The relationship of personality to cognitive characteristics and SME performance in Tanzania

Purpose Focussing on the relationship between personality traits and small and medium enterprise (SME) performance in Tanzania's furniture sector, the purpose of this paper is to examine the effect of cognitive characteristics as a mediating variable. Design/methodology/approach A total of 300 SMEs in furniture sectors from four different regions in Tanzania were involved in this study. Structural equation modelling approach was used to test simultaneously the direct and the indirect effects of the characteristics of the entrepreneurs on the SMEs performance. Findings The findings show that personality traits have a significant influence on SMEs performance through cognitive characteristics. Research limitations/implications The study's data were collected from businesses in only one industry (furniture) in Tanzania. Future research may extend the approach to other business sectors. Practical implications Since entrepreneurial characteristics are considered an important driver of a country's economic development and performance, it is hoped that governments and sector associations implement suitable policies and incentives to develop an entrepreneurial culture among citizens. Originality/value Current knowledge about entrepreneurial characteristics and their relationship with SME performance in developing countries, especially Tanzania, is very limited. The present study suggests that cognitive characteristics are necessary mediators of the link between personality traits and SME performance.