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Small and Medium Enterprises (SMEs) are central to the Zambia’s economy, but often struggle with sustained profitability. This study examined the influence of entrepreneurial characteristics on SME profitability in Zambia. Specifically, the study aimed at; (i) identifying the key influential entrepreneurial characteristic and (ii) analysing the relationships between entrepreneurial characteristics and SME profitability. Entrepreneurial characteristics examined included; innovativeness, risk-taking, autonomy, confidence/negotiation skills, readiness, need for achievement, experience and education.  Data were collected from 201 SMEs registered with the Patents and Companies Registration Agency (PACRA) across seven urban canters through structured questionnaires administered in face-to-face approach. A systematic random sampling technique was used to select respondents. Factor analysis, Pearson correlation, and chi-square tests were used to analyse the data. Findings revealed that entrepreneurial characteristics significantly influence SME profitability, with autonomy emerging as the most influential characteristic. However, correlation analysis indicated that autonomy and other characteristics including; education, experience, innovativeness, readiness, confidence, need for achievement, and risk-taking do not have a significant direct linear relationship, implying that their influence is contingent on contextual factors like finance, regulations, and markets. The study concludes that entrepreneurial characteristics alone are insufficient for profitability; instead, their influence depends on their alignment with environmental opportunities, offering insights for policy, training, and SME support interventions. Therefore, policy and practice should move beyond narrow emphasis on formal education or abstract entrepreneurial characteristics. Interventions should promote adaptive leadership, decision-making under uncertainty, and resource mobilisation that promote autonomous behaviour.  

Small and Medium Enterprises (SMEs) are crucial to Zambia’s economic growth but continue to face challenges in sustaining profitability. This study examined the effect of firm characteristics on SME profitability, aiming to (i) identify the most influential characteristic and (ii) analyse their relationships with profitability. The characteristics assessed included firm size, firm age, debt finance, liquidity, and sales growth. Data were collected from 270 SMEs registered with the Patents and Companies Registration Agency (PACRA) across seven urban centres: Livingstone, Lusaka, Kabwe, Ndola, Kitwe, Chingola, and Chililabombwe, using structured, face-to-face questionnaires. Systematic random sampling was employed, and data were analysed using factor analysis, Pearson correlation, regression, and Chi-square tests. Results showed that firm characteristics collectively have a significant effect on SME profitability, though individual relationships were weak and statistically insignificant. Among the characteristics, sales growth had the strongest influence. However, regression results (R² = 0.002, F = 0.237, p = 0.790) indicated very weak predictive power, suggesting that firm characteristics explain only 0.2% of profitability variance. This implies that SME profitability in Zambia is influenced by the combined interaction of factors rather than individual characteristics. The study contributes new insights by identifying sales growth as the most influential factor, highlighting that sales growth drives SME profitability even in resource-constrained contexts like Zambia. Policymakers should prioritise integrated strategies that foster sales growth through innovation, market diversification, and digital marketing, while enhancing liquidity through accessible, low-interest financing. Financial policy reforms should prioritize accessible, low-interest financing mechanisms that enhance liquidity and sustainable debt utilisation.