Frugality and Tangible Asset Values in small firms of Eastern and Northern Uganda

Abstract

This study aimed at investigating relatedness of frugality and tangible asset values in small firms in eastern and northern Uganda. Frugality in this study is defined as careful use of resources in firms. Frugality is operationalized as spending discipline, resource-reuse and delayed gratification. Tangible asset value is physical resources owned by the firm measured in Uganda shillings (UGX) currency value. Using a cross-sectional research design, data were collected from 242 small business owner/managers. Study results indicated that majority of the respondents were men (64 percent) most respondents were in the age bracket 20-49 and most firm operators’ educational level was university degree and O- level, respectively. On average, Tangible asset values were UGX 62 Million. Frugality data were analyzed using a multiple correspondence analysis (MCA) and two frugality dimensions were obtained that explained 82 percent variance in fru gality. MCA results also indicated that delayed gratification and spending discipline items significantly contributed to frugality dimensions, unlike resource-reuse items. A one-way ANOVA was conducted to determine if asset value was different for small business owners who had frugality attributes and those without frugality attributes. Data mean ± standard error. Participants were classified into two groups: Don’t have (n = 112), and Have attributes (n =92). There was a statistically significant difference between groups [F (1,203) = 8.32, p = .0044]. Since those small firm operators with mindfulness on business resource use have a less average of asset values, unlike firms that have frugality attributes, even when resources reuse is deployed by small firm operators in Uganda, such operators attract more business assets by applying frugality attributes. This study focused on frugality and tangible asset values within northern and eastern Uganda thereby limiting generalization to other regions of Uganda. Small business owner and managers are provided with information emphasizing the importance of frugality as a foundation towards building the tangible asset values in firms. The results have important societal implications. Spending and delayed gratification facets of frugality that lead to more assets in small firms in rural setups were identified. This is believed to be the first empirical investigation of relationship between frugality and tangible asset values in eastern and northern Uganda.