Analysis of Education Levels and Small Business Financial Worth in Uganda

Abstract

A common impression prevails that the higher the education of business owners the lower the business prosperity, that the highly educated individuals suffer from the ‘paralysis of analysis’ and so their firms are alleged to financially starve due to excessive financial risk analyzes. This motivated investigations of the effect of educational levels of small business owners on small business financial worth. Financial worthiness in this study is defined by the financial value of the total assets of the firm while the educational levels constitute, secondary education, post-secondary and university degree. From a heterogeneous sample of 528 small firms in Uganda evidence on these variables is presented. Using negative binomial regression, results overturn the predominant ‘paralysis of analysis’ perspective effect on small firm asset growth. Although some education levels are reported not to move with the higher financial worth levels, overall there was significant influence of progressive education level on small business financial worth. Thus, the education level of business owners augments the existing perspectives of the human capital theory, where by the different weights of the secondary, post-secondary and university degree education levels are outlined on the small business landscape. Additionally, attractions of more firm resources that are linked to the secondary education level extend the perspective of the resource based view especially in matters regarding the knowledge resources in Uganda.