Influence of Social Capital on Small and Medium Enterprises Performance in Wakiso District, Uganda

Published: Aug 14, 2023

Abstract:

Purpose: This study examined the influence of Social Capital (SC) on the performance of Small and Medium Enterprises (SMEs) in Wakiso District. Specifically, we identified forms of SC and assessed how they influenced SMEs’ performance in Kitemu Ward.

Research methodology: Using qualitative and quantitative methodologies, the study solicited data from 40 participants through interviews and a self-administered questionnaire. Data were edited, cleaned, coded, and entered into MS Excel to generate frequencies and graphs. Content value analysis was used to transcribe the qualitative data and group them into subthemes.

Results: The results revealed internal forms of SC, such as friends/peers, trustworthiness, personal saving, family, and social links, while external forms of SC were customers, financial institutions, governments, and companies. Further, SC influences the customer base, leads to high profits, increases sales volume, and enhances creativity and innovation.

Limitations: Financial constraints prevented researchers from eliciting data throughout the study area. Furthermore, the small sample size might limit the generalization of the study results to the entire district. In addition, time and data collection biases have implications for this study.

Contribution: This study is vital because there are no studies carried out in Kitemu Ward on SC and its influence on SMEs’ performance. The findings can be used by policy and decision-makers to design mechanisms for SMEs’ proprietors to integrate SC into business operations. The literature reveals that SC forms enhance sales, profits, market share, customer base, and accessibility to finance.

Novelty: This original study was conducted primarily among women proprietors and managers of SMEs because they are reliable and provide firsthand information as compared to men. Thus, if adopted, the findings are vital for other business proprietors and managers to improve business performance.

Keywords:
1. Networks
2. norms
3. reciprocity
4. ties
5. trust
Authors:
1 . Henry Stanley Mbowa
2 . Mbabazi Phelix Businge
3 . Paul Ssemaluulu
4 . Marus Eton
How to Cite
Mbowa, H. S., Businge, M. P., Ssemaluulu, P., & Eton, M. (2023). Influence of Social Capital on Small and Medium Enterprises Performance in Wakiso District, Uganda. International Journal of Accounting and Management Information Systems, 1(1), 81–95. https://doi.org/10.35912/ijamis.v1i1.1517

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References

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    Amegayibor, G. K. (2021). Leadership styles and employees' performance: A case of family-owned manufacturing company, Cape Coast. International Journal of Financial, Accounting, and Management, 3(2), 149-164. doi:10.35912/ijfam.v3i2.624

    Analia, D., Syaukat, Y., Fauzi, A., & Rustiadi, E. (2020). The impact of social capital on the performance of small micro enterprises. Jurnal Ekonomi Malaysia, 54(1), 81-96.

    Anoke, A. F., Onu, A. N., & Agagbo, O. C. (2022). Managerial Competencies and Growth of Small and Medium Enterprise (SMEs) in Abuja Metropolis, Nigeria. International Journal of Financial, Accounting, and Management, 4(3), 255-268.

    Anoke, F., Ngozi, N. H., Uchechukwu, E. S., & Joyce, I. (2022). Entrepreneurial Marketing And SMEs Growth In Post Covid-19 Era In Awka, Anambra State, Nigeria. International Journal of Financial, Accounting, and Management, 4(2), 115-127.

    Bhandari, P. (2021). Questionnaire Design | Methods, Question Types & Examples. Retrieved from https://www.scribbr.com/methodology/questionnaire/

    Bhattacherjee, A. (2012). Social science research: Principles, methods, and practices: USA.

    Biryabarema, E. (2020). Uganda's central bank may cap commercial bank interest rates. Retrieved from https://www.reuters.com/article/uganda-rates-idUSL8N2EG0RQ

    Capital, I. f. S. (n.d.). Guide to social capital: The concept, theory, and its Research. Retrieved from https://www.socialcapitalresearch.com/guide-to-social-capital-the-concept-theory-and-its-research/

    Chenhall, R. H., Hall, M., & Smith, D. (2010). Social capital and management control systems: A study of a non-government organization. Accounting, organizations and society, 35(8), 737-756.

    Claridge, T. (2018). Introduction to Social Capital Theory. Social Capital Research. Retrieved from https://www.socialcapitalresearch.com/wp-content/uploads/edd/2018/08/Introduction-to-Social-Capital-Theory.pdf

    Claridge, T. (2019). The promise of social capital theoryOr the dominance of economic discourse and triumph of capitalism? Retrieved from https://www.socialcapitalresearch.com/promise-of-social-capital-theory/

    Creswell, J. W. (2014). Research design: qualitative, quantitative, and mixed methods approaches.

    Dodd, M. D. (2016). Intangible resource management: social capital theory development for public relations. Journal of Communication Management, 20(4), 289-311.

    Elhami, A., & Khoshnevisan, B. (2022). Conducting an Interview in Qualitative Research: The Modus Operandi. MEXTESOL Journal, 46(1), n1.

    Eton, M., Mwosi, F., Ebong, C. D., & Ogwel, B. P. (2018). Government interventions in supporting SME growth in Lira district, northern Uganda. International Journal of Emerging Research & Development, 1(2).

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    Harjanti, D., & Noerchoidah, N. (2017). The effect of social capital and knowledge sharing on innovation capability. Jurnal Manajemen dan Kewirausahaan, 19(2), 72-78.

    Kamasak, R. (2017). The contribution of tangible and intangible resources, and capabilities to a firm’s profitability and market performance. European Journal of Management and Business Economics, 26(2), 252-275.

    Kato, A. I., & Tsoka, G. E. (2020). Impact of venture capital financing on small-and medium-sized enterprises’ performance in Uganda. The Southern African Journal of Entrepreneurship and Small Business Management, 12(1), 11.

    Khan, A. U., Kundu, A., Mathew, A., John, B., Sanyal, K., Chakraborty, R., . . . Motkuri, V. (2018). Social Capital: An Eclectic Literature Survey.

    Kim, C. S., & Aggarwal, P. (2016). The customer is king: culture-based unintended consequences of modern marketing. Journal of consumer marketing, 33(3), 193-201.

    Kothari, C. R. (2004). Research methodology: Methods and techniques: New Age International.

    Lin, N. (2002). Social capital: A theory of social structure and action (Vol. 19): Cambridge university press.

    Liviani, R., & Rachman, Y. T. (2021). The influence of leverage, sales growth, and dividend policy on company value. International Journal of Financial, Accounting, and Management, 3(2), 165-178.

    Machalek, R., & Martin, M. W. (2015). Sociobiology and sociology: A new synthesis.

    Mapcarta (Cartographer). (n.d.). Location of Kitemu Parish

    McCombes, S. (2019). Descriptive Research | Definition, Types, Methods & Examples. Retrieved from https://www.scribbr.com/methodology/descriptive-research/

    Moskoff, D. (2011). The Basic Tenets and Main Critiques of the Social Capital Theory: Theories of Social Transformation Essay 2. Retrieved from https://connectnetwork.org.za/wp-content/uploads/2017/07/Social_capital_theory.pdf

    Olamide, A., & Ogbechie, R. (2021). Social capital and business performance: a study of female-owned SMEs in the Nigerian informal sector. Small Enterprise Research, 28(2), 190-205.

    Opondo, O. (2021). Entandikwa, OWC, Emyooga , Parish Models, and the Fight against Poverty. Retrieved from https://www.mediacentre.go.ug/Opinion/entandikwa-owc-emyooga-parish-models-and-fight-against-poverty

    Ozanne, L. K., Chowdhury, M., Prayag, G., & Mollenkopf, D. A. (2022). SMEs navigating COVID-19: The influence of social capital and dynamic capabilities on organizational resilience. Industrial Marketing Management, 104, 116-135.

    Petronellah, N. (2022). Moving subsistence households to the money economy: Why Uganda’s Parish Development Model (PDM) is far from achieving intended results. Retrieved from https://dativaassociates.com/pdm/

    Prins, I., & Custers, G. (2021). Bonding, bridging and linking social capital in neighbourhood initiatives in BoTu during COVID-19. Master’s Thesis). Erasmus University Rotterdam.

    Projectclue12. (2021). Taro Yamane Formular In Calculating Sample Size For Research. Retrieved from https://projectclue1.medium.com/taro-yamane-formular-in-calculating-sample-size-for-research-92b93a39696c

    Schuller, T., & Theisens, H. (2010). Networks and Communities of Knowledge. International Encyclopedia of Education, 100-105.

    Spottswood, E. L., & Wohn, D. Y. (2020). Online social capital: recent trends in research. 36, 147-152.

    Times, T. E. (2023). What is 'Social Capital'. The Ecomic Times. Retrieved from https://economictimes.indiatimes.com/definition/social-capital

    Townsend, W. (n.d.). The importance of social capital. An analysis of volunteer placements. Aalborg University.

    Turyahikayo, E. (2015). Challenges faced by small and medium enterprises in raising finance in Uganda. International Journal of Public Administration and Management Research, 3(2), 21-33.

    Unido. (n.d.). Empowering Women: Fostering Entepreneurship. Retrieved from https://www.unido.org/sites/default/files/2014-01/Brochure_low_resolution_0.pdf

    Voxco. (2021). Descriptive Research Design. Retrieved from https://www.voxco.com/blog/descriptive-research-design/

    Weerathunga, V. M., & Seneviratne, S. C. (2023). Management control systems and business performance: Evidence from Sri Lankan apparel industry. International Journal of Financial, Accounting, and Management, 4(4), 411-426.

    wellbeing, w. w. (2022). What is social capital? Retrieved from https://whatworkswellbeing.org/resources/what-is-social-capital/

    Xie, G.-H., Wang, L.-p., & Lee, B.-f. (2021). Understanding the impact of social capital on entrepreneurship performance: the moderation effects of opportunity recognition and operational competency. Frontiers in psychology, 12, 687205.

    Yani, A., Eliyana, A., Sudiarditha, I. K. R., & Buchdadi, A. D. (2020). The Impact of Social Capital, Entrepreneurial Competence on Business Performance: An Empirical Study of SMEs. Systematic Reviews in Pharmacy, 11(9).

    Yin, R. (2011). Qualitative research from start to finish: Guilford Publications, Inc.

    Young, J. (2012). Personal Knowledge Capital: The Inner and Outer Path of Knowledge Creation in a Web World: Woodhead Publishing Limited.

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  2. Amegayibor, G. K. (2021). Leadership styles and employees' performance: A case of family-owned manufacturing company, Cape Coast. International Journal of Financial, Accounting, and Management, 3(2), 149-164. doi:10.35912/ijfam.v3i2.624
  3. Analia, D., Syaukat, Y., Fauzi, A., & Rustiadi, E. (2020). The impact of social capital on the performance of small micro enterprises. Jurnal Ekonomi Malaysia, 54(1), 81-96.
  4. Anoke, A. F., Onu, A. N., & Agagbo, O. C. (2022). Managerial Competencies and Growth of Small and Medium Enterprise (SMEs) in Abuja Metropolis, Nigeria. International Journal of Financial, Accounting, and Management, 4(3), 255-268.
  5. Anoke, F., Ngozi, N. H., Uchechukwu, E. S., & Joyce, I. (2022). Entrepreneurial Marketing And SMEs Growth In Post Covid-19 Era In Awka, Anambra State, Nigeria. International Journal of Financial, Accounting, and Management, 4(2), 115-127.
  6. Bhandari, P. (2021). Questionnaire Design | Methods, Question Types & Examples. Retrieved from https://www.scribbr.com/methodology/questionnaire/
  7. Bhattacherjee, A. (2012). Social science research: Principles, methods, and practices: USA.
  8. Biryabarema, E. (2020). Uganda's central bank may cap commercial bank interest rates. Retrieved from https://www.reuters.com/article/uganda-rates-idUSL8N2EG0RQ
  9. Capital, I. f. S. (n.d.). Guide to social capital: The concept, theory, and its Research. Retrieved from https://www.socialcapitalresearch.com/guide-to-social-capital-the-concept-theory-and-its-research/
  10. Chenhall, R. H., Hall, M., & Smith, D. (2010). Social capital and management control systems: A study of a non-government organization. Accounting, organizations and society, 35(8), 737-756.
  11. Claridge, T. (2018). Introduction to Social Capital Theory. Social Capital Research. Retrieved from https://www.socialcapitalresearch.com/wp-content/uploads/edd/2018/08/Introduction-to-Social-Capital-Theory.pdf
  12. Claridge, T. (2019). The promise of social capital theoryOr the dominance of economic discourse and triumph of capitalism? Retrieved from https://www.socialcapitalresearch.com/promise-of-social-capital-theory/
  13. Creswell, J. W. (2014). Research design: qualitative, quantitative, and mixed methods approaches.
  14. Dodd, M. D. (2016). Intangible resource management: social capital theory development for public relations. Journal of Communication Management, 20(4), 289-311.
  15. Elhami, A., & Khoshnevisan, B. (2022). Conducting an Interview in Qualitative Research: The Modus Operandi. MEXTESOL Journal, 46(1), n1.
  16. Eton, M., Mwosi, F., Ebong, C. D., & Ogwel, B. P. (2018). Government interventions in supporting SME growth in Lira district, northern Uganda. International Journal of Emerging Research & Development, 1(2).
  17. Fine, B. (2010). Theories of social capital: Researchers behaving badly: Pluto press.
  18. Guðmundsson, G., & Mikiewicz, P. (2012). The concept of social capital and its usage in educational studies.
  19. Harjanti, D., & Noerchoidah, N. (2017). The effect of social capital and knowledge sharing on innovation capability. Jurnal Manajemen dan Kewirausahaan, 19(2), 72-78.
  20. Kamasak, R. (2017). The contribution of tangible and intangible resources, and capabilities to a firm’s profitability and market performance. European Journal of Management and Business Economics, 26(2), 252-275.
  21. Kato, A. I., & Tsoka, G. E. (2020). Impact of venture capital financing on small-and medium-sized enterprises’ performance in Uganda. The Southern African Journal of Entrepreneurship and Small Business Management, 12(1), 11.
  22. Khan, A. U., Kundu, A., Mathew, A., John, B., Sanyal, K., Chakraborty, R., . . . Motkuri, V. (2018). Social Capital: An Eclectic Literature Survey.
  23. Kim, C. S., & Aggarwal, P. (2016). The customer is king: culture-based unintended consequences of modern marketing. Journal of consumer marketing, 33(3), 193-201.
  24. Kothari, C. R. (2004). Research methodology: Methods and techniques: New Age International.
  25. Lin, N. (2002). Social capital: A theory of social structure and action (Vol. 19): Cambridge university press.
  26. Liviani, R., & Rachman, Y. T. (2021). The influence of leverage, sales growth, and dividend policy on company value. International Journal of Financial, Accounting, and Management, 3(2), 165-178.
  27. Machalek, R., & Martin, M. W. (2015). Sociobiology and sociology: A new synthesis.
  28. Mapcarta (Cartographer). (n.d.). Location of Kitemu Parish
  29. McCombes, S. (2019). Descriptive Research | Definition, Types, Methods & Examples. Retrieved from https://www.scribbr.com/methodology/descriptive-research/
  30. Moskoff, D. (2011). The Basic Tenets and Main Critiques of the Social Capital Theory: Theories of Social Transformation Essay 2. Retrieved from https://connectnetwork.org.za/wp-content/uploads/2017/07/Social_capital_theory.pdf
  31. Olamide, A., & Ogbechie, R. (2021). Social capital and business performance: a study of female-owned SMEs in the Nigerian informal sector. Small Enterprise Research, 28(2), 190-205.
  32. Opondo, O. (2021). Entandikwa, OWC, Emyooga , Parish Models, and the Fight against Poverty. Retrieved from https://www.mediacentre.go.ug/Opinion/entandikwa-owc-emyooga-parish-models-and-fight-against-poverty
  33. Ozanne, L. K., Chowdhury, M., Prayag, G., & Mollenkopf, D. A. (2022). SMEs navigating COVID-19: The influence of social capital and dynamic capabilities on organizational resilience. Industrial Marketing Management, 104, 116-135.
  34. Petronellah, N. (2022). Moving subsistence households to the money economy: Why Uganda’s Parish Development Model (PDM) is far from achieving intended results. Retrieved from https://dativaassociates.com/pdm/
  35. Prins, I., & Custers, G. (2021). Bonding, bridging and linking social capital in neighbourhood initiatives in BoTu during COVID-19. Master’s Thesis). Erasmus University Rotterdam.
  36. Projectclue12. (2021). Taro Yamane Formular In Calculating Sample Size For Research. Retrieved from https://projectclue1.medium.com/taro-yamane-formular-in-calculating-sample-size-for-research-92b93a39696c
  37. Schuller, T., & Theisens, H. (2010). Networks and Communities of Knowledge. International Encyclopedia of Education, 100-105.
  38. Spottswood, E. L., & Wohn, D. Y. (2020). Online social capital: recent trends in research. 36, 147-152.
  39. Times, T. E. (2023). What is 'Social Capital'. The Ecomic Times. Retrieved from https://economictimes.indiatimes.com/definition/social-capital
  40. Townsend, W. (n.d.). The importance of social capital. An analysis of volunteer placements. Aalborg University.
  41. Turyahikayo, E. (2015). Challenges faced by small and medium enterprises in raising finance in Uganda. International Journal of Public Administration and Management Research, 3(2), 21-33.
  42. Unido. (n.d.). Empowering Women: Fostering Entepreneurship. Retrieved from https://www.unido.org/sites/default/files/2014-01/Brochure_low_resolution_0.pdf
  43. Voxco. (2021). Descriptive Research Design. Retrieved from https://www.voxco.com/blog/descriptive-research-design/
  44. Weerathunga, V. M., & Seneviratne, S. C. (2023). Management control systems and business performance: Evidence from Sri Lankan apparel industry. International Journal of Financial, Accounting, and Management, 4(4), 411-426.
  45. wellbeing, w. w. (2022). What is social capital? Retrieved from https://whatworkswellbeing.org/resources/what-is-social-capital/
  46. Xie, G.-H., Wang, L.-p., & Lee, B.-f. (2021). Understanding the impact of social capital on entrepreneurship performance: the moderation effects of opportunity recognition and operational competency. Frontiers in psychology, 12, 687205.
  47. Yani, A., Eliyana, A., Sudiarditha, I. K. R., & Buchdadi, A. D. (2020). The Impact of Social Capital, Entrepreneurial Competence on Business Performance: An Empirical Study of SMEs. Systematic Reviews in Pharmacy, 11(9).
  48. Yin, R. (2011). Qualitative research from start to finish: Guilford Publications, Inc.
  49. Young, J. (2012). Personal Knowledge Capital: The Inner and Outer Path of Knowledge Creation in a Web World: Woodhead Publishing Limited.