This study compares Entrepreneurial Capabilities (EC) between the Chagga and Sukuma Owned Small and Medium Enterprises (SMEs) in Tanzania. The Chagga and Sukuma ethnic groups are the first largest and second largest ethnic groups in Tanzania respectively. A cross sectional survey and exploratory case study research designs were used. Purposive and snowball sampling techniques were used to select 254 owner-managers in Kilimanjaro and Mwanza regions. Furthermore, the identified SME owners were selected using systematic sampling in order to get the final respondents to participate in the study. Twelve (12) cases of business owners were purposefully selected and relevant case studies were developed. Semi-structured questionnaires, in-depth interview, focused group discussion and observation were used in collection of primary data. Independent samples T-test was used to compare EC between the Chagga and Sukuma owned SMEs. Content analysis was used to analyze qualitative data. Results from T-test indicate a statistical significant difference in EC between the Chagga and Sukuma owned SMEs whereas the Chagga demonstrated higher EC than Sukuma. The study concludes that that the mean of Weighted Average Capital Growth Rate (WACGR) among the Chagga was 1.3 times of the Sukuma; suggesting that the Chagga demonstrated higher EC than the Sukuma owned SMEs. The study recommends that favourable socio-cultural determinants of EC among the Chagga should be embraced and disseminated to other ethnic groups across the country