The Role of Venture Capital Funding on the Performance of Small and Medium-Sized Enterprises (SMEs) in Lusaka, Zambia: A Case Study
- 1 Graduate School of Business, The University of Zambia, Lusaka, Zambia
- 2 Graduate School of Business, The University of Zambia, Lusaka, Zambia
- 3 Technology Advisory and Development Unit (TDAU), The University of Zambia, Lusaka, Zambia
Abstract
This study investigates how venture capital funding impacts SME performance in Lusaka, Zambia. SMEs are crucial for Zambia’s economic growth, but face challenges accessing financing, especially in their early stages. Venture capital offers potential solutions by providing capital and expertise for SMEs to thrive. However, there’s a gap in understanding how exactly venture capital influences SME growth and performance, and the contextual factors at play. The research, based on the economic theory of the entrepreneur, used a mixed study design and achieved a 100% response rate from 102 SME owners/managers through questionnaires. Analysis reveals a positive correlation between venture capital funding and SME performance, along with the importance of financial management skills. Challenges include limited access to venture capital, awareness issues, and regulatory hurdles. Recommendations include developing growth-centric business plans and enhancing awareness of venture capital benefits for SMEs.
- Abor, J., & Quartey, P. (2010). Issues in SME Development in Ghana and South Africa. International Research Journal of Finance and Economics, 39, 218-228.
- Aman (2020). Role of Venture Capital Funding on the Performance of Small and Medium-Sized Enterprises (SMEs) in Russia. Journal of Entrepreneurship & Economic Development, 2, 45-57.
- Amissah, M. (2009). Angel Investing in Zambia: Opportunities and Challenges. Intern a tional Journal of Business Angels, 5, 189-205.
- Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Small vs. Young Firms across the World: Contribution to Employment, Job Creation, and Growth. World Bank Policy Research Working Paper. https://doi.org/10.1596/1813-9450-5631
- Babbie, E., & Mouton, J. (2002). The Practice of Social Research. Oxford University Press.
- Baldwin, M., & Rafiquzzaman, M. (2020). Role of Financial Management Skills on the Performance of SMEs in Malawi. African Journal of Business Management, 14, 28-40.
- Chung, D., & Park, S. (2017). The Role of Venture Capital Funding in SME Growth: Evidence from Zambia. International Journal of Entrepreneurship, 21, 345-364.
- Creswell, J. W. (2013). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Sage Publications.
- David (2023). Relationship between Venture Capital and Other Sources of Finance: A Literature Review. Journal of Finance Studies, 13, 102-115.
- International Monetary Fund (IMF) (2021). Zambia: Economic Growth and Develo p ment Outlook. IMF Economic Outlook Report.
- Jabareen, Y. (2009). Building a Conceptual Framework: Philosophy, Definitions, and Procedure. International Journal of Qualitative Methods, 8 , 49-62. https://doi.org/10.1177/160940690900800406
- Jensen, A., & Meckling, W. (2019). Role of Venture Capital Funding on the Performance of Small and Medium-Sized Enterprises (SMEs) in Australia. Australian Journal of E n trepreneurship, 7, 78-91.
- John (2023). Influence of Venture Capital Financing on Start-Up Success: A Literature Review. Entrepreneurship Research Journal, 11, 145-165.
- Kwesiga, A., & Franzel, S. (2014). Role of Small and Medium-Sized Enterprises (SMEs) in Economic Development: Evidence from Zambia. Journal of African Economies, 23, 647-676. https://doi.org/10.1093/jae/eju023