Academic journal article International Journal of Entrepreneurship

Effects of Factors Influencing Capital Formation and Financial Management on the Performance and Growth of Small Manufacturing Firms in Senegal: Recommendations for Policy

Academic journal article International Journal of Entrepreneurship

Effects of Factors Influencing Capital Formation and Financial Management on the Performance and Growth of Small Manufacturing Firms in Senegal: Recommendations for Policy

Article excerpt

ABSTRACT

This paper presents results of a survey conducted among 36 (n=36) owners of small manufacturing businesses in Senegal. Although most of these firms show promising potential for success they are threatened with some operational problems that constrains their ability to attain better results. In order for these mostly stagnated small firms to graduate into higher levels of development therefore, their need for adequate and relevant supporting infrastructures are essential. This study identified the biggest impediment facing most Senegalese small businesses to be that of limited access to sources of capital, in addition to other external conditions that affect the productive management and usage of funds. It is recommended that the government machinery, relevant establishments and business communities combine their efforts with that of entrepreneurs and create effective structures that will help ameliorate the process and conditions for effective capital formation. Taking this approach in addition to providing relevant training should enhance better management know-how for entrepreneurs and encourage the chances for progressive development of the small business sector in Senegal.

INTRODUCTION

At the turn of the 21st century, it still appears that the level of development for most small firms in sub-Saharan African countries (Francophone or Anglophone) is still very basic. Most of these firms have not progressed beyond the basic craft, promotional (Filley & Adalg, 1978) or the Artisan levels (Longenecker, et al 2003), which are characterized as firms that are not innovative, use very little capital and maintain only simple methods for management and development. Firms of this category survive by sheer tenacity and remain in business mainly by sweat equity. In addition, such firms do not conduct any form of research for development to proactively gain control of market share because they either cannot afford to do it, do not know how, or simply do not see the immediate importance of doing any research due to myopic business growth vision that they have. Such firms would rather choose to use only simple benchmarking techniques or follow signals from other competitors when demand for similar products increases or decreases. Most businesses of this category in Senegal are seasonal in nature due to the type of products that they produce and are simply complacent as they struggle to remain in business just to earn enough money to maintain a stable means of livelihood.

Although factors influencing small firms' development and their effects are different in countries and environments, many factors have been identified by researchers as causes leading to poor performance, slow growth and development of small firms in countries. Some researchers for instance have noted that financial constraint is the most serious handicap confronting small firms in lesser developing countries especially in Africa (Cook, 2001 & McMahon, 2001). In another twist, Deakins et. al. (2002) noted assumptions made by some researchers that although inadequate financial management practices are regarded as important contributors to the causes of turbulence in small firms, little study has been done to know about the role owner-manager's approach in the evolution of strategy and associated learning in this area. Similarly, Chittenden, et. al. (1998) observed that little attention has been received from financial researchers, with regard to non-financial and behavioral factors that influence capital structure decisions.

There is therefore more to be understood about the pattern of how managers learn to adapt, develop strategies and make decisions in this area and how they are unique and different in specific environments. Relatively, limited amount of research especially has been conducted on SMEs and entrepreneurship around the African continent. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.