Michael Karikari Appiah

Department of Economics,

Universiti Malaysia Terengganu,

Malaysia

kofikarikari@yahoo.com

Applicability of theory of constraint in predicting Ghanaian SMEs investment decisions

Bayu Taufiq Possumah

Department of Economics,

Universiti Malaysia Terengganu,

Malaysia

bayu@umt.edu.my

Nizam Ahmat

Department of Economics,

Universiti Malaysia Terengganu,

Malaysia

nizamahmat@umt.edu.my

Nur Azura Sanusi

Department of Economics,

Universiti Malaysia Terengganu,

Malaysia

nurazura@umt.edu.my

Abstract. This study investigated dimensions of SME’s constraints and decisions to Invest in the Ghanaian Oil and Gas Sector. Using a binominal regression model we analyzed primary data from 497 local SMEs. The study found that SMEs with inadequate capital, had high level of competition, had high corruption perception, lacked policy awareness, lacked adequate external credit facilities, had inadequate information, lacked managerial capabilities, lacked technological  capabilities were less likely to invest in the Ghanaian oil and gas sector. Per contra, inadequate human resources capabilities, inadequate entrepreneur characteristics exerted no significant influence on SMEs decisions to invest in the Ghanaian oil and gas sector. This study has implications on oil and gas policies, investment decisions and future research. Particularly Ghanaian government is required to expedite and enforced the Local Participation in Petroleum Activities Policy under the Petroleum Regulations. This study could be replicated within other emerging economies using different models.

Received: December, 2017

1st Revision: February, 2018

Accepted: April, 2018

DOI: 10.14254/2071-8330.2018/11-2/14

JEL Classification: D02, O16, O17, P31

Keywords: Ghanaian SMEs, Logit model, oil and gas, perceived investment constraints