ENTREPRENEURIAL ORIENTATION, GROWTH OF MSMEs AND THE MODERATED MEDIATION ROLE OF ENVIRONMENTAL FACTORS AND FIRM STRATEGIC CAPABILITIES IN THE MANUFACTURING SECTOR IN NAIROBI COUNTY, KENYA
Abstract
The study set out to determine the moderated mediation role of environmental factors and firm strategic capabilities on the relationship between EO and growth of MSMEs. The study is anchored on the contingency fit view theory and resource-based view. This study is based on the Positivism philosophy and employed explanatory survey design, of a cross-sectional nature. A stratified sample of 384 MSMEs was drawn from a target population of 103,214 registered MSMEs, with a focus on the manufacturing sector in Nairobi County. Data was collected by use of structured questionnaires and analysed by both descriptive and inferential statistics which included multiple regression modelling. The study did not however find a significant moderated mediation role of environmental factors on the indirect relationship between EO and growth of MSMEs, through firm strategic capabilities as the second interaction between environmental factors and firm strategic capabilities was not significant (β=-.0021, P>.05; LLCI=-.0143; ULCI=.0102). It is concluded that among manufacturing sector MSMEs in Kenya, growth is directly, positively and significantly influenced by owner/managers’ EO and firm strategic capabilities. The relationship between EO and MSME is also non-linear, moderated by environmental factors. The study therefore validates the contingency fit view, affirming that the association between EO and growth of MSMEs is moderated by environmental factors. The study recommends that government formulates supportive policies that encourage EO and strategic capacity building among manufacturing MSMEs through trainings, access to credit, common equipment facilities, business incubation centres, technology transfer and creating local markets. It is also recommended that despite uncertainty and unfavourable environmental factors, MSME owners/managers ought to practice EO to build strategic capabilities and realize growth. Having adopted a cross-section design, it was not possible to track MSME growth in terms of possible transitions through the growth stages. It is thus suggested that future studies adopt a longitudinal approach.
Key Words: Entrepreneurial Orientation, Environmental Factors, Firm Strategic Capabilities, Micro Small and Medium Enterprises, MSME Growth
CITATION: Mosonik, J. K., Maru, J. C., & Komen, J. K. (2024). Entrepreneurial orientation, growth of MSMEs and the moderated mediation role of environmental factors and firm strategic capabilities in the manufacturing sector in Nairobi County, Keny. The Strategic Journal of Business & Change Management, 11 (1), 23 – 51. http://dx.doi.org/10.61426/sjbcm.v11i2.2892
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