Financial management practices and business performance of small and medium enterprises in western Uganda
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Date
2013
Journal Title
Journal ISSN
Volume Title
Publisher
African journal of business management
Abstract
Small and medium Enterprises are seen as a driving force for the promotion of an economy. The
purpose of the study was to establish the relationship between financial management practices and
business performance of SMEs in western Uganda with a view to establishing a coherent model
directed at improving business performance and it was hypothesized that financial management
practices positively influences Business performance. The study adopted a positivist (quantitative
paradigm) with cross sectional and correlational designs. The study used a respondent sample of 335
SMEs operating in Mbarara, Sheema and Bushenyi whose owners/managers were the unit of enquiry.
Structural Equations Modeling with Analysis of Moment Structures were used to for statistical
modeling. The findings in respect of the main purpose of the study indicated that financial management
practices accounted for 33.8% of the variance in business performance of SMEs. The results also
indicated that working capital management influences highly since it predicts over 22% of the variance
in business performance. The present study supported a multi-theoretic approach in explaining
business performance of SMEs in Uganda. The study supports the pecking order theory in explaining
the financing of SMEs together with resource based view as the theories that help in explaining
business performance of SMEs. The study confirmed efficient financial management practices factor
structure of observed variables and the latent variables. As a result, the study provided models for
efficient financial management practices. These models can then used to provide a trajectory for
improving business performance of SMEs in Uganda.
Description
Keywords
Financial Management, Business Performance, SMEs.
Citation
Abanis, T., Arthur, S., & Derick, S. (2013). Financial management practices and business performance of small and medium enterprises in western Uganda. African journal of business management, 7(38), 3875-3885.DOI: 10.5897/AJBM2013.6899