EFFECT OF ORGANIZATIONAL CAPABILITIES ON PERFORMANCE OF MICRO AND SMALL FAMILY BUSINESSES IN GHANA: THE MODERATING ROLE OF ENVIRONMENTAL CHARACTERISTICS

ABSTRACT

The rationale of the study is to examine the moderation role of competitive intensity on organizational capabilities (marketing and managerial) as a measure of business performance. Data was collected from 196 micro and small family business firms in Ghana. The hierarchical regression model was used to analyze the hypotheses of the study. The findings of the study indicate that, irrespective of the competitive intensity in the business environment, micro and small family businesses that adapt marketing and managerial capabilities will always outperform industry players. Thus, there is a direct relationship between organizational capabilities and organizational performance (financial and operational). This result was achieved after firm age, firm size and industry sector were used as control variables. The moderating interaction was insignificant therefore family businesses are being encouraged to enforce best marketing and managerial capabilities to achieve superior return on investments and return on sales. To achieve this result, quantitative data and subjective results were used to analyze the data with LISREL 8.5 and SPSS 16.0. Limitations of the study were centered on the survey conducted only in Ghana. The conclusion and recommendations focused on micro and small family business owners in adapting marketing and managerial capabilities within the turbulent industry competitiveness to achieve outstanding financial and operational performance within the industry sector.

CHAPTER ONE

INTRODUCTION 

1.1 Background of Study

The African Centre for Economic Transformation (ACET) reviewed an investment guide for West African Countries like Ghana in the year 2014 suggesting the need for diversification of their resources production base and making the exports more competitive to avoid international sanctions. In spite of this, increasing the productivity of farms, government agencies and firms and also to upgrade their technological assets and capabilities, all as an attempt in improving human well-being and human capital (Moyela, 2015), thus investment drawbacks of entrepreneurs which either inhibits or if well facilitated improves performance strategies. The prevailing economic liberalization of the global trade and industry sector in the world of commerce has caused numerous changes in the business especially bringing about rapid growth in entrepreneurship. Entrepreneurial business is an emerging business trade springing out in the African economy especially in Ghana, to be precise with micro and small family businesses as the major focus since multinational companies need huge investment capital unlike these micro and small family businesses which need just little startup capital for their initial investments. These micro and small family businesses comprise both the manufacturing and services sector. This comprises the manufacturing sector involving businesses like those of the sachet water manufacturers, indigenous African wear and locally made ornamental fashion companies, artisans in the field of handicrafts etc. The services sector of micro and small family businesses also involves the stores and various retail shops, supermarkets, hotels, microfinance or savings and loans credit unions, repairers of electronic machines, tailors and seamstresses, barbers, restaurants or canteens and local market vendors. These businesses are characterized by buying and selling of products termed as commercialization and trading (Kayanula and Quartey, 2000). Coupled with the performance of these micro and small family businesses in Ghana are their organizational capabilities which impacts on the business environment. One major organizational capabilities performance check is the competitive strategy and industry competition in the business and commerce industry sector. Business environmental analysis as the moderating role is characterized by the PESTLE factors being it political, economic, socio-cultural, technological, and legal and finally natural environment. Aside these are the perceived intensity of industry competition and the industry sector performance influences which also involves marketing and managerial RBV competencies capabilities (Kotler and Keller, 2012). Many researchers and leading academic authorities have conducted research within the area of micro and small family business performance in Ghana in terms of marketing capability and competitive strategies (Agyapong et al, 2015). Therefore, the gap for the essence of this research topic focuses on managerial capabilities and marketing capabilities as moderated by intensive competition of micro and small family business performance in Ghanaian industry sector.

1.2 Problem Statement

Organizational capabilities can positively impact on micro and small family businesses to give them competitive advantage since it leads to differentiation of markets from competitors (Kelchner, 2015). According to Jean Philippe Prosper, Vice-president for sub-Saharan Africa, Latin-America and the Caribbean International Finance Corporation, the International Finance Corporation (IFC), in support of small and medium-sized enterprises (SMEs) stated. Family firms sometimes find difficulties in obtaining licences to operate their businesses and therefore the IFC has made it possible through community development programmes to enable SMEs to get access to national, domestic, foreign, international and global value chains (Norbrook, 2014). Moreover, the IFC in order for the local entrepreneurs to put their sources of financial funding of income, loans and grants into judicious and profitable use offer training programs and technical assistance help in various field of endeavour like better environmental and safety policies of industrialization. Also, due to the smaller sizes of these micro and small family businesses, they seem not to have direct access to the global international marketplace hence smaller companies are reached though multinational companies like Newmont. Thus, in the value chain of buying and selling, bigger companies are tasked to make procurement of raw material resources on behalf of smaller business. In view of this, the IFC is planning to integrate local and small companies through financial intermediaries since about 50% of Ghanaian businesses are channeled through the financial institutions like local rural banks for the SMEs to benefit especially the agricultural sector small scale farmers. Most of these SMEs also encounter problems in the procurement and purchasing of assets based equipment hence the IFC boosts their technological asset base equipment through leasing programme. Eventually, the SMEs contribute about 20% of the total value cost of the asset whilst the financial institutions pay for the rest of the equipment‟s price therefore, the banking establishments tend to own this equipment and have the authoritative power to lease it to other SMEs for further productions. Thus, trying to recover the asset but at times the SMEs in turn buys it back at the durational end of the leasing period to help in its manufacturing and production base (Norbrook, 2014). This emphasizes interdependency of resource based facilities and amenities. All these assertions impact on organizational performances either positively or negatively hence calling for this research as a policy measure for improved business performance sustainability. The pending most crucial problems confronting the micro and small family businesses is in the aspect of regulatory framework and proper governmental legislation hampering the SMEs like that of the illegal gold mining locally termed as “galamsey” which is depleting and deteriorating our natural green vegetation cover and natural habitat extinction. Another peculiar hindrance is that of proper and better justice or judicial system and enforcements of the rule of law being backed by the constitutional jurisdiction (Norbrook, 2014). In contrast, the statement of the problem can be deduced that, “examining the essence of micro small family businesses and what they are capable of accomplishing and achieving in the spate of competitive business environment in a middle income country like Ghana as an emerging economy into industrialized economies with a performance benchmark in environmental and organizational capabilities”.

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Item Type: Ghanaian Topic  |  Size: 89 pages  |  Chapters: 1-5

Format: MS Word  |  Delivery: Within 30Mins.

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