Influence of Social Competence on Performance of Small and Medium Enterprises (SMES): Empirical Evidence from Tanzania’s Manufacturing SMES

Abstract

The purpose of this study was to examine the influence of dimensions of social competence namely social perception, social adaptability, social expressiveness, impression management, and persuasiveness on SME performance. The study employed a cross-sectional research design where by data were collected from manufacturing SMEs in Tanzania in four types of sub-sectors namely; food processing, woodwork, ironwork and textile. 250 manufacturing SMEs were selected through stratified random sampling procedure. Data were collected using survey method whereby self-administered questionnaires were administered to owner- managers of these SMEs. Thereafter, data were analysed using the Statistical Package for Social Sciences (SPSS version 21). Statistical analysis included factor analysis and multiple linear regression models. Results indicate that social competence as composite variable has a significant influence on SME performance. More specifically, the findings show that persuasiveness, social perception, social expressiveness and impression management have a significant influence on sales; persuasiveness, social adaptability and social expressiveness have a significant effect on profit; persuasiveness, social perception, social expressiveness and impression management have a significant positive influence on ROA and finally persuasiveness, social perception and social expressiveness have a significant effect on ROI. These findings imply that, socially competent entrepreneurs are more likely to experience higher firm performance than less socially effective owners. This research contributes to the literature regarding the role and impact of social competence on business performance, particularly, in the context of SMEs in developing countries