Mapping the Pathways to Success: SEM-PLS Analysis of Factors Influencing SME Growth in Tanzania

Salum Ibrahim Kanyungu
Department of Management Studies
Tanzania Institute of Accountancy (TIA)
ORCID: https://orcid.org/0009-0007-6124-3427
Email: Kanyungu30@gmail.com

Abstract: This paper systematically advocates the determinants influencing Small and Medium Enterprises (SMEs) in Tanzania, specifically on potential business ecosystem elements which include Accessibility to Finance (AF), Market accessibility and Competition (MAC), Entrepreneurial Skills and Management (ESMC) capacity, as well as Regulatory requirements (RR). The study used a mixed study design and employed Structural Equation Modelling (SEM) and Partial Least Squares (PLS) to analyze data collected from 125 random samples from SME owners in Mwanza and Arusha City. Smart PLS software was used to analyze data from a structured questionnaire to realize the study’s objective. The results highlight Access to Finance as the most substantial determinant of SME growth, followed by Market Access and Competition. Entrepreneurship skills and the ability to manage an enterprise have a positive influence but possess a relatively weak association, whereas Regulatory Requirements demonstrated modest effects. The proposed mechanisms to ensure the expansion and scaleability of SMEs in Tanzania are directed to laws and policymakers, as well as other development partners to intervene in all analyzed, construct to smooth financial inclusiveness, invest in research to discover market opportunities, adjust SMEs’ legal structure to provide conducive entrepreneurial ecosystem, as well as establishment of entrepreneurship development programs to upgrade creativity, innovation and management capacity for SMEs growth and Sustainability.