Owner-Manager Competencies and Performance of the Firms: Evidence from Small Restaurant Businesses in Urban Tanzania

This study was set out to examine the influence of owner- manager’s competences on the performance of small restaurant businesses in urban Tanzania since there are patchy empirical evidences on the same. To achieve this, criterion and simple random sampling techniques were employed to obtain a sample of three hundred, ninety two (392) small restaurant businesses from the list of all licensed small restaurants in Ilala and Dodoma district. Information was collected from owner-managers of these entities by using structured questionnaires. Data was analyzed both descriptively and by using structural equation modelling for making inference. Confirmatory Factor Analysis was performed to validate the items measuring the owner-manager entrepreneurial, managerial and functional competencies as latent variables. Performance of small restaurant was measured subjectively by considering the number of customer’s dynamics and changes in lifestyle of the owner-manager as a result of the business undertaken over past three years of operation. It was found that owner-manager’s managerial and functional competencies contribute significantly to the performance of the small restaurant businesses in urban Tanzania. This is true but they cannot be in operation unless entrepreneurial competencies are in place. This implies that, performance relies on base (entrepreneurial) and operational (managerial and functional) that need to be improved. As such, policy makers may not only rely on entrepreneurial aspects but also extend to the managerial and functional aspects of performance.