GOVERNMENT SUPPORT, E-MARKETPLACE UTILIZATION, AND SME PERFORMANCE IN TANZANIA: A MEDIATION MODERATION ANALYSIS

Abstract

The COVID-19 pandemic has accelerated the growth of the digital economy, highlighting the critical role of e-marketplaces in enhancing the performance of small and medium enterprises (SMEs). This study aims to examine the influence of government support and the use of e-marketplaces on SMEs’ performance in Tanzania. Specifically, it investigates the mediating role of e-marketplace usage in the relationship between government support and SMEs’ performance, as well as the moderating effect of government support on the relationship between e-marketplace usage and SMEs’ performance. Grounded in the resource-based theory (RBV), this study collected primary data from 654 SME owners, CEOs, and managers in Tanzania using a structured questionnaire. The data was analyzed using Partial Least Square Structural Equation Modeling (PLS-SEM). The findings reveal that government support has a significant positive influence on SMEs use of e-marketplaces (H3 supported, β=0.204, p=0.000). Moreover, the use of e-marketplaces strongly mediates the relationship between government support and SMEs’ performance (H4 supported, β=0.077, p=0.000). However, the study found no significant moderating effect of government support on the relationship between e-marketplace usage and SMEs’ performance (H5 not supported, β=0.034, p=0.333). This study provides important policy implications, suggesting that government efforts should focus on enhancing digital infrastructure, capacity building, and supportive policies to encourage greater adoption of e-marketplaces and foster SMEs’ growth within the digital economy.