Performance of microenterprises in Ghana: a resource‐based view

Abstract

PurposeThe purpose of this paper is to assess the financial performance of microenterprises in Ghana by applying the resource‐based theory of the firm. Specifically, it is tested that if firm‐specific resources dominate sector and market‐wide effects in explaining microenterprise performance, as suggested by the resource‐based theory.Design/methodology/approachThe relevant literature for both microenterprise performance and the resource‐based theory is reviewed. Data from the 1998/1999 Ghana Living Standards Survey are analysed using ordinary least squares, followed by robustness checks.FindingsFactors embodied in firm‐specific resources jointly impact enterprise performance. However, sector/market factors also play a role, suggesting that the interaction between microenterprise, sector, and market factors helps explain enterprise performance.Research limitations/implicationsAll the constructs of the resource‐based theory cannot be tested due to data limitations.Originality/valueSmall enterprises play a key role in promoting developing country growth, but no study has evaluated microenterprise performance using this particular data set and the resource‐based theory of the firm. Future research should focus on collecting data to further validate this theory.