Determinants of technical efficiency and financial sustainability of small scale sunflower oil processing firms in Tanzania
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Date
2019
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Publisher
Mzumbe University
Abstract
Technical Efficiency (TE) and Financial Sustainability (FS) of firms have attracted scholarly attention in both developed and developing world literature over several decades, since they are necessary conditions for maximizing output and institutional permanence respectively. However, little attention has been paid to small scale agroprocessing firms’ context in developing economies like Tanzania. Sunflower oil agroprocessing firms are of no exception as the sub-sector is dominated by small scale firms with no well documented determinants of TE and FS. To bridge this knowledge gap, this study was set to examine the determinants of TE and FS of sunflower oil processing firms (SOPF) in Dodoma and Singida regions. Firm level cross-sectional data were collected using a questionnaire from 219 SOPF randomly selected, in which firm owners were purposively selected. Nine key informants were likewise purposively selected for a qualitative follow-up interview. One Stage Stochastic Frontier Analysis (SFA), Standard and Hierarchical Multiple Linear Regression models were used to simultaneously estimate TE levels and their determinants, and to study the influence of TE on FS and firm-specific factors on FS of SOPF respectively. It was found that location of the firm, sole proprietorship form of ownership, firm age, education level and age of the owner contribute significantly to TE. Besides, TE, location and firm size contribute significantly to FS of SOPF in Tanzania. The obtained findings imply that, firms located along the highways, individually owned firms, youth-owned firms, newly established firms and firms with educated owners are more technical efficient than their counter parts. Moreover, location of the firm is a key determinant for both TE and FS of SOPF. TE is a necessary condition for the firm’s FS. Firms’ owners, the government and other agencies in the sector should therefore consider clustering firms in the designed industrial locations for easy accessibility of inputs and support services for standard conformity, nurturing entrepreneurial aspirations in tender age and improving TE is a pre-requisite for financial sustainability of SOPF in Tanzania.
Description
A Thesis Submitted in Fulfilment of the Requirements for an Award of a Degree of Doctor of Philosophy of Mzumbe University
Keywords
Cooking Oil Processing, Financial sustainability, Resource-Based Theory, Sunflower Oil Processing Firms, Agro-processing Sector - Tanzania, Millennium Development Goals (MDGs), Production and Efficiency, Technical Efficiency
Citation
APA