The impact of training on performance of micro and small enterprises served by microfinance institutions in Tanzania
Research Journal of Business Management
Department of General Management, P.O. Box 35046, Dar es Salaam, Tanzania; Department of Accounting, University of Dar es Salaam Business School, P.O. Box 35046, Dares Salaam, Tanzania
This study examines differences in business performance between two specific groups of micro finance clients; the enterprises whose owners have received business and entrepreneurship training against those who had never. The analysis is centred on the premise that microfinance institutions enable their clients (mainly micro and small enterprises) to enhance their income earning capacity, attain firms' growth and improve owners' living standards. A total of 225 micro and small enterprises who are micro credit recipients was involved in the study. The performance analysis employed three growth indicators, namely sales revenue, employees number and firms assets value. An independent t-test was used in the comparative analysis. Prior to the test, the survey data was subjected to an application of natural logarithm to enable pulling of the highly skewed observations to a normal distribution. The comparison between the two groups was important in examining the impact of training in changing behavior and characteristics of businesses and the owners. The results of t-test revealed that micro credit client-enterprises owned by recipients of business training have higher level of assets and sales revenue compared to enterprise owned by non-recipients of training while insignificant differential impact on employment creation was demonstrated. Implications from the study is that training in business skills for Tanzanian micro and small entrepreneurs is vital for firms performance, growth and improved owners living standards in addition to credit access. Microcredit providers should therefore consider products modifications or work closely with training providers to achieve greater impact from micro finance services and poverty alleviation. © 2010 Academic Journals Inc.