Influencing attributes on revenue growth : an empirical analysis from SMEs in Tanzania

Abstract

PURPOSE: Several studies have empirically investigated and measured firm growth in different aspects. Yet, no studies in Tanzania took advantage of enterprise surveys from World bank micro data to explore the effect of contingent and institutional factors on the firm's revenue growth. This paper will fill the gap by linking revenue growth with contingent and institutional factors.

METHODOLOGY: By adopting the combined data sets from the World bank enterprise survey in 2006 and 2013, this paper regresses revenue growth measured by the log percentage change of sales against different kinds of contingent and institutional factors using Pooled Ordinary Least Square model.

FINDINGS: On average, contingent factors such as competition, small size and corruption positively affect revenue growth. Moreover, firms owned by a female, pressure from government regulations, tax rates, access to finance and skilled workforce are institutional factors significantly affecting the firms' revenue growth. The robust results indicate that these factors affect firms in the service industry more.

PRACTICAL IMPLICATIONS: The paper recommends that the government should have a mutual talk with firms' owners and review the regulations for firms' operations. Financial institutions should take an opportunity by giving loans to service firms to boost their liquidity, ultimately improving their revenue. Also, firms should construct a good recruitment policy that will enable them to hire skilled workers.

ORIGINALITY/VALUE: This paper used an updated World bank enterprise survey on firms in Tanzania cities. The results are robust to different categories of firms' sectors and industries.