THE Entrepreneurial competence and financial literacy in certified and uncertified Zanzibar SMEs
Abstract
This study assessed Certified and Uncertified Small and Medium Enterprises in Zanzibar with respect to Entrepreneurial Competence and Financial Literacy. The study was guided by Resource-Based theory and Institutional theory. The study employed quantitative methods. The sample size of this study was 90 participants, and purposive (judgmental) sampling was used to select the sample. Questionnaires were used as the primary data collection tool. After data collection, the Chi-square Test was applied as an estimation technique. The findings revealed a powerful, interconnected dynamic among Zanzibar's SMEs, in which certification by the Zanzibar Bureau of Standards serves as a key marker of success. The study found that certified SMEs, often driven by a quest for credibility and competitive advantage, demonstrably possess higher entrepreneurial competencies and are significantly more likely to experience growth (76.1% vs. 29.0% of uncertified SMEs). A critical foundation for this success is financial literacy, which is strongly linked to high competencies (82.2%) of firms with good financial literacy. The study recommends that the Zanzibar Bureau of Standards integrate financial literacy into SME support programs and launch awareness campaigns that emphasize tangible benefits, such as improved credibility and competitive advantage.
Full text article
References
Ahmad, N. H. (2009). Entrepreneurial competencies and business success among small and medium enterprises [Unpublished doctoral dissertation]. Universiti Sains Malaysia.
Almajed, A. I. (2017). Descriptive research design. Journal of Educational Studies, *12*(3), 45-58.
Alsamydai, M. J., Alnawas, I., & Alhadid, A. Y. (2022). The impact of financial literacy on entrepreneurial self-efficacy: An empirical study. Journal of Entrepreneurship Education, *25*(2), 1-15.
Alvarez, S. A., & Busenitz, L. W. (2001). The entrepreneurship of resource-based theory. Journal of Management, *27*(6), 755-775.
Anderson, B. S., Eshima, Y., & Hornsby, J. S. (2018). Strategic entrepreneurial competencies and firm performance. Entrepreneurship Theory and Practice, *42*(4), 589-612.
Ayyagari, M., Beck, T., & Demirguc-Kunt, A. (2007). Small and medium enterprises across the globe. Small Business Economics, *29*(4), 415-434.
Bacigalupo, M., Kampylis, P., Punie, Y., & Van den Brande, G. (2016). EntreComp: The entrepreneurship competence framework. Publications Office of the European Union.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, *17*(1), 99–120.
Battilana, J., Leca, B., & Boxenbaum, E. (2009). How actors change institutions: Towards a theory of institutional entrepreneurship. Academy of Management Annals, *3*(1), 65–107.
Bätz, K., Sieger, P., & Fueglistaller, U. (2021). Entrepreneurial competencies and firm performance. International Journal of Entrepreneurial Behavior & Research, *27*(5), 1248–1272.
Brixiová, Z., Ncube, M., & Bicaba, Z. (2015). Skills and youth entrepreneurship in Africa. Journal of Developmental Entrepreneurship, *20*(1), 1-24.
Bruhn, M., Karlan, D., & Schoar, A. (2018). The impact of consulting services on small and medium enterprises. American Economic Journal: Economic Policy, *10*(1), 158–192.
Busenitz, L. W., Gómez, C., & Spencer, J. W. (2000). Country institutional profiles: Unlocking entrepreneurial phenomena. Academy of Management Journal, *43*(5), 994–1003.
CEAS. (2024). Annual report on certified enterprises in Zanzibar. Commission for Enterprise Advancement and Standards.
Darsono, S. N., Rahayu, S. M., & Wijayanti, R. (2022). Financial literacy and digital financial inclusion for SMEs. Journal of Asian Finance, Economics and Business, *9*(3), 245–256.
Eniola, A. A., & Entebang, H. (2017). SME managers and financial literacy. Global Business Review, *18*(3), 559-576.
Garman, E. T., & Forgue, R. E. (2002). Personal finance (6th ed.). Houghton Mifflin.
Gavigan, K. (2010). Financial literacy: The importance of financial education. The Bottom Line, *23*(3), 92-95.
Gibb, A. (2008). Entrepreneurship and enterprise education in schools and colleges. Industry and Higher Education, *22*(3), 147-159.
Graffham, A., Karehu, E., & MacGregor, J. (2007). Impact of GlobalGAP on small-scale horticultural farmers in Kenya. Fresh Insights, *10*, 1-24.
Henson, S., & Humphrey, J. (2010). Understanding the complexities of private standards in global agri-food chains. World Development, *38*(11), 1591-1602.
Heras-Saizarbitoria, I., & Boiral, O. (2013). ISO 9001 and ISO 14001: Towards a research agenda. Journal of Management, *39*(1), 47-74.
Hung, A., Parker, A. M., & Yoong, J. (2009). Defining and measuring financial literacy. RAND Corporation Working Paper Series.
ISO. (2023). ISO survey of certifications to management system standards. International Organization for Standardization.
Jabir, A., & Nadia, S. (2019). Certification and firm performance: Evidence from Indian manufacturing SMEs. Journal of Small Business Management, *57*(3), 987-1008.
Jacobs, S. (2001). Financial literacy: A tool for economic empowerment. Community Development Journal, *36*(4), 305-316.
Kaiser, T., Lusardi, A., Menkhoff, L., & Urban, C. (2022). Financial education affects financial knowledge and downstream behaviors. Journal of Financial Economics, *145*(2), 255-272.
Kariuki, A., Mburu, J., & Ndirangu, S. (2020). Certification and export competitiveness of Kenyan SMEs. African Journal of Business Management, *14*(8), 245-258.
Kothari, C. R. (2004). Research methodology: Methods and techniques (2nd ed.). New Age International.
Kothari, C. R. (2011). Research methodology: Methods and techniques (3rd ed.). New Age International.
Kulathunga, K. M. M. C. B., Ye, J., Sharma, S., & Weerathunga, P. R. (2020). How does financial literacy affect SME performance? Journal of Open Innovation: Technology, Market, and Complexity, *6*(4), 1-18.
Lăzăroiu, G. (2019). Is financial literacy a determinant of entrepreneurial success? Economics, Management, and Financial Markets, *14*(2), 32-38.
Loan, N. T., Hung, N. V., & Phuong, N. N. (2023). Managerial competencies and SME performance: A balanced scorecard approach. Cogent Business & Management, *10*(1), 1-22.
Luken, R., & Stares, R. (2005). Small business responsibility in developing countries. Journal of Corporate Citizenship, *20*, 81-94.
Luthans, F., Stajkovic, A. D., & Ibrayeva, E. (2004). Environmental and psychological challenges facing entrepreneurial development in transitional economies. Journal of World Business, *39*(1), 95-110.
Man, T. W., Lau, T., & Chan, K. F. (2002). The competitiveness of small and medium enterprises: A conceptualization. Journal of Business Venturing, *17*(2), 123-142.
Mead, D. C., & Liedholm, C. (1998). The dynamics of micro and small enterprises in developing countries. World Development, *26*(1), 61-74.
Mello, A., Pires, A. M., & Santos, J. (2021). Financial education programs and SME performance: A meta-analysis. Journal of Small Business Management, *59*(4), 789-812.
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, *83*(2), 340-363.
Mitchelmore, S., & Rowley, J. (2010). Entrepreneurial competencies: A literature review and development agenda. International Journal of Entrepreneurial Behavior & Research, *16*(2), 92-111.
Nadvi, K., & Häting, J. (2015). Global value chains and standards. World Development, *72*, 1-14.
Nnaemeka, O. C., Okonkwo, E. A., & Okafor, C. (2020). Entrepreneurial skills and profitability of manufacturing SMEs in Nigeria. Journal of Entrepreneurship in Emerging Economies, *12*(4), 567-588.
Nur Shuhada, K., Risyawati, M., & Norhayati, R. (2018). Halal certification adoption among Malaysian micro-enterprises. Journal of Islamic Marketing, *9*(3), 556-574.
OECD. (2017). Enhancing the contributions of SMEs in a global and digitalised economy. Organisation for Economic Co-operation and Development.
OECD. (2018). OECD/INFE core competencies framework on financial literacy for MSMEs. Organisation for Economic Co-operation and Development.
OECD. (2023). OECD SME and entrepreneurship outlook 2023. Organisation for Economic Co-operation and Development.
Okello, J. J., Narrod, C. A., & Roy, D. (2019). Food safety standards and smallholder compliance. Food Policy, *36*(3), 391-401.
Peng, M. W. (2001). The resource-based view and international business. Journal of Management, *27*(6), 803-829.
Penrose, E. T. (1959). The theory of the growth of the firm. Basil Blackwell.
Psomas, E. L., Fotopoulos, C. V., & Kafetzopoulos, D. P. (2010). Critical factors for effective implementation of ISO 9001 in SMEs. International Journal of Quality & Reliability Management, *27*(7), 814-836.
Ross, A., & Willson, V. L. (2017). Basic and advanced statistical tests. Sense Publishers.
Sampaio, P., Saraiva, P., & Rodrigues, A. G. (2009). ISO 9001 certification research: Questions, answers and approaches. International Journal of Quality & Reliability Management, *26*(1), 38-58.
Santika, T. (2019). Certification as a quality assurance mechanism. Journal of Quality Assurance, *15*(2), 112-128.
Siedlecki, S. L. (2020). Understanding descriptive research designs. Clinical Nurse Specialist, *34*(1), 8-12.
Suparno, S., & Saptono, A. (2018). Entrepreneurial competencies and financial literacy in SMEs. Journal of Entrepreneurship Education, *21*(3), 1-14.
Taherdoost, H. (2022). Data collection methods and tools for research. International Journal of Academic Research in Management, *11*(1), 10-28.
TBS. (2022). Tanzania Bureau of Standards Act, 2022. Government of Tanzania.
Terziovski, M., & Guerrero, J. L. (2014). ISO 9000 quality system certification and its impact on product and process innovation performance. International Journal of Production Economics, *158*, 197-207.
Veideman, T. (2019). Quality certification and customer satisfaction in tourism SMEs. Tourism Management, *72*, 220-230.
Veliu, L., & Manxhari, M. (2017). Managerial competencies and SME performance in South Africa. Journal of Management and Sustainability, *7*(2), 101-114.
Win Easter, A. (2017). Factors influencing SME success in Tanzania. African Journal of Business Management, *11*(15), 367-380.
World Bank. (2021). SME finance and entrepreneurship development. World Bank Group.
Yamane, T. (1967). Statistics: An introductory analysis (2nd ed.). Harper & Row.
Authors
Copyright (c) 2026 Omar Ali, Mussa Makame
This work is licensed under a Creative Commons Attribution 4.0 International License.
https://www.explorationpub.com/ueditor/php/upload/image/20220407/1649295240380692.png
