The Role of Linkages in Determining Informal And Small Firms’ Performance: The Case of the Construction Industry in Tanzania

Abstract

Despite their significant contribution to employment and to the economy in general,the performance of informal and small construction firms is still low; and has beenassociated with limited human and working capital, poor technology, limited accessto differentiated markets and productive resources. Among the addressed options toovercome these problems is by linking them to relatively large contractors. Empiricalstudies which have associated the performance of these firms to linkages are unableto show the extent to which linkages explain the performance. While controlling forselected firms’ factors, this paper tries to examine the role of linkages in explainingthe performance of firms. The results reveal that firms with reliable customers andaccess to organisational subcontracting arrangements perform better than theircounterparts.