Firm competition and firm level shocks.
Competition among firms brings a well allocation of resources effectively in the economy through forcing the prices to converge to marginal cost and efficiency gain from competition (Rajlakshmi, 2014). Many firms in Uganda regardless of their location are affected by their size and level of development, and competition from other firms that are in the same line of production or operation. Kampala a Prominent businesses center in the country might soon run out of business if a decision that could see the use of Shs1.3 trillion taxpayers’ money to bailout companies in distress is not taken in their favour. There are failure for companies to comply with audit financial accounts for the period they operate and failure to pay for their debts. Not only in Uganda, also in South Africa, KPMG financial company based in Johannesburg could not keep in operation due to auditoria problems (TJ Strydom, 2017). Due to inadequacy in their operation, KPMG lost almost all of its market and as a result of running with no objective, their owners decided to close it down. In the same manner, Ugandan firms face competition form other firms in the same line of production and in the end these lack market for their products.
Occupational choice and positive shocks to the entrepreneur’s outside options. It is already well known that entrepreneurship has an enormous effect on the performance of an economy. In most countries, this fact is commonly reacted in policy in the form of subsidies aimed at increasing the number of entrepreneurs. It is well known that competition brings about locative efficiency gains by forcing price to converge to marginal cost. Efficiency gain from competition, however, is not limited to such static and locative gains. Indeed, recent theoretical and empirical studies on gains from competition have been paying increasing attention to productive efficiency and dynamic efficiency, which can be broadly defined in terms of productivity growth through innovations.
Also, under this theory, people choose either to look for employment to work and if they do not find any, one may decide to start up their own, or work for the family with no pay but little gains. According to Maitreesh Ghataka (2006), model of occupational choices by individuals with different skills, beyond the simple options of self-employment or wage-employment, by including a second choice for the self-employed. That is, an option to hire employees and so become self-employed with employees or to be self-employed without employees.
Survival versus growth
Due to the current uncertain economic situation, the first priority for small business entrepreneurs is the survival of their businesses. Many firms in Uganda fail in the first 3 – 5 years due to economic challenges and bankruptcy. According to BUYINZA (2011), Compares to small and medium firms, large firms have got a higher chance of sevival in the market. However, Buyinza say that small firms keep in businsess operation even when they are not making profites but only survive to keep running due to some expectations of the entrepreneur. Some reasons that may keep the firm even when it does not make profits is because of their future prospects that the firm may be able to do well and earn them profites in the future. Also, the higher costs of starting up a new business may force the own not close the exsiting one though it may not be doing well.
These are individual behaviors or personal qualities that shape effective leaders. Leadership traits may vary from one person to another depending on personal preferences and goals. Leadership is more than just taking control of a situation. It’s also making sure you are in tune with situations, willing to help, guide discussions and be willing to go where others fear to tread. Discovering the importance of embodying leadership traits early in a career is important to help one advance. Developing emotional intelligence and confidence before leading people and processes is part of a leader`s job description signaled to others that are ready for these responsibilities. Leadership behaviour is a big determinant of the firm size and its survival and this will be discussed in details below.
There are many factors that make leaders to be special from one another and these are described in the following paragraphs.
Kremen and Block (1996), believe that resilience are just temporary setback that maybe faced by a leader but which can be solved any time. These leaders usually maintain a good and a positive attitude and a sense of opportunity during challenges. However, in Uganda this aspect of resilience is still lacking among some business owners who getup one day and decide to close their businesses due to challenges they face. Also, resilient leaders do not only care about themselves but also think about others because they are those other people who help in business success.