Entrepreneurship and the Progress of the SMEs

This chapter presents the major conclusions produced from the study as well as implications of the studies. It is split into three main portions. The first section presents a listing of the research research and the conclusion regarding the study hypotheses. That is followed by the discussion of the implications of the study findings in relation to the idea and practice. The section concludes with the areas that discuss the limitation of the study and areas for future research

Summary and conclusion

The question why some companies grow while others do not is one of the very most influential in the field of entrepreneurship. Research focused on handling this question has investigated a wide variety of factors that might influence firm progress. These factors add the characteristics of the business owner to the factors related to the surroundings in which these lenders operate. The books, which addresses the factors for firm development in Tanzania, concentrates much on macro or exterior factors. Though some of the problems resolved in these studies have improved, the performance of the SMEs sector hasn't yet been impressive. This suggests the necessity to further investigate the factors that influence SMEs expansion from different sides. Because of the crucial role played out by individuals, several studies worldwide have recognized the importance of internet marketers for the development of SMEs. Appropriately, (Kuratko and Hodgetts 2001) have suggested that the potency of programmes aimed at the introduction of SMEs rely upon a thorough understanding of the characteristics of the owner-managers (also referenced below as entrepreneurs). Actually, most of the SMEs be based upon owner-manager for his or her survival and development. Without the owner-manager, not much happens in the company because the owner-manager is usually the main one who makes important decisions pertaining to products, markets, inspiration of employees, enlargement strategies and other proper decisions regarding the firm (Frese 2000). Thus, this brings about the probability that a big part of the difference in the performance among SMEs can be discussed by individual variations among the owner-managers (Hall 1995). Based on these observations, one can delineate the degree to that your characteristics of the owner-manager have an impact on the development of their firms. In this value, the main aim of this review has been to examine the influence of the characteristics of the owner-managers on the expansion of SMEs. To meet up this objective the study has specifically linked SMEs growth to demographic characteristics (owner-manager's age group, education, experience and family track record), personality qualities (dependence on achievements, locus of control, risk taking, tolerance for ambiguity and self efficiency) and cognitive characteristics (entrepreneurial alertness, frame of mind towards entrepreneurship, cognitive styles and entrepreneurial determination). The progress of SMEs was measured by three different indicators such as sales growth, asset growth, and employment development. Furthermore, SMEs growth in conditions of sales and job were measured over two time spans, namely growth on the three-year period and development over a five-year period.

In order to achieve this general purpose and guided by the research model as presented in Amount 3 of Section Four, this study carried out a combination sectional design from which the data were gathered through the review method. The data were accumulated between March 2008 and April 2009. In the end, 300 owner-managers (representing small and medium-sized enterprises) within the furniture industry in four different locations in Tanzania participated in the fieldwork study. Linear regression and structural equation modelling process were used to examine the partnership between hypothesised relationships. In a nutshell, the findings claim that certain characteristics of the owner-managers are indeed significant predictors on the growth of SMEs in furniture industry. Since more descriptive analysis and discussions of the results have been dealt with in the previous chapter, the following sections give attention to some major conclusions and implications of the results both at theoretical and insurance plan levels.

Conclusion regarding research hypothesis

The present study hypothesised that personal characteristics of the owner-manager impact the development of SMEs in Tanzania. Based on this basic hypothesis, and by considering the theoretical and previous empirical findings, the next four sub hypotheses were produced.

H1: Demographic characteristics of the owner-managers positively influence the progress of SMEs

H2: Personality characteristics of the owner-managers favorably influence the expansion of SMEs

H3: Cognitive characteristics of the owner-managers favorably influence the development of SMEs

H4: Personality qualities come with an indirect effect on SMEs progress, which is mediated by cognitive characteristics.

Overall, the results of the research indicate good support for the hypothesised romantic relationships. The results also support the (frese) observations that the personal characteristics of the owner-managers and the performance benefits of their businesses are empirically related. Quite simply, the managers' differences in demographic characteristics, personality traits and cognitive control exert a robust influence above the firm management towards either success or otherwise. The following section discusses in simple the conclusion regarding each one of these hypotheses.

Demographic characteristics

The first hypothesis of the study tested the importance of the influence of demographic characteristics in describing the growth of SMEs. As mentioned in Chapter Two, demographic characteristics were presented by four characteristics namely owner-manger's era, education, past experience, and family track record. Accordingly, it ought to be recalled that in this thesis owner-manager's education is measured by three factors: the level of education, carpentry education and workshop received. Likewise, three types of earlier experience particularly entrepreneurial experience, managerial experience, and professional experience are being used to assess owner-manager past experience. Associative results of the relationships between demographic characteristics and progress in sales, asset and job were analysed and reported in Section 7 section 1. In a nutshell, the finding shows that workshops, commercial experience, and family background seem to affect the expansion of SMEs both in conditions of sales, investments, and employment growth both in a three and five 12 months period. In the same way, managerial experience and carpentry education seem to be to impact the progress of SMEs in sales and investments only. This study, therefore, concludes that certain demographic characteristics of owner-managers immediately influence the progress of SMEs in Tanzania.

Personality traits

The second aim of this research used the trait style of entrepreneurship to examine six characteristics associated with small organization development. The test that was performed to validate hypothesis 2 produced the results which demonstrated that higher dependence on achievement, higher inside locus of control, more tendencies to take chances, greater innovativeness behaviour and higher-level of self-efficacy are positively related to SME expansion. The test also demonstrates that external locus of control and risk aversions have negative implications towards firm growth. These studies lead to the final outcome that growing companies in Tanzania are possessed and managed by owner-managers with the bigger need for achievement, higher inside locus of control, more tendencies to take risks, greater innovativeness behavior and higher-level of self-efficacy. On the other hand, failed companies are monitored by owner-managers with higher exterior locus of control and higher risk averse. From these studies, the study concludes a few specific personality attributes can anticipate well the entrepreneurial results.

Cognitive characteristics

The third objective of this research used the cognitive model approach to analyze four cognitive characteristics from the development of SMEs. Subsequently, four sub hypotheses were developed. The test, that was performed, to validate this hypothesis produced the results which demonstrated that higher degrees of alertness, good attitude towards entrepreneurship, creating styles and entrepreneurial motivations are positively related to SME growth. The test also shows that low level of alertness and knowing styles have a negative implication to the expansion of SMEs. These conclusions suggest that the reasons for owner-managers success in increasing their business in Tanzania can be traced to many cognitive characteristics. This summary is of particular value as it shows that the growth of SMEs is somewhat identified by the motivations and behavior of the owner-managers.

Indirect effect

The fourth goal of this thesis was to check the indirect effect of the personality features in detailing the growth of SMEs. It had been hypothesised that the personality traits works through cognitive characteristics in explaining the growth of SMEs. The results confirm the hypothesised indirect relationship suggesting that personality attributes affect SME expansion indirectly through cognitive characteristics. This finding implies that cognitive characteristics are necessary mediator of the link between personality features and SMEs development. That's, without strong cognitive characteristics, personality traits may have a minimal or no influence on the development of SMEs. This finding offer justification as to the reasons some of the prior studies have found a vulnerable romance between personality attributes and stable performance. Most of the past studies have found weakened or no such marriage because they have only examined the direct romantic relationship ignoring the indirect marriage. This finding suggests that personality attributes and SMEs growth are connected indirectly alternatively than directly.

To conclude, the conclusions from this analysis substantiate earlier studies regarding

the ramifications of internal locus of control, generalized self-efficacy, and entrepreneurial

orientation on the performance of entrepreneur-led companies. Self-concept

traits matter both straight (in the case of inside locus of control) and indirectly

through entrepreneurial orientation (regarding generalized self-efficacy) in

determining organization performance

Conclusion regarding progress measures used in this study

In this study, the development of SMEs is assessed in terms of sales, advantage and employment growth. Based on the analysis finding we conclude that both sales and property growth measures are somehow affected by the same factors. Furthermore, work growth was hardly related to the characteristics of the owner-managers researched in this analysis. The findings conclude that occupation, on the main one palm, and sales and advantage expansion on the other are not interchangeable standards for measuring expansion. Therefore, when investigating sales development it is suitable for analysts to refer to empirical studies on asset expansion; the vice versa is also true. However, when investigating the employment expansion it is unacceptable for researchers to refer to empirical studies on advantage or sales growth. This finding also leads us to conclude that employment strategy is wii indicator of an firm's development in the furniture industry in Tanzania. Further, SMEs development in terms of sales and occupation were measured over two time spans, namely growth over the three-year period and expansion over the five-year period. Checking the results of both time spans we conclude that both cases yield similar results. Thus, it is appropriate to build up knowledge across studies that check out subjective sales and employment growth utilizing a three year span of time with those that use a five calendar year time span.


The review makes lots of contributions with respect to things of both theoretical and practical matter. The contribution with regard to the idea will be shown first accompanied by the contribution in regards to to the sensible implication.

Theoretical implication

This thesis has several theoretical implications. First, characteristics of the owner-manager play a significant role in the growth of SMEs. Just lately, entrepreneurship scholars known that the characteristics of the businessman has only been rudimentary analyzed and needed research in developing and screening theoretical models with a concentrate on psychological success factors (Frese et al. 2007; Baron 2007). More specific it is important to research the characteristics of the owner-manager that are more related to entrepreneurial performance than the general characteristics, which do not (Rauch and Frese 2007b). This thesis focused on the demographic characteristics, specific personality attributes, and cognitive characteristics that are conceptually carefully related to entrepreneurial behaviours and so of particular interest for scholarly site of entrepreneurship. By producing and screening models that are the demographic factors, specific personality traits and cognitive attribute, this thesis contributes to an improved theoretical knowledge of the characteristics of the owner-managers that make clear the expansion of SMEs.

Secondly in regards to to the characteristics of the owner-manager, this analysis has a number of theoretical implications. You start with demographic characteristics our study contributes to the existing knowledge by displaying that different types of education and previous experience significantly described the variance in the growth of SMEs. Specifically with regards to education, the findings show that not absolutely all types of education play the same role in detailing the development of SMEs. In fact, education received by means of workshops exhibited a stronger relationship with SMEs development than other styles of education studied in this analysis. Equally important, commercial experience proved a stronger romantic relationship with SMEs development than managerial experience. Therefore, future research will include a variety of more types of education and experience to be able to have a clear understanding about the impact of the factors on SMEs development. Our results also donate to the existing psychological literature by indicating a few specific personality qualities that matched with the task of entrepreneurship can forecast well the entrepreneurial final result, including expansion. Indeed, the specific traits that anticipate well SMEs expansion include the dependence on success, locus of control, innovativeness behavior and self effectiveness. Similarly, our results also donate to the books regarding cognitive methodology by showing that cognitive characteristics of the owner-manager play a significant role in describing the progress of SMEs. Since characteristics affects SMEs development through other variables such as cognitive characteristics it is therefore could be worthwhile to study other additional qualities and other cognitive characteristics.

Third, due to the growing need for the SMEs in the economies of producing countries in recent years, the present review is a valuable addition to the scant studies about SMEs progress in Tanzania. Recent studies in developed countries have empirically supported the importance of the characteristics of the businessperson on the growth of SMEs. This research adds to this body of knowledge by examining these connections in Tanzanian framework. By studying these connections in another context, we've been able to gain an understanding of the SMEs development sensation in a context where empirical research on this issue is scarce. Indeed, the primary contribution emerging from our empirical results suggests that certain characteristics of the owner-managers would subject when describing the development of SMEs. Furthermore, it should be recalled that the current review was also evaluating the applicability of the prevailing entrepreneurship theories associated with personality traits, demographic and cognitive characteristics as well as SMEs development in the Tanzania's ethnic setting. In short, our results have recognized the applicability of these theories to Tanzanian SMEs and the development of SMEs. This review also provides some data that the measurement scales applied in entrepreneurial research is operational even in the Tanzania entrepreneurial and ethnic environment and hence it contributes to the reliability of these scales in the entrepreneurial research.

Fourth, this thesis also makes the contribution to the SMEs expansion literature in regards to to the development indicators, measurement times and the decision of the formula for computing expansion. The first contribution to the SMEs progress literature is that we now have indeed some substantive dissimilarities between sales and asset growth on the one hand and employment growth on the other. Therefore, it will probably be worth studying different growth indicators individually when learning SMEs growth. This approach pays to because from the finding of the study not absolutely all growth signals play the same role in measuring the expansion of SMEs. Specifically, it can show that sales and advantage growth measures are the good indications for SMEs development in Tanzania while job expansion is shown as a poor indicator.

Additionally, in regards to to different way of measuring period, our findings contribute to the existing knowledge by recommending that the characteristics of the owner-manager that are responsible for short term progress generally determine the long term growth. Thus researchers are free to gathered knowledge across different time spans such as a three-year time span and a five-year span of time. However, before getting a conclusion it ought to be realised that sales and investments growth was measured using subjective options. For this reason, we are not quite sure if the studies obtained may be the same when aim measures are employed. Thus, we only suggest that researchers can accumulate knowledge across different time spans when subjective development measures are being used. Furthermore, in regards to to the decision of the method for computing expansion, our results donate to the progress of books by recommending that the use of total or relative growth doesn't matter when employment development is measured in one period. However, when development is measured across two time spans, our finding shows that both of these methods influence the final results differently. Specifically, our finding suggests that some of the factors that favorably affect absolute growth were unrelated or even adversely related to the progress in relative conditions. Therefore, this thesis contributes to the existing literature by suggesting that it is unacceptable to compare the results across time spans when the several formulas have been used to compute career growth.

Practical implication

The findings of this thesis present lots of functional implications. First, our conclusions suggest that practitioners may consider the owner-manager characteristics that are usually more related to entrepreneurial performance than characteristics that are general as criteria for decision making. For instance, in most producing countries, including Tanzania it is very easy to get started on a tiny business and consequently it is difficult to identify potential entrepreneurs. For instance, in 2007 the Tanzanian government aimed at encouraging SME growth by providing soft lending options to small business. One of the most important criteria to be able to receive a very soft loan was to post a image indicating possession of an active business. Lately, the finding signifies that most of these businesses failed to repay back the eye and this generated a total loss to the government. Our results indicate using at least additional entrepreneurial features as standards for making investment decisions. Eventually, banks or endeavor capitalist should consider the owner-manager characteristics that tend to be proximal to entrepreneurial performance than characteristics that are basic as conditions for investment decision. Our result indicate that valid selection conditions must include owner-manager characteristics such as education, past experiences, achievement inspiration, locus of control, self applied effectiveness, entrepreneurial alertness, frame of mind towards project creation and growth and cognitive styles. Furthermore, people considering starting a small business may evaluate their personal characteristics and utilize this information to support their profession choice. Indeed, by knowing their advantages or weakness it would be easier to allow them to match themselves with the task of owning a business or even to decide on companions who compensate for his or her weaknesses.

Secondly, these conclusions also may help the government, educators, and trainers determining and teaching the right things and that happen to be required for the firm to reach your goals. For instance, in this study we have found that workshops attended by owner-managers have a very significant influence on the expansion of their organizations. Thus, the government and other support companies should consider creating training programs for the existing and possible owner-managers in Tanzania. For instance, the government through Vocational Training Centres (VETA) and Small Industry Development Specialist (SIDO) should encourage the development of customized training to the present and prospective owner-managers. Working out should be offered at reasonable rates to be able to allow more participants to wait working out programs. Predicated on our conclusions, education and training must target not only on the complex issues but also on the entrepreneurial characteristics. In doing this, well-trained enterprisers can create much needed employment and generate profits, which would help boost Tanzanian current economic climate.

Furthermore, the results in this analysis also underline the importance of the role of past experience for the growth of SMEs. More importantly, the growth romance was stronger for managerial experience and professional experience. Formal education should thus include more practical hands on experience. In fact, prospective owner-managers are likely to advantage more from working experience. Predicated on this observation, we suggest that the federal government and other non federal agencies should also provide owner-managers with previous encounters through mentoring or incubator support programs where possible entrepreneurs could work under successful owner-managers prior to get started on their own business. The experience gained in this form would help owner-managers to get business knowledge, which is known as important for business expansion.

Further, the specific personality attributes and certain cognitive characteristics were considered crucial to the progress of SME. However, an interesting question is if these features can be educated. Relating to (Brush, Greene, and Hart 2001), workshops or training improve the knowledge, skills, and management capabilities of entrepreneurs, and this to a certain level workshops or training may also change business owners' state of mind and attitudes toward entrepreneurship. Appropriately, it is suggested that entrepreneurial characteristics can be acquired or enhanced in different ways, one of which is training and education (Wiklund and Shepherd 2003; Poon, Ainuddin, and Junit 2006). Therefore, appropriate training would enable owner-managers to improve their behaviour and the manner where they understand their business activities. Similarly from the perspectives of routine acceptance, (Baron 2007) argues that appropriate training enables entrepreneurs to be an expert at knowing opportunities. So out of this advice, it is obvious that, somewhat, these factors can be trained. Therefore, training programs designed to train the business owners in Tanzania should combine as much features as it can be related to entrepreneurial characteristics. As we have seen, such features have a considerable role to try out on the expansion of SME. Specifically, the entrepreneurial characteristics, which require more attention, are achievement inspiration, locus of control, do it yourself efficacy, alertness, behaviour towards entrepreneurship, creative styles and entrepreneurial motivations. The right kind of training to the business owner can increase their business knowledge and skills and thus increase the success of the companies.

Furthermore, as stated in Section One, the Tanzanian federal government has adopted various plans and initiated programs that can facilitate the progress of SMEs. The results of our review suggest that individuals need different kinds of support with regards to the level of development of their business as well as their determination. For example, we have seen that the occurrence of role models has a significant influence on business growth. Therefore, the government might consider using the mass media to feature reviews about successful business people. These success stories would help further encourage more entrepreneurs to work hard in aspiring to be like their role models. Consequently, in order for many who start businesses out of necessity to evolve into committed enterprisers, appropriate training and support is needed to allow them to secure livelihoods and for that reason sustain their businesses. An unstable life will discourage long-term dedication, which fosters business expansion. Moreover, as stated in the previous chapter, Tanzania is among the post socialist countries. Through the socialism era, there is a negative frame of mind towards entrepreneurship and it was the federal government that acquired the mandate of creating job to its citizen. We know that societal norms are slow-moving to change and so entrepreneurship as a job may be viewed negatively in Tanzania. Therefore, we recommend that the government should try to create enterprising culture among its citizen. This is achieved through increasing awareness on the importance of entrepreneurship to the country's economy. For example, entrepreneurship education should be provided to the young ones throughout the training system from main to school level. This process is very important because encouraging visitors to be more enterprising needs to begin young.

Owner-managers themselves should recognise that multiple personal qualities affect the expansion of their SMEs. Therefore, they must add, through partnering or learning, those personal characteristics they lack. In fact, it's been advocated that a few of the entrepreneurial features can be increased by training. Thus Owner-managers should engage in various training related to business activities.

Limitation of this study and advice for future study

It should be mentioned that while this research makes lots of contributions, there are a few limitations that point to important strategies for future research. Firstly, the data because of this study was collected in one industry only in Tanzania. Consequently, we don't know the applicability of these results in other industries. Therefore, future research will include other sectors to be able to see if today's finding is specific to the furniture sector only or to other sectors as well.

Secondly, the test was picked from cities of only four locations out of 26 parts in Tanzania. Despite the fact that the descriptive statistics in Chapter Seven indicate that the sample is much more likely to represent the SMEs sector in Tanzania, there is some prospect of producing biased results since the firm chosen may not be a precise representative of all organizations in Tanzania. Future research that examines the partnership between characteristics of the owner-manager and the growth of SMEs should also consider other regions.

Thirdly, the non possibility sampling methods used in this review essentially means that there surely is a limitation on the scope to which the research studies can be generalised to all of those other human population of owner-managers in Tanzania. To be able to overcome this restriction, regional centres known because of their furniture industry were indentified by making use of Small Industry Development Organisation (SIDO). This resulted into the selection of Dar es Salaam, Arusha, Morogoro and Iringa regions. Furthermore, in each of these areas, the centre known for furniture industry were indentified and the current researcher stopped at all the determined streets. By choosing these four regions, a spread across the country was made certain.

Fourthly, the info collected because of this newspaper were obtained directly from the owner-managers, which may be subject to bias or inaccuracy scheduled to reliance on memory space and personal reporting. In order to overcome these restrictions, first we used multiple what to measure a particular construct. Factor evaluation suggests that most of these items show constant results. Furthermore, different techniques were used to assess firm growth. With the addition of different approaches to measure SMEs progress, we are self-assured that people have captured important aspects of SMEs progress. For future research it would be important to interview both owner-managers for those companies that have greater than a sole owner-manager and compare the results.

Fifth, this thesis used a mix sectional procedure in studying the relationship between characteristics of the owner-managers and the progress of SMEs. It really is still not clear how these characteristics can be affected by industry pattern and macro financial environment. For instance, it's advocated that there surely is some area of the variances of the personality qualities that can change as a result of success (Rauch and Frese 2007b; Rauch and Frese 2007a). In other words, starting an enterprise successfully may lead to the change in personality characteristics. Furthermore, we have seen that entrepreneurial motives do change as time passes. Thus a longitudinal analysis taking these factors under consideration can enhance our understating in these areas.

Sixth, our way of measuring SMEs expansion regarding sales and asset was based on owner-managers subjective estimations about their progress rates. The choice is always to obtain more purpose data as we've done with work growth. However, as mentioned in Chapter Six, the researcher experienced problems in obtaining financial data, specially when interacting with private organizations. It is because many owner-managers of SMEs do not keep proper accounting files and when they certainly, they are generally not prepared to disclose those to third parties. Due to this observation, we think it is logical to rely on the quotes provided by owner-managers to assess sales and belongings growth. Indeed, it is suggested that the utilization of subjective actions of performance does not lead to erroneous conclusions (Wall et al. 2004). Nevertheless, calculating organization performance in terms of progress has its restrictions. Future research should think about other performance methods such as labour production. Future research should also try to use objective steps for sales and assets, which would provide more sensible information for these options.

Subsequently, by studying entrepreneurship at the individual level, the primary focus of this thesis is on the characteristics of the successful owner-manager. But we recognize that these factors only cannot fully make clear the expansion of SMEs. Additional factors such as stable characteristics and environmental factors also effect the growth of SMEs (Gartner and Bhat 2000; Baum and Wally 2003; Baron and Tang 2009). However, as almost all of the SMEs be based upon owner-manager for his or her survival and growth, thus characteristics of the owner-manager are necessary to the expansion of the SMEs. Future research should incorporate other interior and external factors in the model in order to have a better knowledge of the factors which affect the progress of SMEs.

Furthermore, this analysis used three development indicators to assess SMEs growth. The result indicates that sales and advantage growth steps are a good signal for SME progress. Employment expansion was barely related to the impartial variables studied in this analysis. This finding shows that employment growth is not a good signal in the expansion of SMEs in furniture industry. However, before achieving the conclusion, we suggest that future review should replicate our study in order to examine the role of work expansion in Tanzanian SMEs and in the furniture sector.

Moreover, it appears that the sector, which is the subject of this research doesn't get highly educated people. Thus, there's a need to study the entry obstacles to this sector by highly informed people. For example, why do graduates find furniture industry unattractive?

Finally, it is noticeable that the sector studied is more conducive to male owner-managers than female owner-managers. Future studies should therefore, investigate why furniture industry is not attractive to owner-managers.

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