Journal Article
Social capital is increasingly being acknowledged as one of the most important sources of
competitive advantage in agro-food processing businesses, particularly small and medium-sized
enterprises. Social capital, as measured by each processor's network of processing contacts, has
become a missing piece in the development of small firms. Despite the fact that processors invest
in contacts in faraway markets as well as regular local trading partners, only around a third of
networks are based on ethnicity. This study looks at how social capital affects the performance of
geographically concentrated and dispersed small agro food processing businesses in Tanzania's
Dodoma and Singida regions. The study's hypothesis was that social capital (measured by
membership in a business association and trust) contributes considerably to firm performance in
both geographically concentrated and dispersed enterprises. Primary data were collected from 134
small agro processing firms. Secondary data were collected from Sokoine National Agricultural
Library (SNAL), District councils, SIDO, Ministry of Industry and Trade, Ministry of agriculture
and Tanzania Chamber of Commerce Industry and Agriculture (TCCIA). Stratified sampling
methods were used because the sub-population varies considerably. Each stratum was sampled
independently because stratification helped to enhance the representativeness of the sample. In
sampling, few enterprises from each stratum were randomly selected to form the investigative
sample. In this case, examination of parameters for each sub-domain within the population can
be obtained separately. The paper provides an in-depth analysis on the aspects concerning social
capital. Data were collected using structured questionnaire. Three criteria were used to choose the
study areas. Including a) the number of firms in the study area; b) the sort of technology used by the
firms in the location and c) firms with similar products. Different methodologies, such as descriptive
statistics, multivariate regression, and log linear regression, were used to analyze the data. The
findings show that social capital boosts firm’s performance and that it may be combined with other
factors to boost firm performance even more. Therefore the study concludes that that social capital
can be considered a crucial production component that determines firm’s performance within the
agro-industrial development. Second, the interaction of human capital, expertise, membership
in trade associations, trust (social capital), and enhanced equipment improves production and
marketing capacity, resulting in increased productivity of high quality processed products that
meet industry standards. It is further recommended that social interaction and networking be
strengthened in order to enhance effective forward and backward linkages in all levels of the agro
processing value chain.