Fortitude, Sense of Coherence, and Financial Resilience of Small and Medium Enterprises in Mbale City.
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Date
2024-07-24
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Makerere University Business School
Abstract
Financial resilience is a prerequisite for any small and medium enterprise to thrive since finance is the lifeblood of any organization. The current study examined the relationship between fortitude, sense of coherence, and financial resilience of small and medium enterprises in Mbale City. The objectives were: to examine the relationship between fortitude and financial resilience; to establish the relationship between a sense of coherence and financial resilience, and to examine the joint effect of fortitude and sense of coherence on the financial resilience of SMEs in Mbale City. This study was informed by the Conservation of Resources (COR) theory, which was initiated by Hobfoll (1989). The study used a cross-sectional design with a quantitative approach to data collection. The unit of analysis was the small and medium enterprises in Mbale City. A sample size of 341 SMEs in Mbale city was targeted, and responses were obtained from at least 268 enterprises, giving a response rate of 78.5%. Factor analysis determined the adequacy of the variables studied. To obtain this sample, a stratified random sampling technique was applied, where SMEs were categorized according to their respective characteristics by the Uganda Bureau of Statistics (UBOS, 2011), namely, manufacturing SMEs, Trade SMEs, and Services SMEs, and later simple random sampling was applied to select elements from each stratum. The CVI tested the validity of the instrument, while the Cronbach Alpha coefficient tested reliability, where the variables exceeded the threshold of 0.7. Primary data was obtained using a structured questionnaire and analysed using SPSS v. 25 to generate descriptive, correlation, and hierarchical regression analyses. Results revealed that investors in SMEs apply fortitude and a sense of coherence to attain financial resilience in the entity. Correlation results indicated that fortitude (r= .436**, P-value < 0.01) and sense of coherence (r= .551**, P-value < 0.01) have a significant and positive relationship with the financial resilience of SMEs in Mbale City. Furthermore, hierarchical regression analysis indicated that fortitude (β =.591) and sense of coherence (β = .436) have better effects on financial resilience. However, fortitude and a sense of coherence jointly contribute to 69.2% (Adjusted R-Square = 0.692) prediction of financial resilience. Investors incorporate fortitude and coherent behaviour to overcome unforeseen challenges to attain financial resilience. Investors in SMEs should continuously integrate fortitude and a sense of coherence in whichever situation they face to withstand and thrive amidst economic challenges in their operations. The government should also develop economic policies that encourage SMEs to apply fortitude and a sense of coherence to overcome difficulties to achieve financial resilience attributed to the attainment of Vision 2040 through the economic transformation of the private sector in Uganda.
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This is a master's thesis
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Citation
Aketch, S. (2024). Fortitude, Sense of Coherence, and Financial Resilience of Small and Medium Enterprises in Mbale City. Makerere University Business School.