Abstract/Summary

The thesis analyses the closely related issues of small business owner-managers’ incomes and the barriers to the growth of their firms. To establish these issues, the study uses a combination of qualitative and quantitative methods based on a survey of 450 firms in the western (rural) part of Uganda. Questionnaires and interview guides were used as the data instruments. The data collection was done in 2016 between June-August. Fifteen different hypotheses were generated and tested under the quantitative method using the ordered probit modelling strategy. Most SME (Small and Medium Enterprise) research has been done in developed countries. However, rural entrepreneurs in developing countries face problems of a somewhat different nature and severity. This thesis is therefore organised around two main research questions which are structured around the experiences faced by entrepreneurs in developing countries. The objective of the work that informs the first research question is to understand the characteristics of the entrepreneur and firm that appear to explain differences in entrepreneurial income in SMEs in Uganda while the second research question investigates the barriers hindering the growth of SMEs in Uganda. The findings of this study indicate that some characteristics of the entrepreneur and firm are significant in determining the growth of SMEs in Uganda. These characteristics are notably outlined as: the age of the entrepreneur, the number of children of the entrepreneur, the education of the entrepreneur, the ownership structure of a firm, the size of a firm, the location of a firm and the industry of a firm. However, characteristics like gender, marital status, type of entrepreneur were not significant in the model used. Also, unlike most previous studies done in developed countries, this study does not find the age of a firm significant in determining entrepreneurial income. This finding is instrumental to the policy makers because it could suggest that despite the common thought that older firms automatically get higher entrepreneurial income, the study finds that this is not necessarily true. The policy makers should deduce ways of creating a conducive business environment for these entrepreneurs/firms. Through interview guides under the qualitative method, the respondents in the study presented eight core barriers that have been identified as detrimental factors to the growth of SMEs in the western part of Uganda. These were corruption, government policy, electricity insecurity, poor infrastructure, high taxes, access to finance, forced mutual help and risk attitude. Empirical studies in developing countries have identified similar barriers while investigating factors hindering the growth of SMEs. Therefore, these barriers were drawn from the literature and so, the literature thus informed the survey design. The respondents in the study also suggested recommendations that the government of Uganda should put in place to solve the underlining barriers. These are documented at the end of this thesis.