Firm Age and Performance in Kampala, Uganda: A Selection of Small Business Enterprises

Abstract

This study sought to find out the effect of firm age on performance, using both financial (net profit before tax) and nonfinancial (operational) performance indicators. An ex post facto, descriptive correlation, descriptive comparative and cross-sectional survey design was used. A sample of 409 firms was used with age ranges in six categories. Cronbach’s Alpha reliability coefficient test (α=0.884) and the Content validity ratio (CVR) for the instrument on performance was 0.93 (Mean CVR=0.93). Two hypotheses were tested: (i) there is a significant difference between firm age and the level of performance and (ii) there is a significant positive relationship between firm age and performance. Applying parametric statistical techniques, on way ANOVA and Regression analysis, both hypotheses were accepted. The effect size was revealed as financial (η2 = 0.99) and non financial (η2 = 0.07). The study also found that both financial and non financial indicators could be used as effective measures of performance. Suggestion was made that emphasis should not only be placed on starting up, but also on the sustainability and longevity of the firms that are operational in Kampala, Uganda.