FACTORS INFLUENCING THE PERFORMANCE OF GROWTH ORIENTED SMALL AND MEDIUM ENTERPRISES IN THIKA SUB-COUNTY
Abstract
SMEs play a key role in Job creations, technology and innovation growth, and economic growth and development. Despite the significant role they play, their growth to maturity is not fully guarantee and is likely to die due to poor performance and lack of competitiveness. Out of every 5 SMEs that are started, 3 die within the first two years. Such death or retardation result to loss of livelihood, retarded economic development, and failure to develop innovation and technology in a country. The purpose of the study was to investigate the factors which influence the performance of growth oriented SMEs in Thika Subcounty of Kiambu County. This study was guided by two specific objectives: Investigate the influence of innovation on the performance of growth Oriented Small and Medium Enterprises and to find out the influence of entrepreneurial orientation on the Performance of growth Oriented Small and Medium Enterprises on the performance of growth Oriented Small and Medium Enterprises in Thika Sub County. The study used descriptive survey design to investigate both the dependent and independent variables. The study targeted a population of 300 growth oriented SMEs which are over 3 years in operation and had been licensed by the Thika Sub county of Kiambu County. The data was collected using self-administered questionnaires and document analysis. The regression analysis done indicated that internationalization had a positive influence on the performance of Growth oriented SMEs and that innovation had a significant positive influence on the performance of SMES in Thika Sub County. The study found out that Innovation influenced performance of growth oriented most. The study recommended that , entrepreneurs keep on scanning the environment to establish unmet need by introducing new products into the market, cutting on their production cost by establishing cheaper but quality raw materials, introduction of new production methods, which are cost effective, but producing quality and competitive product and finally identification of new unmet market through market segmentation and Introduction of the above named aspects of innovation would lead to increased performance by the growth oriented SMEs. For the growth oriented SMEs to perform optimally they needed to be proactive in their business. The researcher recommended that the research on the above named factors to be conducted in other Counties with an aim of providing adequate data for generalization.
Key Words: Innovation, entrepreneurial Orientation, Performance, SMEs
Full Text:
PDFReferences
Anderson, S. (2011), “International entrepreneurship, born global and the theory of Effectuation”, Journal of Small Business and Enterprise Development, Vol. 18 No. 3, pp. 627-643
Alkali, M., Isa, A., & Baba, H., (2012).A conceptual model of factors affecting business Performance among the manufacturing sub-sector of small business enterprises in Nigeria (Bauchi state), 4 (5).
Aloulou, W., & Fayolle, A. (2005). A Conceptual Approach of Entrepreneurial Orientation within Small Business Context. Journal of Enterprising Culture, 13(1), 24-45
Ang, J., & Cheng, Y. (2011). The Endogeneity of Information Asymmetry and Corpo Rate Financing Decisions. Journal of Financial Research, 34(3),
Antonio Majocchi, Luciana Dalla Valle & Alfredo D'Angelo (2015) Internationalization, cultural distance and country characteristics: a Bayesian analysis of SMEs financial performance, Journal of Business Economics and Management,
Asamoah, E., (2014),"Customer based brand equity (CBBE) and the competitive Performance of SMEs in Ghana", Journal of Small Business and Enterprise Development, Vol. 21 Iss 1 pp. 117 – 131.
Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Small vs. Young firms across the world: Contribution to employment, job creation, and growth (World Bank Policy Research Working Paper 5631).
Bechhofer, F., & Paterson L. (2008).Principles of research design and social science New York: Routledge.
Benkraiem, R., & Gurau, C. (2013). How do corporate characteristics affect capital structure decisions of French SMEs? International Journal of Entrepreneurial Behavior& Research, 19(2), 149–164.
Blumberg, BF & Letterie, WA, 2008. Business starters and credit rationing. Small Business Economics 30, 187–200.
Bowen, M, Morara, M & Mureithi, S, 2009. Management of business challenges among Small and micro enterprises in Nairobi, Kenya. KCA Journal of Business Management 2(1), 16–31.
Brealey RA, Myers SC, and Allen F (2008). Principles of Corporate Finance – 9th Editions. McGraw-Hill/Irwin, New York.
Brem, A. and Voigt, K.-I. (2009), “Integration of market pull and technology push in the Corporate front end and innovation management-insights from the German software Industry”, Technovation, Vol. 29 No. 5, pp. 351-367.
Brown, J. David .Earle, John S. and Lup, Daniela (2005) what makes small firms grow. Finance, human capital, technical assistance, and the business environment in Romania. Economic Development and Cultural Change, 54 (1). pp. 33-70. ISSN 1539-2988.
Bunyasi, G., (2015). Entrepreneurial factors that influence growth of Small and Medium Enterprises in Thika East. Unpublished PhD thesis.
Cooper, D.R., & Schindler P.S. (2008).Business Research Methods. (10th ed). Singa Pore: McGraw-Hill.
Covin, J. G., Green, K. M., & Slevin, D. P. (2006). Strategic process effects on the entrepre Neurial Orientation-sales growth rate relationship. Entrepreneurship Theory & Practice, 30(1), 57–81.
Delmar, F and Wiklund, J (2008), ''the effect of small business managers' growth motivation firm growth: a longitudinal study an Italian investigation''. Entrepreneurship. Theory and practice, Vol 32 No.3 pp.437-457.
Dinh, Hinh T.; Clarke, George R.G.. 2012. Performance of Manufacturing Firms in Africa : An Empirical Analysis. Washington, DC: World Bank.
Dobbs, M. and Hamilton, R.T. (2007), “Small business growth: recent evidence and new Directions”, International Journal of Entrepreneurial Behavior and Research, Vol. 13 No. 5,pp. 296-322.
Emmanuel Selase Asamoah, (2014),"Customer based brand equity (CBBE) and the Competitive Performance of SMEs in Ghana", Journal of Small Business and Enterprise Development, Vol. 21 Iss 1 pp. 117 – 131.
Fernando Muñoz-Bullón Maria J. Sanchez-Bueno, (2011),"Is there new evidence to show that product and International diversification influence SMEs' performance?", EuroMed Journal of Business, Vol. 6 Iss 1 pp.63 – 76.
Gabriel son, P. and Gabriel son, M. (2013), “A dynamic model of growth phases and Survival in international business-to-business new ventures: the moderating effect of Decision-making logic”, Industrial Marketing Management, Vol. 42 No. 8, pp. 1357-1373.
Government of Kenya Sessional paper No 2 of 2005 on Development of Micro and Small Enterprises for Wealth and Employment creation for poverty Reduction; Nairobi, Kenya; Government Printers.
Helen Reijonen, Szandra PárdányiSasu, Tuominen Tommi Laukkanen & Raija Komppula, (2014),"Are Growth oriented SMEs more likely to adopt market and brand orientations?", Journal of Small Business and Enterprise Development, Vol. 21 Iss 2 pp. 250 – 264.
Hermann Frank, Dietmar Roessl. 2015. Problematization and conceptualization of “Entrepreneurial SME Management” as a field of research: overcoming the size-based Approach. Review of Managerial Science 9, 225-240.
Hooi, L.W. (2006). Implementing e-HRM: The readiness of SME manufacturing company In Malaysia. Asia Pacific Business Review, 12(4), 465-485.
Keh, H. T., Nguyen, T. T. M., & Ng, H. P. (2007). The effects of entrepreneurial orientation and marketing Information on the performance of SMEs. Journal of Business Venturing, 22(4), 592–611.
Kenya National Bureau of Statistics (2007) on informal Manufacturing Activities in Kenya .www.afdb.org/fileadminluploads/afdb/documents/ and /kenya-Eng.pdf.
Leitao, J & Franco, M, 2011. Individual entrepreneurship capacity and SME performance: A Human and organizational approach. African Journal of Business Management 5(15), 6350–65
Linder, J.C., Jarvenpaa, S. and Davenport, T.H. (2003), “Towards an innovation sourcing strategy”, MIT Sloan Management Review,
Leonidas A. Zampetakis, Melina Vekini&VassilisMoustakis (2011) Entrepreneurial Orientation, access to financial resources, and product performance in the Greek commercial TV industry, The Service Industries Journal, 31:6, 897-910.
Lan, Q., and Wu, S., (2010),"An empirical study of entrepreneurial orientation and degree of Internationalization of small and medium-sized Chinese manufacturing enterprises", Journal of Chinese Entrepreneurship, Vol. 2 Iss 1 pp. 53 – 75.
Lu, J. and Beamish, P.W. (2004), “International diversification and firm performance: the S-curvehypothesis”, Academy of Management Journal,.
Hermann Frank, DietmarRoessl. (2015). Problematization and conceptualization of “Entrepreneurial SME Management” as a field of research: overcoming the size-based approach. Review of Managerial Science 9, 225-240.
McClelland, D.C. (1976). The Achieving Society, Princeton, N.J.: Van Mostrand. New York: Irvington Publishers.
McClelland, D.C. (1987). Human Motivation Cambridge, England: Cambridge University Press.
Michael Muchiri & Adela McMurray (2015), Entrepreneurial orientation within small firms: a critical review of why leadership and contextual factors matter, Small Enterprise Research, 22:1, 17-31.
MiikaVaris, Hannu Littunen, (2010),"Types of innovation, sources of information and Performance in Entrepreneurial SMEs", European Journal of Innovation Management, Vol.13Iss 2 pp. 128-154.
Minna Saunila, Sanna Pekkola, Juhani Ukko, (2014),"The relationship between innovation capabilities and performance: The moderating effect of measurement", International Journal of Productivity and Performance Management, Vol. 63 Iss 2 pp. 234-249
Miller, D. (2011). Miller (1983) revisited A reflection on EO research and some Suggestions for the future. Entrepreneurship Theory & Practice, 35(6), 873–894.
Mwangi, S.M., & Namusonge, M.J. (2014). Influence of innovation on small and medium enterprise (SME) growth- a case of garment manufacturing industries in Nakuru County. International Journal for Innovation Education and Research, 2(5),
Mwangi G.G., (2011), "An analysis of factors affecting the performance of small and medium enterprises in the manufacturing sector in Kenya"
Mugenda, A. & Mugenda O M (2003); Research Methods, Quantitative and Qualitative Approaches, ACTS Press, Nairobi
Myers, S.C. (1984). The capital structure puzzle, the journal of finance, 39 (3), pp. 574-592.
Nyamita,M., HariLall Garbharran, H., and Dorasamy, N., (2014).Factors influencing debt Financing decisions of corporations –theoretical and empirical literature review,12(4)
Satish, K., & Purnima, R., (2015). A conceptual framework for identifying financing preferences of SMEs, Small Enterprise Research, 22:1, 99-112.
Namusonge, G. (2011). Determinants of growth-oriented small and medium enterprises in Kenya. Waldshut-Tiengen, BW: Abe Books
Njeru A.W (2014). Determinants of Choice of Source of Entrepreneurial Finance for Small and Medium Size Enterprises. A Survey of Thika District, Kenya. Unpublished PhD thesis.
Omar, S., Arokiasamy, L. & Ismail, M. (2009). The Background and Challenges Faced by the Small Medium Enterprises. A Human Resource Development Perspective. International Journal of Business and Management, (4) 10.
Ouma, A. K., & Munyoki, J. M. (2010). An investigation into the marketing strategies used by Commercial banks in managing service breakdown among SME customers. Some experiences in Kenya. In 1st AIBUMA Conference held in August 2010, Nairobi: SME
Pansiri, J., & Temtime, Z. T. (2008). Assessing managerial skills in SMEs for capacity building. Journal Of Management Development, 27(2), 251-260.
Paolo Tatichi kasi Balachandran, Flavio Tonelli, (2012) performance measurement and Systems: state of the art guidelines for design and challenges. Measuring business excellence 16:2,41-54
Rauch, A., Wiklund, J., Lumpkin, G. T., & Frese, M. (2009). Entrepreneurial orientation and business Performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory &Practice, 33(3), 761–787.
Sapienza, H. J., De Clercq, D., & Sandberg, W. R. (2005). Antecedents of international and domestic learning effort. Journal of Business Venturing, 20(4), 437–457.
Schumpeter, J.A. 1934, the theory of economic development: an inquiry into profits, capital,credit, interest and the business cycle, Harvard Economic Studies, Harvard College, Cambridge, MA.
Saunders, M.Lewis, P., &Thorn Hill A .(2007). Research Methods for business students (4th edn.). Harlow: Financial Times Prentice Hall.
Tomi Heimonen, (2012),"What are the factors that affect innovation in growing SMEs?",European Entrepreneurial learning through formal growth-oriented training programs for SME Manager’s pr Journal of Innovation Management, pp. 122 – 144.
Valerie Lindsay, Nicholas Ashill, Banjo Roxas & Antong Victorio (2014). Entrepreneurial Orientation and performance of microenterprises in an emerging economy, Journal of Strategic Marketing, 22:7, 631-656
William, M. (2006). Research Methods knowledge base. Retrieved 29th December 2010. From www.socialresearchmethods.net/kb/quesresp.php.
Wiklund, J., Davidson, P., Audretsch, D.B. and Karlsson, C. (2011), “The future of entre preneurship research”, Entrepreneurship Theory and Practice, Vol. 35 No. 1, pp. 1-9.
Yazdanfar, D., &Öhman, P. (2015). Debt financing and firm performance: an empirical study based on Swedish data. Journal of Risk Finance (Emerald Group Publishing Limited), 16(1), 102-118.
Zahra, S., (2008),"Being entrepreneurial and market driven: implications for company performance", Journal of Strategy and Management,. 125 – 142.
Lu, J. and Beamish, P.W. (2004), “International diversification and firm performance: the S-curve hypothesis”, Academy of Management Journal,.
DOI: http://dx.doi.org/10.61426/sjbcm.v4i2.430
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.