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The purpose of the study was to examine the influence of Small and Medium Enterprise (SME) owner-manager‘s social competence on networks formation. Similarly, the study examined the interrelationship of three constructs namely: entrepreneurial networks, social competence, and business performance. Specifically, it investigated how entrepreneur‘s social competence made up of social perception, social adaptability, social expressiveness, impression management, and persuasiveness influences the types of networks formed by owner-managers and how in turn the relationship between these networks and SME performance is influenced by social competence. The study was undertaken in the two cities of Dar es Salaam and Mwanza. This research adopted a cross-sectional study design where by data were collected from manufacturing SMEs in Tanzania in four types of sub-sectors viz food processing, woodwork, ironwork, and textile. 250 owner-managers were selected through stratified random sampling procedure and interviewed. The collected data were analysed using Statistical Package for Social Sciences (SPSS) version 21. Three major statistical analyses were performed viz factor analysis, multiple linear regression model, and Poisson regression model. Factor analysis was adopted in order to reduce social competence items into factors that are easily manageable in subsequent analyses. Poisson regression model was used to test the influence of social competence on networks formation. Regression analysis was done to test the direct relationship between social competence and SME performance as well as the interrelationship between networks, social competence and SME performance.
The findings of the study show that the types of networks formed by SMEs vary and are associated with some of the demographic characteristics of entrepreneurs and enterprises. Furthermore, the study findings identify and indicate that a majority of social competence dimensions have a significant influence on networks formation and SME performance. Similarly, the findings show that many of the social competence attributes have a significant effect on the relationship between networks and SME performance. These findings suggest that: first, social competence is influential in determining the type of entrepreneurial networks among SMEs as well as SME performance; second, social competence dimensions have a significant relationship with SME performance; and third, social competence has an influence on the relationship between entrepreneurial networks and SME performance. In view of that, this study offers a lesson that the formation of useful networks depends on the entrepreneur‘s ability to effectively interact with others. This implies that a firms‘ emphasis on social competence attributes may enhance the effectiveness of networks on SME performance. Thus, in order to improve SME performance, capacity building to entrepreneurs on appropriate knowledge and skills on networking and social competence is crucial and should be part and parcel of the entrepreneurship strategy and policy. |
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