East Africa Research Papers in Business, Entrepreneurship, and Management (EARP-BEM)

Assessing Rwanda’s Economic Potential from an International Perspective
EARP-BEM No. 2018:14
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This study focuses on the multidimensional characteristics of Rwanda’s business climate and potential in terms of foreign economic relations. This country has created macroeconomic stability and increasingly attractive investment conditions for foreign investors, trading partners, business start-ups, entrepreneurs and other private sector actors. The study has the following objectives: (i) assessing Rwanda’s economic potential in the background of the East African states using the taxonomic methods (three different types of standardizations were used in the study: classical standardization, standardization by average and standardization by range); (ii) evaluating the potential of Rwandan exports; and (iii) formulating policy recommendations for developing Rwandan international economic relations. The paper also classifies conditions for doing business with non-model methods. The analysis covers almost all East African states. Moreover, an evaluation of Rwandan export potential is based on the index of indicative trade potential. The study takes into account Rwanda’s most important export partners: the Common Market for Eastern and Southern Africa, the East African Community, the Democratic Republic of the Congo and Kenya. The analysis spans the period 2001-15. In some cases the research period was extended to 2016.

Effects of Supply Chain Integration on Performance: An Analysis of Manufacturing Firms in Rwanda
EARP-BEM No. 2018:13
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This study extends the developing body of literature on supply chain integration (SCI), which is the degree to which a manufacturer strategically collaborates with its supply chain partners and collaboratively manages intra- and inter-organizational processes to achieve effective and efficient flows of products and services, information, money and decisions to provide maximum value to customers. Previous researches were inconsistent in their findings about the relationship between SCI and performance. We attribute this inconsistency to incomplete definitions of SCI, in particular the tendency to focus on customer and supplier integration only excluding the important central link of internal integration. Mainly using a cross-sectional approach, we used a structured questionnaire to collect responses from 258 employees drawn from 580 registered companies in the Rwanda Development Board (RDB) and analyzed these with the help of Pearson’s correlation and structural equation modeling (SEM). We use three dimensions of SCI -- internal integration, supplier integration and customer integration -- to determine the effects of individual SCI dimensions and their interactions on a firm’s performance. The findings indicate that SCI is related to both operational and firm performance. Further, the results also indicate that internal and customer integration are more strongly related to improving performance than supplier integration.

Mind-set and Entrepreneurial Activities in Rwanda: A Firm Level Investigation
Charles M. RUHARA and Charles R. KAYITANA
EARP-BEM No. 2018:12
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This study examines the effect of mind-set on an entrepreneur’s activities in Rwanda. By doing so it seeks to establish whether the lack of an entrepreneurial mind-set contributes to the high rates of small and medium enterprises’ failure in the country. This is necessary because evidence from various studies highlights that lack of entrepreneurial mind-set leads to business failure. We estimated an entrepreneurship activities equation and used the OLS regression analysis. The factors affecting a firm’s sustainability include an entrepreneurial mind-set, the manager’s years of experience, gender and competition that has entered the market. Our study also shows that an entrepreneurial mind-set is an important factor of performance and sustainability in Rwanda without which a business will fail. This study recommends entrepreneurial education to nurture and support a firm’s success. There is a need to analyze the entrepreneurial mind-set at the household level. In addition a dataset collected for different time periods will help capture mind-set dynamics and inform the policymaking process.

The effects of ICT adoption on Small and Medium sized enterprises in Rwanda: A Case study of Kigali City
EARP-BEM No. 2018:11
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ICT adoption is an important field of study in various areas including small and medium enterprises (SMEs).This study examines the factors that influence the adoption and use of ICT by SMEs in Rwanda. It also examines perceptions of SMEs’ employees and managements on adoption and use of ICT, assesses the level of awareness and skills of SMEs’ employees and other variables which can be helpful in gaining valid outputs. It uses a specially designed structured questionnaire to collect data and uses t-test statistics to compare the mean difference between the level of awareness and adoption patterns of ICT facilities among SMEs. A regression analysis helps evaluate factors influencing ICT adoption choices in the SME sector and assess the perceptions of SMEs’ employees towards ICT adoption. It uses the SPSS software to perform data entry and analysis. This study examines the relationship between ICT adoption and its five factors -- perceived benefits, perceived costs, ICT knowledge, external pressures and government support. The results show that perceived costs and external factors were insignificant in ICT adoption whereas perceived benefits, perceived costs and ICT knowledge were significant in ICT adoption. According to the results, perceived benefits had a strong and significant relation to ICT adoption and the relation between ICT knowledge and employees’ skills about ICT adoption were also significant.

The Relationship between Entrepreneurial Orientation, Government Policy and SME Performance: The Case of Small and Medium Enterprises in Rwanda
EARP-BEM No. 2018:10
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Given the ever-growing importance of small and medium enterprises (SMEs) in developing nations like Rwanda this study examines the relationship between entrepreneurial orientation, government policy and the SMEs’ performance. The research study was conducted in Rwanda using a cross-sectional research design. The targeted sample was 226 firms and the collected data was entered and analyzed using the SPSS software package. The study used the Pearson correlation coefficient and the regression model analysis to test the research hypothesis. The results show that entrepreneurial orientation is significantly and positively related to both SME performance and government policy. At the same time, government policy is also significantly and positively related to SME performance. These results were confirmed by the hierarchical regression model which showed that entrepreneurial orientation and government policy were both significant predictors of SMEs’ performance. Based on its findings the study gives recommendations for SME staff members to improve their performance.

The Contribution of Institutional Environment and Support to the Growth of Small and Medium Enterprises in Rwanda: A Survey of SMEs in Kigali
Josephine MUTESI, Christine NAMAGANDA, Theogene RIZINDE
EARP-BEM No. 2018:09
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Although market reforms in developing economies date back to the 1980s and early 1990s no empirical studies have assessed whether the institutional environments in these economies are favorable for small and medium enterprises (SMEs). This followed a recent effort to do so in the context of the developed and emerging economies in Eastern Europe and Latin America, our research developed a valid scale to comprehensively measure institutional environments in developing economies. SMEs are found in every sector of the economy and are crucial for sustained long term growth and employment. Despite the different initiatives to enable SMEs to survive in their operations, most of them have failed. Therefore, the purpose of this study is to ascertain the contribution of an institutional environment and support to the growth of SMEs in Rwanda. Our results show that the factors that make up an institutional environment for SMEs’ growth in Rwanda include accessibility to finance, market and training in entrepreneurship skills and knowledge and SMEs’ abilities to interpret the environment. The findings indicate that there is a need for improving the factors that affect the institutional environment for SMEs in Rwanda.

Impact of Dividend Policy on Shareholders’ Wealth: A Study of the Agriculture Industry in Nigeria
EARP-BEM No. 2017:08
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The existence of information asymmetry, agency problems, taxes and transaction costs makes dividend policy the most controversial of the three corporate decisions that managers have to take (investments, financing and dividends). However, some researchers believe that the level of dividend affects shareholders’ wealth. Further, as there is a need for investible funds in the agricultural sector in Nigeria for transforming various developmental parameters (employment, foreign exchange, capital inflows) into economic growth and development this study investigates whether dividends affect the agricultural firms’ shareholders’ wealth in Nigeria. It uses the ex-post facto research design to collect data and the results of a multiple regression of ordinary least square (OLS) show that a unit change in earnings per share (EPS), dividend per share (DPS), dividend pay-out (DPO) and price-earning (P/E) leads to 11, 25, 68 and 32 per cent positive increase in MPS respectively. The results also show that without paying dividends, firms’ MPS will fall by 43 per cent; this shows the relevance of paying dividends by stock market firms in Nigeria. Further, 73 per cent of the changes in the dependent variable (MPS) are explained by changes in independent variables. Therefore, this study recommends that firms, especially those operating in infant industries like agriculture, should ensure that they have good and robust dividend policies in place. This will enhance their profitability and attract investments to the sector.

Impact of Capital Adequacy on the Performance of Nigerian Banks using the Basel Accord Framework
EARP-BEM No. 2017:07
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Capital adequacy is sufficiency of the amount of equity to absorb any unexpected shocks that a bank may face. According to the Capital Adequacy Standard set by the Bank for International Settlements (BIS), banks must have a primary capital base equal at least to 8 per cent of their assets. Since bank-specific characteristics differ in Nigeria, the Central Bank of Nigeria (CBN) set an arbitrary N25 billion minimum capital base after considering all capital adequacy variables (total assets, owners’ funds, customers’ deposits and loans and advances) to forestall all future financial downturns. This study examines the impact of these variables on banks’ performance in Nigeria. Data was collected using the cross panel methodology from nine deposit money banks with significant foreign operations. The results of the ordinary least square (OLS) regression show that 76 per cent (R2) of the variations in profit after tax (PAT) were caused by independent variables. The study further shows that a unit change in total assets (TA), loans and advances (LA), customer deposits (CD) and owners capital (OC) led to 4.1, 1.6, 3.7 and 1.7 per cent change in PAT respectively. The study therefore recommends that the banks’ regulators should not only focus on capital adequacy but also on supervisory review and market discipline (1-R2) to maintain banks’ financial strength and stability in Nigeria.

Public Leadership, Responsibility and the Nigerian Paradox
Albert T. AKUME
EARP-BEM No. 2016:06
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Ideally, in functional societies there is a close connection between public leadership and public responsibility. The strong knitting of these two accounts for a wise and responsive government that seeks to and enhances the welfare of citizens. That, however, is not the case in Nigeria, a society that seems to exhibit an increasing gap between public leadership and public responsibility with ordinary citizens bearing the harsh brunt of the divide. Given this backdrop this paper uses the elite theory to answer the disturbing theoretical question: Why has the Nigerian state continued to espouse a contrasting paradox?

Crowdfunding: The Beliefs of Rwandan Entrepreneurs
Adele BERNDT and Marvin MBASSANA
EARP-BEM No. 2016:05
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Crowdfunding, through the use of Internet platforms, is a relatively recent development that has attracted both interest among entrepreneurs and investors. Recent figures suggest approximately $34.4 billion was raised in 2015, making crowdfunding attractive to entrepreneurs. Crowdfunding in Africa has not received the same level of attention, and thus the purpose of the research was to investigate the beliefs (awareness and knowledge) of Rwandan entrepreneurs towards crowdfunding. This study is important due to the lack of academic research into this phenomenon in Africa and in Rwanda. Understanding the beliefs (awareness and knowledge) of Rwandan entrepreneurs can indicate the potential for crowdfunding for entrepreneurs and their intention to use it as a future financing strategy. Due to the limited research conducted into crowdfunding, this study was exploratory in nature with the use of qualitative methods in order to attain the purpose of the study. Use was made of convenience sampling and in this pilot study, findings from personal interviews with 8 entrepreneurs are reported on. Financial constraints were identified by most of the entrepreneurs as impacting the development of their ventures. The findings show limited knowledge of crowdfunding as a phenomenon and the specific aspects of how it operates. Despite this lack of knowledge, the participants reflected an interest in using crowdfunding, though clarification of the expectations of the entrepreneurs and the investors would be necessary prior to its use. The use of crowdfunding can be considered by entrepreneurs but care would be needed to ensure successful implementation. The study concludes by suggesting implications for entrepreneurs, crowdfunding platforms as well as crowdinvestors who would invest in the various ventures.

Job-Rotation, Utilization of Workshops and Performance of Entrepreneurial Firms in Rwanda: An Empirical Study of SMEs in Gasabo District
EARP-BEM No. 2016:04
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This study addresses an important aspect of building SME entrepreneurial success through human resource development. We specifically study the experiences of manufacturing SMEs in Rwanda to demonstrate the performance implications of using workshops and job-rotation among small entrepreneurial firms. Given its unique commitment in the region for building necessary support for developing enterprises, Rwanda is a particularly interesting context to study this. One hundred and one firms were included in the study drawn from Gasabo, a district in capital Kigali. With the help of a regression analysis, we found support for a positive direct link between job-rotation and SME performance. We, however, did not find a similar result regarding workshops and SME performance. In order to examine the effects of job-rotation and workshops more deeply, we tested for the combined effect of these two practices. Our findings demonstrate the value of workshops when combined with job-rotation among SMEs in our study setting. With these findings, our study demonstrates how local firms and advocates of workshops can effectively use this method to enhance SME performance.

Strategic Innovation in Management of Small and Medium–Sized Manufacturing Companies in Rwanda
EARP-BEM No. 2016:03
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This paper has two objectives: first, to create awareness about the necessity of incorporating strategic innovations in the daily management of SMEs, and two, to understand that this necessity for innovation holds opportunities, if innovations and trends are recognized before competitors so that they can be acted upon rather than reacted to. This paper starts by defining the concept of strategic innovation and discusses some tactics used by SMEs for the successful implementation of strategic innovations, that is, how they cultivate a style of organizational behavior that is comfortable with new ideas, changes, risks and even failures. A purposeful technique is used to select SMEs for interviews; data was collected using self-administered interview guides. The data collected through the interview guides was qualitative and was analyzed thematically using a content analysis which covered how strategic innovations were being implemented through transmission of SMEs’ vision and strategic targets to employees; tolerance of risks, mistakes and failures; degree of decision making by operational staff; and attention to the future through transparency and truth. Creating an innovative culture a SME should make clear it’s vision to all its employees; it should have minimum acceptance of risks, mistakes and failures and more importantly it should learn from those mistakes and failures; it should empower people to take quick decisions and reward any initiative at doing a new thing; and it should always create room for curiosity among employees to know about new things outside their daily work and thus prepare them for innovations.

Assessing the Relationship between Employee Motivation and Productivity in Nyagatare District in Rwanda
Pereez NIMUSIMA and James Francis TUMWINE
EARP-BEM No. 2016:02
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This paper examines the relationship between employee motivation and work productivity in Nyagatare district in Rwanda. The study was guided by the objectives of identifying performance behavior in terms of punctuality, absenteeism, work morale, ability at work and a sense of responsibility among Nyagatare district staff members. This involved finding out the methods of employee motivation that are used and then analyzing the relationship between the level of employee motivation and productivity. A case study approach was followed for this in Nyagatare district. The research design involved the use of quantitative and qualitative approaches to collect and analyze data. The findings demonstrate the existence of a significant and positive relationship between the level of employee motivation and productivity. These results reveal that the better the employees are motivated, the more they are likely to be productive. The study also contributes to an understanding that the more the employees are materially and immaterially rewarded at work, the more they are likely to be productive and consequently achieve their performance targets (they are happy to identify with the district administration and this also reduces absenteeism at work). The results are further supported by the work of Rafikul & Ahmad, (2008) which confirms that the lack of employee motivation within an institution results in the under-utilization of the potential and skills of employees since they feel that their efforts are not being rewarded in a fair fashion

Exploring the Implications of Low-Cost Leadership and Differentiation Strategies in the East African Community Market: A Perspective of Local Firms
EARP-BEM No. 2016:01
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Over the past few decades, East African countries have made tremendous economic, social and political progress and are seeking to consolidate this growth with the formation of the East African Community. The Global Entrepreneurship Summit held in Kenya’s capital Nairobi in July 2015 highlighted the competitiveness of local firms in the region as having the potential to contribute to high-value added activities through innovation and entrepreneurship. Nonetheless, there are general concerns as to whether local firms can maintain their competitive advantages in the new environment of economic integration especially with the increasing entry of more resource endowed players from abroad. This conceptual paper explores the capacity of local firms to maintain their competitive edge by evolving into low-cost producers and/or differentiators. Specifically, the paper presents arguments in support of the differentiation strategy being followed by fledgling manufacturing local firms. While recognizing the limitations for local firms along this path, the paper identifies areas from previous research which address the question of upgrading from big emerging markets such as China, India, Argentina and Brazil and suggests areas that can guide future research aimed at helping local firms to be successful differentiators.

Content updated 2018-02-21

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