Institutional Quality and the Performance of Manufacturing Small and Medium Enterprises in Uganda: the mediating role of Competitive Advantage

The purpose of this study was to establish the mediating role of competitive advantage in the relationship between institutional quality and the performance of manufacturing Small and Medium Enterprises (SMEs) in Uganda. We used a quantitative cross-sectional survey design and data were collected from 274 owners and managers of manufacturing SMEs using a self-administered questionnaire. We employed proportionate stratified and simple random sampling techniques to select final respondents following their homogeneity in the nature of businesses. Data were analysed using SPSS and smart-PLS to establish the direct and indirect relationships between study variables. The findings show that there is no significant relationship between institutional quality and performance of manufacturing SMEs. However, competitive advantage fully mediates the relationship between the study variables. This implies that institution quality can only foster improved performance of manufacturing SMEs if it unlocks the competitive advantage of businesses that acts as a conduit for better performance.