DETERMINING WHETHER NETWORK CENTRALITY HAS AN INFLUENCE ON THE FINANCIAL PERFORMANCE OF MEDIUM SIZED ENTERPRISES IN KENYA
Abstract
The purpose of this study was to examine the influence of network centrality on financial performance of medium sized enterprises in Kenya. A descriptive survey design was adopted. The target population was drawn from 51 medium sized enterprises in Kenya which participated in the KPMG top 100 mid-sized ranking for the period 2011 to 2015. Multi stage, systematic and purposive sampling was used to select a sample of 255 which had the data needed in the study. Primary data was collected using questionnaires which were pretested for reliability and validity to determine it suitability for use in the study. Statistical Package for Social Sciences (SPSS) was used in the analysis of data to generate frequency distribution of the responses and descriptive statistics. The study findings indicated that the enterprises had greater power and influence over other enterprises in the industry, the enterprises operated in an environment that offered strategies about competitors and partnership opportunity information was available to their enterprise through networks. It was found that network centrality was positively and significantly related to financial performance. The finding lends support to the social network theory, indicating that the more central the entrepreneur is in the network, the more it will affect business performance. Firms with strong entrepreneurial orientations benefit from the industry leadership status associated with high centrality, because these ventures need to acquire resources and mobilize institutional support from a variety of domains to successfully commercialize their innovations. Medium sized enterprises should consider networking with external environment as part of business planning objective and the management or the owner manager of the business should use it as an instrument for accessing marketing information, for acquiring tangible and intangible resources and finally to improve the performance of their business. The study recommended that managers should carefully construct their alliance networks. Firms with superior advantage-creating or advantage-enhancing capabilities should encourage partners to actively collaborate with one another.
Key Words: Network Centrality, Financial Performance, Medium Sized Enterprises, Entrepreneurial Networks
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DOI: http://dx.doi.org/10.61426/sjbcm.v5i4.870
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