Asian Journal of Advances in Research

This study examines economic efficiency and its determinant factors in dairy enterprises in the Hadiya Zone, Central Ethiopia. A total of 212 enterprises were selected using multi-stage sampling techniques. Economic efficiency was estimated, and the data were analyzed using descriptive statistics and econometric model called stochastic frontier model. The findings indicate that the overall average enterprises economic efficiency (EE), score of total sampled enterprises obtained from stochastic frontier model result was 36.16% (it were 36.88% for micro level enterprises and 37.34%, for small level enterprises) respectively. The result of the study confirms that the EE of total sampled enterprises were statistically and significantly determined by number of employee, amount of initial capital, access to market, access to infrastructure and access to credit at different levels of significance. Moreover, EE of micro level enterprises were also found to be statistically and significantly influenced by number of employee, amount of initial capital, access to consultancy service, sex of manager and access to premises in the study area at different levels of significance. Furthermore, the EE of small level enterprises were statistically and significantly affected by education level, number of employee, experience of manager, access to training, access to infrastructure and access to credit at different levels of significance in the study area.  These results carry important implications for enhancing the performance of dairy enterprises and guiding policy decisions in the area of enterprises.