The Role of Linkages in Determining Informal And Small Firms’ Performance: The Case of the Construction Industry in Tanzania

Abstract

Despite their significant contribution to employment and to the economy in general,
the performance of informal and small construction firms is still low; and has been
associated with limited human and working capital, poor technology, limited access
to differentiated markets and productive resources. Among the addressed options to
overcome these problems is by linking them to relatively large contractors. Empirical
studies which have associated the performance of these firms to linkages are unable
to show the extent to which linkages explain the performance. While controlling for
selected firms’ factors, this paper tries to examine the role of linkages in explaining
the performance of firms. The results reveal that firms with reliable customers and
access to organisational subcontracting arrangements perform better than their
counterparts.