Determinants of Owner-manager Competencies for Small Business Operations: Evidence from a Small Restaurant Business in Tanzania

Abstract

This study examines the influence of owner-manager demographic characteristics on attainment of their competencies in Tanzania, because there are scant empirical evidences on the same. The data used in this study were obtained through a survey of 392 small restaurant businesses from Ilala and Dodoma in Tanzania. Information was collected from the owner-managers of these entities by using structured questionnaires. Competencies of the owner-managers were measured subjectively by assessing their ability to perform entrepreneurial, managerial and functional works. Thus, the study uses Structural equation model to analyze the latent variable data collected. Study results have shown that among the demographic characteristics of the owner-manager, formal education and family background in doing business are more important in explaining how competent an owner-manager is in all three competencies. Furthermore, age of the owner-manager is very important in explaining how competent the owner-manager is in terms of managing the business while their industrial working experiences are more important in explaining the owner-manager ability to fulfill functional activities. These results imply that, whoever wants to operate the small restaurant business should try to understand their demographic characteristics. That is, to match themselves with the competencies of fulfilling entrepreneurial, managerial and functional activities or decide on any other way of compensating for their weaknesses for better business performances.