Influence of institutions on value creation activities of micro and small enterprises in rural Tanzania

Abstract

Economic development initiatives in Tanzania recognise the importance of enterprises in the country’s economy. Similarly, rural entrepreneurship has the potential to stimulate the rural economy. The promotion of rural entrepreneurship can help to fulfil that potential, with creation of value for customers as one of the promotion initiatives. Institutions govern the value creation activities of enterprises. By focusing on the wood furniture industry, this research article analyses the influence of institutions on the value creation activities of rural Micro and Small Enterprises (MSEs) in Tanzania. The institution theory and the value chain model are its theoretical bases. The Mvomero district is the study area. Interviews and discussions are the data collection methods used in this qualitative study and 14 cases are analysed. The study finds that four institutional concerns influence the value creation activities of enterprises and these are: regulations compliance; regulations enforcement; regulations knowledge; and regulatory costs. However, the study excludes informal institutions. Its findings may be beneficial to stakeholders such as policymakers, development stakeholders, researchers – as well as rural MSEs.

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