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Utilization of non-financial business support services to aid development of Micro, Small and Medium Enterprises (MSMEs) in Tanzania

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Abstract

A variety of factors inhibit the development of MSMEs in African countries, which in turn affects entrepreneurship, job creation and economic transformation. Using cross-sectional data from 250 MSMEs in the Dar es Salaam region, we find in most of the examined variables the positive relationship between the use of non-financial business support services (BDS) and the development of MSMEs in the Dar es Salaam region. However, contrary to expectations, building business linkages and mentoring programs recorded negative relationships with MSMEs development. This is related to restricted capacities stemming from the size of MSMEs compared to large companies and deficiencies in the content of mentoring programs. In addition, the discrepancy between BDS demand and supply as well as the low adoption rate of BDS are associated with the inadequate adaptation of BDS to the needs of MSMEs, high service costs and a lack of qualified service providers. Thus, we argue that the provision of BDS to MSMEs should be demand-driven and that institutions should build on the pre-eminent characteristics of MSMEs when designing business support programs. On the other hand, Government efforts to nurture the development of MSMEs through policies and programs should extend to promoting business linkages between MSMEs and large enterprises.

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  • Lwesya, Francis & Swebe Mwakalobo, Adam Beni & Mbukwa, Justine, 2021. "Utilization of non-financial business support services to aid development of Micro, Small and Medium Enterprises (MSMEs) in Tanzania," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 5(2), pages 358-358, July.
    • Handle: RePEc:aaz:sbir01:v:5:y:2021:i:2:p:e358
    DOI: 10.26784/sbir.v5i2.358
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    References listed on IDEAS

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    1. Caniels, M.C.J. & Romijn, H.A., 2005. "What Works, and Why, in Business Services Provision for SMEs: Insights from evolutionary theory," Working Papers 05.03, Eindhoven Center for Innovation Studies.
    2. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, June.
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    1. Daniel Heriel Shayo & Emmanuel J Munishi & Pastory Dickson, 2022. "Role of presidential issued identity cards (pids) in alleviating the street vendor’s business challenges in Dar es Salaam City," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(5), pages 138-148, July.

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    More about this item

    Keywords

    MSME development; non-financial support services (BDS); business development services; weighted average index (WAI);
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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