Business Linkages and their Effects on Firm Performance A case of Sunflower oil Manufacturing Firms in Tanzania

Abstract

Business networking is perceived to be one of the key factors determining performance of manufacturing firms. Using data from a survey of 144 micro and small sunflower manufacturing firms from the central agricultural zone of Tanzania, and applying Logit and OLS estimations to address the question of choice and the effect of networking, this study finds that, edible oil manufacturing business in sunflower sub sector in the study area is dominated by Micro and Small firms. With regard to business networking among firms, results suggest that the majority of the firms, about 83.3% of the firms do practice some business networking of different nature. Motivating factors for firm commercial networking as captured in the logit model are many, but the significant ones are firm size, firm age and firm profitability. Networking however, does not contribute significantly to performance of micro and small firms in the study area. The findings suggest that development of strong and meaningful market-based networking is unlikely where the firms involved are micro or small applying more or less equal technology in their production process.