Economic Sustainability of Small to Medium Enterprises (SMEs) in Zimbabwe: The Impact of Fiscal Incentives and Entrepreneur Work Engagement

Abstract

This study aimed at investigating the impact of fiscal incentives and work engagement on economic sustainability of SMEs in Zimbabwe. The study adopted fiscal incentives, representing external factors, and work engagement, representing factors internal to the organization, as independent variables and economic sustainability assessed in terms of profitability through turnover and return on investment (ROI) as the dependent variable. Survey data was obtained from 120 SMEs in Zimbabwe using semi-structured questionnaires. Research participants were purposively selected to ensure the results are representative of all players within the SME sub-sector in Zimbabwe. Correlation and regression analysis were used to test the hypotheses that fiscal incentives and work engagement are positively associated with economic sustainability of SMEs in Zimbabwe. The study established that there is a significant positive relationship between fiscal incentives & work engagement and economic sustainability of SMEs in Zimbabwe. However, it was revealed that most entrepreneurs in Zimbabwe were not aware of the availability of and their eligibility for fiscal incentives. As such, the study concluded that economic sustainability of SMEs in Zimbabwe is mainly driven by internal people factors than the influence of fiscal incentives. The study also revealed that majority of entrepreneurs in Zimbabwe were pushed into establishing businesses by negative economic conditions such as unemployment than free-will and business enthusiasm. This establishment therefore, confronts the self-determination theory as it proved limited insight into the psychological mechanisms involved in driving entrepreneurial spirit. The study however further concluded that if properly administered, fiscal incentives have the capacity to significantly impact economic sustainability of SMEs in Zimbabwe. Study findings will contribute towards the development of a more satisfactory descriptive theory for a broader approach to economic sustainability of SMEs in Zimbabwe

Keywords: Fiscal incentives, Work engagement, Economic sustainability

DOI: 10.7176/PPAR/9-12-03

Publication date: December 31^st 2019