What Business Environment Elements Are Constraints To Firm Performance In Ghana?

I use data on a sample of Ghanaian firms to estimate elements of the business environment that are significant obstacles to firm performance in Ghana.I address the issue of omitted variable bias and endogeneity by conducting estimations with all variables entered simultaneously and using the city-industry average values for the business environment variables instead of using firm managers'individual responses.The pooled cross-sectional nature of the data makes it unfeasible to estimate firm fixed effects making reverse causality an issue of concern.I therefore develop group IDs which classify firms into various categories based on firm characteristics and use these group IDs as a "pseudo-firm-fixed-effects".I find that corruption and labor regulations are significant obstacles to the sales growth of firms.I also find that tax administrations,corruption and political instability are significant obstacles to labor productivity.The results also indicate that transportation,corruption and access to land are significant obstacles to product,process and organizational innovation respectively.These findings have significant implications for policy formulation especially in the Ghanaian economy and could be explored to aid firm performance.