Social influence and saving behavior as moderated mediated by self-control and financial literacy among micro and small enterprise owners in Kampala, Uganda

Abstract

The owners' money management may impact on a micro or small enterprise's ability to survive. This is only possible through planning and embracing saving. However, the survival of these enterprises is still of concern especially those in Sub-Saharan Africa (SSA), particularly in Uganda; where three out of five Micro and Small Enterprises (MSEs) fail due to individual poor saving habits. The ability to handle money successfully necessitates caution in spending decisions, allowing business owners improve and sustain their businesses. The main objective of the study was to determine the moderating role of self-control on the relationship between Social Influence and Saving Behavior as mediated by Financial Literacy. Specific objectives were to examine the effect of; Social Influence, Financial Literacy and Self-Control on Saving Behavior of micro and small enterprise owner, to determine the effect of Social Influence and Saving Behavior, the mediating effect of Financial Literacy on the relationship between Social Influence and Saving Behavior, to examine the moderating role of Self-Control; in the relationship between Financial Literacy and Saving Behavior; Social Influence and Saving Behavior. The study additionally looked at how self-control affected the strength of the indirect link between social influence and business owner saving behavior via financial literacy. This research was guided by the Social Cognitive Theory, Behavioral Life Cycle Hypothesis and the Unified Theory of Behavior. The research adopted a positivism research paradigm in addition to an explanatory research design. Multi-stage sampling technique was utilized in collecting primary data from the target population of 46,270 and a subsequent sample size of 430 MSE owners operating in Kampala, Uganda, using a self-administered structured questionnaire. The study variables were all continuous, and they were all measured by adapting previous study measures. Data was analyzed by Pearson correlation coefficient, factor analysis, standard multiple and hierarchical regression analyses. The study found that; Social Influence (β=.590, p=.000), Financial Literacy (β =.244, p=.000) and Self-Control (β =.273, p =.000) positively and significantly affects business owner saving Behavior. In addition, results show that Social Influence directly influences Financial Literacy (β =.273, p =.000), Financial Literacy partially mediates the relationship between Social Influence and business owner saving Behavior (β =.065, CI=.033, .106), Self-Control moderates the link between; Financial Literacy and owner saving Behavior (β = -.137, p=.000) and Social Influence and owner saving Behavior (β =-.089, p=.009). Finally, Self-Control was found to moderate the strength of the indirect relationship between Social Influence and owner Saving Behavior via Financial Literacy, and the conditional indirect effect is much stronger at lower levels of Self-Control (β =-.037, CI =-.067, - .014).The study findings showed that, in addition to having social networks and being financially literate, business owners ought to have some amount of self-control in managing their finances, enabling them self-finance their enterprises and perhaps grow their businesses and sustain them in a long run. It is on this basis that government is recommended to implement policies aimed at encouraging savings of Micro and Small Enterprises to support their self-financing through internally generated funds as well as deepening the financial services sector through business deposits, hence fostering the economic growth of the country. Future research could be undertaken using a longitudinal or a qualitative evaluation using these study variables.