOVA was used to determine whether there is a significant difference among metropolitan cities in the entrepreneurial ecosystem of MSEs.According to the results, there are no significant differences in the entrepreneurial ecosystem of MSEs across metropolitan cities (F2, 444 = 0.205, p = 0.814).As a result, the hypothesis that there is a difference in the entrepreneurial ecosystem of MSEs among Amhara region metropolitan cities (H1) is not supported.
Because Levene's statistic was not significant, an equal variance assumption was used.As Table 4 below plainly illustrates, the ANOVA values and post hoc test findings indicated that there are no variations in the entrepreneurial ecosystem of MSEs among the metropolitan cities under consideration.
This may be related to the fact that the cities are administered by a single regional administration, in which the overall ecosystems are unlikely to differ significantly.

Is the entrepreneurial ecosystem different among sectors?
One-Way-ANOVA was used to determine whether there is a difference in the entrepreneurial ecosystem of MSEs across sectors: Manufacturing, Construction, and Urban-Agriculture.The ANOVA results indicated that there are no significant variations in the entrepreneurial ecosystem of MSEs across sectors in which micro and small enterprises operate (F2, 444 = 0.954, P = 0.386).According to the ANOVA findings in Table 5, there are no significant variations in the entrepreneurial ecosystem of MSEs among the three key areas of MSEs.As a result, H 2 is rejected.
Evidence suggests that the entrepreneurial ecosystem is industry-specific and varies by sector (Manolova et al., 2017).The Ethiopian MSEs strategy also states that firms involved in or planning to engage in the manufacturing sector are granted specific privileges and support (MOUDH, 2016).It is also planned that Ethiopia intends to transition from agriculture to industrialization.As a result, the manufacturing sector receives special attention.However, the current study's finding appears to contradict what the strategy has indicated.The lack of significant differences among the three sectors in terms of the entrepreneurial ecosystem of MSEs indicates that the manufacturing sector is not given preferential treatment.

Measurement model
The relative Chi-Square should be less than 5, and the Goodness of Fit Index(GFI),Incremental Fit Index(IFI), Comparative Fit Index(CFI) and Tukey-Lewis Index (TLI) values should be greater than 0.9 (Byrne, 2020;Hair et al., 2014).Similarly, when the indices are smaller than 0.08, RMSEA and RMR are deemed good fits (Byrne, 2020).According to Hair et al. (2014), the complete model is considered fit if any 3-4 of the above goodness-of-fit indices are within the threshold.Hence, further analysis can be performed using the model.

Construct reliability and convergent validity
Cronbach's alpha and composite reliability scores must be greater than 0.7 for construct reliability to be established (Hair et al., 2014).The average variance extracted (AVE) value of 0.5 and above ensures convergent validity using the Fornel and Larcker criteria.Table 6 below reveals the construct reliability and convergent validity.

Discriminant validity
According to Fornel and Larcker's criteria, discriminant validity is demonstrated when a construct's square root of AVE is greater than its correlation with other constructs (Byrne, 2020).Similarly, the HetroTrait-MonoTrait(HTMT) ratios having a value less than 0.9 confirmed no issues of Discriminant validity (Hair et al., 2014).The square root of the AVE of the contracts (bolded and italicised) exceeds the correlation with other structures, as seen in the Table 7 below.As a result, there is no discriminant validity issue in our study.

The effect of policy on the performance of MSEs
An attempt has been made to explain the effect of the policy dimension of the entrepreneurial ecosystem on the performance of MSEs to test the third hypothesis.H 3 : There is no significant relationship between policy dimensions of the entrepreneurial 4.5.1.1.Ecosystem and the performance of MSEs.Policy as one element is the entrepreneurial ecosystem was assessed and its relationship with the performance of MSEs was evaluated.The result revealed that policy has a significant relationship with the performance of MSEs (β = 0.322, CR = 7.548, P = .000).This implies there is a significant relationship between the policy and the entrepreneurial performance of MSEs.Table 8 below reveals the regression weights that policy has a significant impact on the performance of MSEs.
The finding of the present study is in line with the research findings of prior researchers (Ascarya & Rahmawati, 2018;Simeon & Lara, 2005) that government laws and policies affect the overall activities of MSEs.Similarly, Das (2017) also investigated that MSEs are highly affected by cumbersome regulatory practices.

The moderating effect of gender on the relationship between policy and the performance of MSEs
The moderation test is carried out using multi-group analysis (Hair et al., 2014), where data is separated into groups based on the moderator.The moderator in this investigation was gender, which required separating the data into male and female groups.The Goodness-of-Fit test of all the indices in the general structural model was found to be fit (Chi-Square = 508.386;DF = 196; P value = .000;Relative Chi-square = 2.594; GFI = 0.879; CFI = 0.957; IFI = .958;TLI = .948;RMSEA = 0.060; RMR = 0.0037).The total structural model for men in this study reveals a substantial relationship between the policy component of the entrepreneurial ecosystem and MSES performance (=.299, CR = 5.927, P = .000).Similarly, the overall structural model for females demonstrated a significant relationship between the entrepreneurial ecosystem's policy component and MSE performance (=.440, CR = 5.341, P = .000).It is also demonstrated that the relationship between policy and MSE performance appears to be stronger for females than males, as evidenced by the beta and p values in the tables below.However, this does not indicate whether or not the moderation effect is statistically significant.The   constrained model is used to assess the moderating impact on the individual pathways to determine its significance.The model comparison result shows that there is no significant difference (CMIN = 2.164, P = .141).In other words, there is no statistical difference between males and females in the relationship between the policy component of the entrepreneurial ecosystem and the performance of MSEs.As a result, the hypothesis that gender moderates the relationship between policy and MSEs' performance (H 3 ) does not hold water.As a result, the link between the policy component of the entrepreneurial ecosystem and MSEs' performance is the same for men and women.These conclusions are supported by (Figures 2,3) and Tables 9-11 below.Specifically, (Figures 2,3) illustrate that gender does moderate the relationship between the policy component of the entrepreneurial ecosystem and the performance of MSEs.

Overall structural model for males (unconstrained). Although the current MSE strategy in
Ethiopia is designed to provide females with many priorities and affirmative actions, the outcomes of this study show that there is no variation in the relationship between policy and the performance of MSE operators across genders.
There was no detailed analysis to evaluate the moderating influence of gender in the relationship between policy and MSE performance.However, Hassan et al. (2021) found that gender had a mediating effect between legal and administrative elements in the entrepreneurial ecosystem and MSE performance.Though the policy is not directly addressed, presuming that it is within the area of legal and administrative issues, the researchers discovered that gender plays a moderating effect in the relationship between policy and MSE performance.Taking this into consideration, the current study's conclusions contradict those of Hassan and others.

Conclusions and implications
The present study concludes that the policy dimension of the entrepreneurial ecosystem is less conducive that in turn leads to low performance of MSEs in the Metropolitan Cities of Amhara region, Ethiopia.It is also found that there are no ecosystem differences both city and sector-wise.Gender was found to be not a moderator on the relationship between policy dimensions of the entrepreneurial ecosystem and the performance of MSEs.It is implied that the policy crafted by the government in the ecosystem development in Ethiopia in improving the performance of MSEs is not different between men and women.
It is critical to develop effective strategies to increase women's participation in overall economic activity and in MSEs in particular.Women's participation in value-added and development industries lags behind men in developing nations like Ethiopia.To close the gaps, the government should prioritize measures that empower women and create a suitable ecosystem.In an endeavour to improve business performance, the study discovered no significant disparities between men and women in the policy elements of the entrepreneurial environment.
Theoretically, the study contributes to the idea that policy directions are not bringing remarkable results in creating a conducive entrepreneurial ecosystem for women in MSEs.Differences in entrepreneurial ecosystems and business performance are not attributed to policy differences in the metropolitan cities of the Amhara region.Furthermore, the study implied that the entrepreneurial ecosystem is neither sector nor geographic-specific, as there are no entrepreneurial ecosystem differences among the metropolitan cities and sectors in that MSEs are engaged in.Hence, based on the social feminist theory that explains the exploitation of women over men in different aspects, the present study is an addition to the existing literature that policy dimensions are not bringing tangible results in encouraging women in business ventures.Practically, the policies the government is formulating concerning MSEs should bring remarkable results on the ground.Policies drafted on paper, unless put into action, do not bring tangible results.Hence, practical policies that can encourage women to come to the front to compete with men should be implemented.As the low performance of MSEs in the metropolitan cities studied may be attributed to the ecosystem, government bodies should devise a system for formulating workable policies about MSEs to bring remarkable results in developing the ecosystem and the performance of women entrepreneurs in the area.It is implied that the policy element of the political-legal dimensions of the entrepreneurial ecosystem is not encouraging in attracting MSE operators.New strategies and policies are implemented in Ethiopia to attract the youth and the unemployed to be engaged in the areas (MOUDH, 2016).However, the results of the policies and strategies on the ground are far from the realities as the study explored well.

Contributions of the study
Understanding the policy dimensions of the MSEs' entrepreneurial ecosystem as a whole assists decision-makers at all levels of government in identifying gaps for the sector's appropriate support, as MSEs are a national priority.The study has the potential to be critical for both present and future female entrepreneurs in MSEs in properly comprehending the policy framework in which they operate.Furthermore, the study has the potential to be critical for policymakers as they determine future field directions.Finally, it will contribute to the existing literature on the entrepreneurial ecosystem in MSEs, a relatively new issue in the field of entrepreneurship, particularly in developing countries like Ethiopia (Schweitzer et al., 2019;Stam, 2018).

Limitations and future research suggestions
The study focused on SME operators with more than 5 years of experience in only three industries (manufacturing, construction, and urban agriculture).Furthermore, the study only evaluates the policy components of the entrepreneurial ecosystem.Future researchers are encouraged to address MSEs in all areas in which MSEs operate and to broaden their analyses to include additional dimensions of the entrepreneurial ecosystem, such as economic-technological and socio-cultural factors.

Figure
Figure 1.Conceptual Research Model.

H 4 :
Gender Moderates the relationship between the Policy component of the entrepreneurial ecosystem and business Performance.

Figure 2 .
Figure 2. The moderation effect of gender the entrepreneurial competency of MSEs.