Introduction
Entrepreneurship development in Tanzania
Theories and hypotheses
Entrepreneurship
Entrepreneurial orientation
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Innovativeness refers to the tendency of pursuing creativity and experimentation (Ketchen and Short 2012). It reflects on engaging in “new ideas and creative processes that lead to new products, services, and processes” (Hult et al. 2004; Kreiser et al. 2002; Lumpkin and Dess 1996). Innovativeness is an important aspect of EO because “it helps firms to pursue new opportunities” (Ketchen and Short 2012).
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Proactiveness refers to “a process that aims at anticipating and acting on future opportunities in terms of products, technologies and markets” (Schillo 2011) rather than “reacting to events after they unfold” (Ketchen and Short 2012). Proactiveness aims at introducing new products ahead of competitors, “strategically eliminating operations that are in the declining stages of the business life cycle” (Antoncic and Zorn 2004). Proactiveness shows “how firms relate to market opportunities by seizing the initiative in the market place” (Ying-hong 2007). Proactive firms have “the desire to be pioneers” (Reijonen et al. 2014) by acting in advance and capitalizing on emerging opportunities (Ketchen and Short 2012).
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Risk taking is one of the internal organizational factors necessary to support entrepreneurship within organizations (Hornsby et al. 2002). It refers to a firm’s tendency to engage and the willingness to commit significant resources to opportunities with uncertain outcomes (Schillo 2011; Lumpkin and Dess 1996). Risk taking ability helps firms to engage in bold rather than cautious actions (Ketchen and Short 2012). However, “entrepreneurship does not entail reckless decision-making, but reasonable awareness of the risks and being able to calculate and manage these risks” (Naldi et al. 2007).
Entrepreneurial orientation and the growth of firms
Innovativeness and profitability growth
H1: Innovativeness is positively related to the profitability growth of local Tanzania’s construction firms.
Proactiveness and profitability growth
H2: Proactiveness is positively related to the profitability growth of local Tanzania’s construction firms.
Risk taking and profitability growth
H3: Risk taking is positively related to the profitability growth of local Tanzania’s construction firms.
Control variables
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The employees’ number is “one of the common control factors in studies on firm growth” (Weinzimmer et al. 1998). During the survey, respondents were asked to indicate the number of employees that the company had in the year 2012, which was the final year of the data collected for this study.
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In this study, the five different types of contractors, namely: building, civil, mechanical, electrical, and specialist contractors were differentiated. However, this study only focuses on two categories of contractors, namely, building and civil contractors due to their big number of registration but with poor growth trends (National Bureau of Statistics 2013). For example, registered contractors for building and civil works were 5418 (which is 80%) out of all registered 6762 contractors in Tanzania by the end of year 2012. The remaining 20% of the registered companies belong to electrical, mechanical, and specialist contractors. It is important to consider the number of contractors registered until 2012 because the number of contractors does change at some points with some new companies being registered while others which are not complying with the CRB’s requirements are deleted from the list of contractors. Consequently, firms’ activities were determined by asking respondents to “indicate the firm’s main line of business” (Varukolu and Park-Poaps 2009), which is building works or civil works (or both) in this case.
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Location: The study focused on seven regions in Tanzania (Dar es Salaam, Tanga, Arusha, Dodoma, Mwanza, Kigoma, and Mbeya), which represent seven major economic zones (Coastal, Eastern, Northern, Central, Lake, Western, and Southern) in Tanzania (Contractors Registration Board of Tanzania 2012). The selected regions are also business centres in the country as a result; many construction firms are located in these regions.
Method
Sample design and sampling technique
Data collection procedures
Measures
Entrepreneurial orientation (EO) measures
Measuring a firm’s profitability growth
Data analysis
Results
Descriptive analysis
Frequency | Percentage | ||
---|---|---|---|
Year of establishment | Before 1991 | 8 | 6.1 |
1991–2000 | 39 | 29.5 | |
2001–2009 | 85 | 64.4 | |
Level of education of firm owners | Certificate in engineering courses | 21 | 15.9 |
Certificate in other courses | 8 | 6.1 | |
Diploma in engineering courses | 7 | 5.3 | |
Diploma in other courses | 11 | 8.3 | |
Bachelor degree in engineering courses | 60 | 45.5 | |
Bachelor degree in other courses | 11 | 8.3 | |
Postgraduate in engineering courses | 10 | 7.6 | |
Postgraduate degree in other courses | 4 | 3 | |
Field of education | Engineering courses | 98 | 74.2 |
Other courses | 34 | 25.8 | |
Activities | Building works | 18 | 13.6 |
Civil works | 12 | 9.1 | |
Building and civil works | 102 | 77.3 | |
Employees in 2012 | 0–10 employees | 47 | 35.6 |
11–20 employees | 20 | 15.2 | |
21–30 employees | 10 | 7.6 | |
31–40 employees | 11 | 8.3 | |
41–50 employees | 9 | 6.8 | |
51 and above employees | 35 | 26.5 | |
Location | Dar es Salaam | 71 | 53.8 |
Tanga | 9 | 6.8 | |
Arusha | 22 | 16.7 | |
Dodoma | 2 | 1.5 | |
Mwanza | 18 | 13.6 | |
Kigoma | 4 | 3 | |
Mbeya | 6 | 4.5 |
Reliability test
Variable | Factor 1 | Factor 2 | Factor 3 | Factor 4 | Factor 5 | Factor 6 | Factor 7 | Factor 8 | Factor 9 | Uniqueness |
---|---|---|---|---|---|---|---|---|---|---|
Innovative ~ 1 | 0.7594 | −0.2004 | −0.1030 | − 0.0916 | 0.0082 | 0.1854 | −0.0306 | 0.0218 | 0.0244 | 0.3278 |
Innovative ~ 2 | 0.7771 | −0.0775 | 0.0277 | −0.2818 | 0.0467 | 0.1448 | −0.0427 | −0.0446 | − 0.0106 | 0.2828 |
Innovative ~ 3 | 0.7836 | −0.1436 | 0.0641 | −0.2809 | 0.0467 | −0.1247 | 0.0543 | 0.0044 | 0.0076 | 0.2616 |
Innovative ~ 4 | −0.2632 | 0.2633 | 0.0913 | 0.0339 | 0.3067 | 0.0646 | −0.0308 | −0.0607 | 0.0086 | 0.7490 |
Innovative ~ 5 | 0.7676 | 0.0387 | 0.2070 | −0.2209 | 0.0232 | −0.1319 | −0.0285 | 0.0351 | −0.0041 | 0.2977 |
Proactiven ~ 1 | −0.3331 | 0.4679 | 0.3122 | −0.0478 | 0.1464 | −0.0728 | −0.0002 | 0.0172 | 0.0058 | 0.5433 |
Proactiven ~ 2 | 0.7542 | −0.3754 | 0.2849 | 0.2238 | −0.0306 | −0.0025 | 0.0264 | 0.0042 | 0.0010 | 0.1573 |
Proactiven ~ 3 | 0.7857 | −0.2530 | 0.2804 | 0.2293 | 0.0177 | −0.0143 | −0.977 | − 0.0143 | −0.0070 | 0.1771 |
Proactiven ~ 4 | 0.7044 | −0.1156 | −0.3188 | 0.1470 | 0.1764 | −0.1271 | 0.0441 | −0.0191 | −0.0070 | 0.3176 |
Proactiven ~ 5 | 0.6931 | −0.0015 | −0.2769 | 0.0615 | 0.2018 | −0.0090 | −0.0337 | 0.0587 | −0.0113 | 0.3936 |
RiskTaking1 | −0.2369 | 0.0497 | 0.1530 | 0.0481 | 0.1195 | 0.1559 | 0.0527 | 0.0864 | −0.0022 | 0.8668 |
RiskTaking2 | 0.6832 | 0.0505 | 0.1309 | 0.0658 | 0.0316 | 0.0683 | 0.1540 | −0.0333 | −0.0002 | 0.4787 |
RiskTaking3 | 0.7209 | 0.4633 | −0.0676 | 0.0282 | −0.0442 | 0.0528 | 0.0141 | −0.0070 | −0.0317 | 0.2543 |
RiskTaking4 | 0.7642 | 0.4422 | −0.0392 | 0.0290 | −0.1799 | 0.0225 | 0.0111 | 0.0011 | 0.0112 | 0.1849 |
RiskTaking5 | 0.7512 | 0.5191 | −0.0237 | 0.1330 | −0.0617 | − 0.0236 | −0.0462 | 0.0079 | 0.0182 | 0.1411 |
1 | 2 | 3 | 4 | 5 | |
---|---|---|---|---|---|
1. Profitability growth | 1 | ||||
2. Innovativeness | 0.2152 | 1 | |||
3. Proactiveness | 0.0166 | 0.7838 | 1 | ||
4. Risk taking | 0.2598 | 0.6949 | 0.6807 | 1 | |
5. Employees | 0.2896 | 0.1512 | 0.0699 | 0.3379 | 1 |
Regression analysis
Variable | Pred. Sign. | Model 1 | Model 2 | Model 3 | |||
---|---|---|---|---|---|---|---|
Coeff. |
p-value
| Coeff. |
p-value
| Coeff. |
p-value
| ||
Innovativeness | + (H1) | .3363 | 0.033** | .2989 | 0.068* | ||
Proactiveness | + (H2) | −.4902 | 0.004*** | −.4547 | 0.011** | ||
Risk taking | + (H3) | .3270 | 0.016** | .2551 | 0.073* | ||
Employees | 0.0049 | 0.000*** | .0033 | 0.021** | |||
Location | |||||||
2 | .1995 | 0.580 | .2425 | 0.491 | |||
3 | .3243 | 0.195 | .3086 | 0.203 | |||
4 | .3513 | 0.572 | −.0206 | 0.973 | |||
5 | .5019 | 0.059* | .4156 | 0.112 | |||
6 | .5597 | 0.212 | .3915 | 0.376 | |||
7 | .6778 | 0.070* | .6608 | 0.073* | |||
Firm activities | |||||||
Building | −.1448 | 0.649 | −.0436 | 0.889 | |||
Civil | −.3166 | 0.301 | −.2037 | 0.487 | |||
Constant | −.1349 | 0.779 | −.1635 | 0.053* | −.2306 | 0.623 | |
N = 101, Adj. R2 = 0.0744, p < 0.1 | N = 105, Adj. R2 = 0.1171, p < 0.01 | N = 101, Adj. R2 = 0.1405, p < 0.01 |