IMPACT OF ENTREPRENEURSHIP CAPABILITIES ON THE PERFORMANCE OF SMALL AND MEDIUM-SIZED ENTERPRISES

Abstract

The importance of this research comes in a time when most of the developed and developing countries are moving strongly towards state policies encouraging the growth and development of the private sector and self-employment. In fact, the industrial sector in Sudan is having the potential to play a great role in the economy given the availability of different kind of inputs in the country. In Sudan 162,682 employees are working in the manufacturing establishments. Small business contributes 40% of total employment in the manufacturing establishments. Specifically in Kassala State, the reason why this research is directed towards SMEs is due the composition of the large as well as SMEs (Small & Medium Sized Enterprises) sector in the state economy. Large and medium scale industries account for 38 industries employing 4,734; while Small business alone accounts for 912 industries which employ 2,280 in the manufacturing sector.

This research investigates the impact of entrepreneurship capabilities on the growth/performance of industrial small and medium sized enterprises. Specifically the research focuses on internal and firm level capabilities represented by entrepreneurship orientation, technology, financial and human resources. The research also considers the external capabilities which are divided into two main capabilities: partnership linkages and sponsorship linkages. The third dimension of the research is entrepreneurship development macro policies including infrastructure, regulations, taxation policies and public administration of SMEs.

The research draws different arguments and perspectives in the field of entrepreneurship; this is due to the reality that this discipline is still new in Sudan. Therefore availing rich literature will help further researches in this area. The literature is supported by relevant theoretical foundations and previous studies in the domain. Descriptively, historical and contemporary data were gathered from the case study to describe the context and characteristic of Kassala state particularly the economic and infrastructure foundations. Furthermore; statistics on industrial SMEs were presented including the special characteristics of industrial establishments in Kassala state. The data was collected from a sample of 244 existing SMEs in the industrial (manufacturing) sector in Kassala state in December 2008. The sampling was limited to existing industrial SMEs registered in the database of Comprehensive Industrial Survey conducted in 2001. A stratified, systematic random sampling with proportionate allocation technique was used.

The unit of analysis in this research is the industrial establishment. The research data was analyzed using SPSS software; bivaraite, multivariate correlation analysis (Pearson's r and Spearman's rho) and cross tabulation were used in the descriptive statistical analysis. Parametric tests were adopted in analyzing the data; simple regression employed in the testing of separate research hypotheses and multiple-regression used in testing the overall research model which assumes the impact of entrepreneurship capabilities on the growth of industrial SMEs. The general research model proves significance indicating the validity of the relationship between the independent and dependent variable although some specific variable are insignificant. All the significant relationships were traced and a unique model was developed together with the findings of the research.

Despite the similarities between this research and other previous studies on entrepreneurship; the uniqueness of this research compare to other relevant researches on subject matter among small enterprises is on the following: This research represents the first scientific research on entrepreneurship on SMEs in Sudan, it takes employees' growth as indicator of business growth and performance; while most previous study focus on profitability and sales growth, and it investigates the effects of entrepreneurship development macro policies as an element ignored by most of the previous studies. The research is concluded with recommendations classified as; general recommendations, specific recommendations and recommendations for future researches. All in all the recommendations critically build on the findings of the study and made to be oriented towards improving realities, studies, R&D, and policies concerning SMEs.