SAMPLE RESEARCH PROPOSAL
CHAPTER ONE
This chapter covers background to the study, statement of the problem, objectives of the study, research hypotheses, scope of the study, justification of the study, definition of key terms and conceptual framework.
1.1 Background to the study
The section presents, historical background, theoretical, contextual background, conceptual background.
1.1.1 Historical Background of the study
The history of small and medium enterprises (SMEs) is a long and complex one, dating back centuries. SMEs have played a vital role in economic development, innovation, and job creation throughout history, in the Ancient Times Small businesses and craftsmen have existed since ancient times. In places like Mesopotamia, Egypt, and Greece, artisans and traders operated small businesses, producing and selling various goods and services. These businesses were essential for local economies, During the Middle Ages, guilds and craft guilds were prevalent in Europe. These were associations of craftsmen and merchants who set standards for their trades and helped regulate business practices (Dlamini, & Schutte, 2020) .
Industrial Revolution (18th and 19th centuries) marked a significant shift in the world of business (Klapper, L. (2016), while large factories dominated much of the economic landscape, many small artisans and cottage industries continued to operate, producing goods on a smaller scale. However, the rise of large-scale industrialization also posed challenges to smaller businesses, in the advent of the 20th century saw the formalization of small business support in many countries. Governments recognized the importance of SMEs in job creation and economic stability, this led to various policies and initiatives to support and protect small businesses (Ocloo, Akaba, & Worwui-Brown, 2019).
Post-World War II: The aftermath of World War II witnessed a resurgence of small businesses. In many war-torn countries, small enterprises played a crucial role in rebuilding local economies (Ardic, Mylenko, & Saltane, 2018). This period also saw the emergence of family-owned businesses that often passed down through generations (Bhat, Gijo, Rego, & Bhat, 2021). The latter half of the 20th century witnessed significant changes in the business landscape (Varga, 2021). The growth of multinational corporations and globalization posed both opportunities and challenges for SMEs. On one hand, they could access larger markets, but on the other, they faced increased competition (Sinkovics, Sinkovics, & Archie-Acheampong, 2021).
Small and Medium Enterprises all over the world are defined differently. In almost all economies, small businesses are vital for sustained growth. Evidence available indicates that Small and Micro enterprises played a major role in the growth and development of all leading economies in Asia (United Nations, 2011). In United States of America (US), small businesses provide approximately 75 percent of the net jobs added to the economy and represent 99.7 percent of all employers. There were approximately 22.9 million small businesses in 2002 in US. According to Uganda Bureau of Statistics (2018), the value of goods and services created or generated by small and medium enterprises was USD 1,363,733 million of the total USD 2,360,157 million; thus a contribution of 58%. They employed 2,704,127 people, representing 56% of employment size. In addition, they are responsible for human resource and entrepreneurial development, poverty alleviation and improved quality of life, resource mobilization, business adaptability and sustainability. A high failure rate is a huge negative for an economy, especially a developing economy with limited capital. Baseline survey of 1999 defines SMEs as those non Primary enterprises (excluding agricultural production, animal husbandry, fishing, hunting, gathering and forestry), In Uganda, Small Enterprises employ between 5 and 49 and have total assets between UGX 10 million but not exceeding 100 million. The Medium Enterprise therefore, employs between 50 and 100 with total assets more than 100 million but not exceeding 360 million (UIA, 2018). Uganda has an extensive SME sector which accounts for approximately 90% of the entire private sector, over 80% of manufactured output and contributes about 75% to the Gross Domestic Product (GDP). It takes up more than 2.5 million people in employment. It encompasses about 1,100,000 enterprises which makes the sector one of the largest employers in the country. SMEs stretch across all sectors; the service sector (49%), commerce and trade (33%), manufacturing (10%) and other fields (8%) (Ministry of Trade Industry and Cooperatives
Small enterprises in africa are said to be a characteristic feature of the production landscape and have been noted to provide about 85% of manufacturing employment of Ghana (Kaberia, & Muathe, 2021), SMEs are also believed to contribute about 70% to Ghana’s GDP and account for about 92% of businesses in Ghana.
Again, from an economic perspective, however, enterprises are not just suppliers, but also consumers; this plays an important role if they are to position themselves in a market with purchasing power: their demand for industrial or consumer goods will stimulate the activity of their suppliers, just as their own activity is stimulated by the demand of their clients. Demand in the form of investment plays a dual role, both from a demand-side (with regard to the suppliers of industrial goods) and on the supply-side (through the potential for new production arising from upgraded equipment) (Mittal, & Raman, 2021).
In view of the perennial financing challenge faced by these SMEs, many interventions have been made by the government through its recent monetary policy and financial sector reforms (Yang et al., 2021), These have substantially increased banks’ lending to the private sector but limited access to credit, high interest rates and prohibitive collateral requirements still pose significant constraints to the growth of many SME’s. Access to medium to long- term financing necessary for capital investment is still tight (Tumiwa, & Nagy, 2021).
Small business owners most often possess more information about the potential of their own businesses but in some situations, it can be difficult for business owners to articulate and give detailed information about the business as the financiers want. Additionally, some small business managers tend to be restrictive when it comes to providing external financiers with detailed information about the core of the business, since they believe in one way or the other, information about their business may leak through to competitors (Winborg and Landstrom, 2010).
Small and Medium Enterprises (SMEs) in Uganda, like in many other countries, face a range of challenges that can hinder their growth and sustainability. These challenges can vary in nature and intensity, but some of the common ones include, SMEs often struggle to access affordable capital for starting or expanding their businesses. Limited collateral, high interest rates, and a lack of financial literacy can make it difficult for them to secure loans or investments, Poor infrastructure, including unreliable electricity, transportation, and communication networks, can increase operating costs and hinder productivity for SMEs and Navigating complex and sometimes inconsistent regulations, licensing requirements, and bureaucratic red tape can be time-consuming and expensive for SMEs. SMEs often lack access to larger markets, both domestically and internationally. They may face competition from larger enterprises and struggle to find the resources needed to expand their reach. Addressing these challenges requires a multifaceted approach involving government policies, financial institutions, industry associations, and business support organizations to provide SMEs with the necessary resources, training, and a conducive business environment to thrive, it is against this background that this study intends to investigate into Influence of fuel prices on the growth and sustainability of SMEs, a case study of Kampala central business district.
1.2 Statement of the Problem
Despite the role of SMEs in the Ugandan economy, the financial constraints they face in their operations are daunting and this has had a negative impact on their development and also limited their potential to drive the national economy as expected. This is worrying for a developing economy without the enough fuel reserves or alternative sources of energy to attract big businesses in large numbers (Zahoor, et al., 2022).
Most SMEs in the country lack the capacity in terms of purchasing alternative source of power apart from relying in generators, qualified personnel to manage their activities (Kamal, et al., 2022). As a result, they are unable to publish the same quality of financial information as those big firms and as such are not able to provide audited financial statement, which is one of the essential requirements in accessing credit from the financial institution. fuel prices significantly impact SMEs, affecting their direct operating costs, supply chain, consumer behavior, financial stability, and overall competitiveness. SMEs need to monitor fuel price trends, adapt their business strategies when necessary, and explore energy-efficient and sustainable practices to mitigate the impact of fuel price fluctuations. It is against this background that this study intends to investigate into the influence of fuel prices on growth and sustainability of SMEs.
1.3 Objective of the study
The study will be guided by the following objectives;
- To analyze the influence of Domestic fuel prices on the Growth and sustainability of SMEs
- To determine the influence of external fuel prices on the growth and sustainability of SMEs
- To investigate the relationship between the prices of crude oil on the Growth and sustainability of SMEs
1.4 Research questions
- What is the influence of Domestic fuel prices on the Growth and sustainability of SMEs?
- What is the influence of external fuel prices on the growth and sustainability of SMEs?
- What is the relationship between the prices of crude oil on the Growth and sustainability of SMEs?
1.5 Conceptual frame work
Fuel prices Growth and sustainability of SMEs
Designed by the researcher 2023
The conceptual frame work indicates that the fuel prices as an independent variable is measured by the following key dimensions, Domestic fuel prices, External fuel prices and Prices of crude oil. The conceptual frame work further indicates that dependent variable; Growth and sustainability of SMEs is measured by; Increase in the number of clients, Increase in profitability and Increase in number of clients.
