Owner-Managers’ Financial Attitudes, Financial Well-Being, and Performance of Small and Medium-Sized Enterprises in Arusha City, Tanzania
DOI:
https://doi.org/10.59645/abr.v18i2.812Keywords:
Financial attitudes, financial performance, financial wellbeing, SMEs, Theory of planned behaviorAbstract
This study aims to analyze the effect of financial attitudes on financial well-being and financial performance. It investigates the mediating role of financial well-being in the relationship between financial attitudes and the financial performance of small and medium-sized enterprises (SMEs). There are two control variables used, namely company size and the business type of SME. A total of 250 valid responses from SME owners-managers in Arusha City, Tanzania, were examined using structural equation modeling (SEM). The results revealed that financial attitudes and financial well-being significantly influence SMEs’ financial performance, with financial well-being driving higher financial performance. Additionally, the findings indicate that financial attitudes significantly influence financial well-being among SME owners. The results also show that financial well-being significantly enhances financial performance and mediates the relationship between financial attitudes and financial performance. Furthermore, the control variables demonstrate significant effects on firm performance, where business type negatively affects performance while firm size positively influences it. These findings suggest that sectoral differences and firm scale are important determinants of SME performance. The practical implication of this study is that SMEs in Arusha City need to promote positive financial attitudes to strengthen personal financial orientation, including the ability to develop effective financial planning records, while also considering sector-specific challenges and growth strategies to improve overall business performance.
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