Networking and Performance of Small and Medium-sized Enterprises: Lessons from Tanzanian Bakeries
Keywords:
network formation; network intensity; interdependence; SME performance; Tanzanian bakeriesAbstract
Most of the small and medium-sized enterprises in developing nations, particularly Tanzania lack the relevant business capabilities that would foster their growth and sustainability. Most of the studies have recommended networking as a viable technique that can influence SME performance. However, Tanzanian SMEs are still facing challenges in understanding viable networking strategies. This study defines networking strategies in terms of network formation, intensity, and interdependence. We seek to establish the contribution of these strategies on SME performance that has been categorized as number of customers, and sales level. Our study focuses on the food sector particularly the bakery business whose contribution to the Tanzania’s agriculture sector, one of the leading sectors in Tanzania is noticeable. We adopt both the concurrent nested design and a multi-stage sampling technique and were able to collect data from 161 bakeries throughout Tanzania by using questionnaires. We also carried out 20 in depth interviews from bakery owners/managers and adopted a moderator analysis in confirming that both size and age of the bakery moderate the relationship between networking strategies and bakery performance. The moderator analysis was preceded by the principal component analysis, and the qualitative content analysis (manifest analysis). Our study concludes that the development, implementation, and improvement of networking practices in Tanzanian bakeries should be greatly emphasized by bakeries that seek to attain competitiveness, growth, and sustainability. Additionally, we argue that, SMEs need to develop strategic linkages with all relevant players from the business environment aiming at enhancing their networking capabilities.
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