An Entrepreneurship Safari - Examining the effect of the entrepreneurship ecosystem on SME growth in the Republic of Tanzania

Abstract: The importance of SMEs for economic growth has made the development of the sector a priority for many developing countries. Several studies identify obstacles impeding growth of SMEs, such as a lack of access to capital, poor infrastructure and bureaucratic procedures. This thesis aims to take a holistic approach to these obstacles and determine if interactions in the entrepreneurship ecosystem can explain how and why these obstacles affect growth through identifying the underlying cause. A qualitative study exploring the perception of stakeholders in Tanzania is employed and together with a review of the SME policy analysed to determine the state of the ecosystem and the constraints of the domains therein. This thesis finds that it is mainly the culture and a lack of trust that causes obstacles that affect growth of SMEs in Tanzania because it reduces the legitimacy of entrepreneurial activities. Further it finds that compliance to normative constraints carries more weight than to regulative ones in producing legitimacy. It is suggested that active efforts to change the culture are implemented and that media is given a central role in changing social norms.