The high entrepreneurial activity demonstrated in Uganda does not translate into sustainable business performance, particularly in the microfinance sector. It is however, not clear whether the institutions’ inability to operate in a sustainable manner is related to the way their management deals with the impact of their external environment. The purpose of this paper is therefore to analyze how managing the impact of the external environment affects the performance of microfinance institutions. Data for this study was collected using a cross-sectional survey involving administration of questionnaires to a random sample of 64 managers, 177 employees and clients 213 selected MFI
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