Factors affecting employment generation rate and sales growth rate : a case study of Bangladeshi firms

Abstract

Bangladesh has shown significant improvement to develop its economy over the past decades. It is one of the developing countries which is an excellent example to the policymakers and specialists working in development sectors. Moreover, the significant contribution was made by firms running the business in Bangladesh to gain this success. This study examines few factors which include the gender of the owner of the organizations, the characteristics of the organizations, possible obstacles faced by and the preferred sources of capital to run the business by the firms, employees employed in the year of 2002 and 2005, and their annual sales in few fiscal years. This study aims to analyze these factors and the impact on the employment generation and sales growth rate from these factors in the firms in Bangladesh in several years. This study uses the data from the enterprise survey conducted in Bangladesh by World Bank in 2007 and 2013. The descriptive analysis shows that 29.2% and 18.1% of the firms had at least one female owner, participated in the survey in 2007, 2013 respectively. Political instability was considered as one of the significant obstacles and finance from the internal funds/ retained earnings was considered as one of the significant sources of capital to run business in both surveys conducted in 2007 and 2013. Linear regression was conducted to find out the impact on the employment generation and sales growth rate from the factors. 2007 dataset shows that Female owners, customs and trade regulation, and company size have a positive impact on employment generation. Labor regulation has a negative impact and Chittagong and Rajshahi region have a negative impact on employment generation compare to the Dhaka region. Both 2007 and 2013 surveys show that gender of owners, three obstacles out of six (minor), the source of capital for business, the region for conducting business, business sector and company size have a significant impact on the sales growth rate between 2003 & 2006 and between 2009 & 2012 respectively.