Driving Competitiveness: How E-Marketplace Utilization Enhances SME Performance in Tanzania’s Digital Economy
Abstract
Small and Medium Enterprises (SMEs) are of great importance to Tanzania in employment, income, and poverty reduction. Nevertheless, the utilization of e-marketplaces by SMEs remains limited, constraining their capacity to compete in the digital economy. This study examines the influence of technological, organizational, and environmental factors on e-marketplaces usage, the impact of such usage on SMEs’ performance, and the mediating effect of e-marketplace utilization between these factors and performance. Drawing upon the Technology-Organization-Environment (TOE) framework, Diffusion of Innovations (DOI) theory, and Resource-Based View (RBV), this study validates an integrated model to explain the determinants of e-marketplace utilization and SME performance. Primary data were collected from 654 SME owners, CEOs, and managers across six regions of Tanzania using a structured questionnaire. The study employed the Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the measurement and structural research models. The findings reveal that technological, organizational, and environmental factors significantly and positively influence e-marketplaces utilization. E-marketplace use also positively affects SMEs’ performance, and mediation analysis confirms that e-marketplace utilization is an important mechanism through which these contextual factors influence business performance. Theoretically, the study broadens the application of DOI, TOE, and RBV within the African SME context. Practically, the study provides policymakers, development agencies, and SME leaders with insights into how to help SMEs leverage e-marketplace platforms. The results reinforce the importance of investments in ICT infrastructure, digital skills, and institutional support to enhance e-marketplace utilization and strengthen SME competitiveness.
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