INFLUENCE OF DIFFERENTIATION STRATEGIES ON THE GROWTH OF SMALL AND MEDIUM ENTERPRISES IN MAKUENI COUNTY, KENYA
Abstract
Small and Medium Enterprises (SMEs) are vital for economic development, yet many face significant challenges hindering their growth, often leading to premature failure. To address these challenges, SMEs increasingly adopt differentiation strategies to thrive in competitive environments. This study examines the impact of differentiation strategies—product differentiation, personnel differentiation, market focus innovation, and factor innovation—on the growth of SMEs in Makueni County. Grounded in the Diffusion of Innovation theory and Schumpeter’s theory of innovation, the research employs an explanatory design targeting 1,890 registered SMEs. Using Yamane's formula, a sample of 330 SMEs was selected through stratified sampling. Data collection utilized questionnaires, and SPSS version 25 was employed for analysis, incorporating descriptive statistics and regression analysis to test hypotheses regarding growth influences. Results indicate that product differentiation accounts for 31.6% of growth variability, personnel differentiation for 32.4%, market focus innovation for 29.1%, and factor innovation for 33.6%. All strategies proved essential for SME growth, providing actionable insights for managers and policymakers. Future research should expand beyond Makueni County and include diverse sectors to enhance understanding of differentiation strategies and their effects on business growth.
Key Words: Small and Medium Enterprises, Differentiation Strategies, Makueni County, Kenya
CITATION: Okwaro, V. O., King’oo, R., & Kinyanjui, W. (2024). Influence of differentiation strategies on the growth of small and medium enterprises in Makueni County, Kenya. The Strategic Journal of Business & Change Management, 11 (4), 641 – 661. http://dx.doi.Org/10.61426/Sjbcm.v11i4.3109
Full Text:
PDFReferences
Aaker, D. A. (2019). Managing brand equity: Capitalizing on brand loyalty. New York: The Free Press.
Abanis, E., Nyende, P., & Muniu, J. (2013). The Role of Small and Medium Enterprises in Economic Development: A Study of Western Uganda. Journal of Economics and Sustainable Development, 4(11), 12-20.
Adeosun, A., & Shittu, A. (2022). The Impact of Small and Medium Enterprises on Economic Growth: A Review of Literature. African Journal of Business Management, 16(5), 1-10.
Akhtar, D. (2016). Research design. In Research in social science: Interdisciplinary perspectives (1st ed., pp. 17). Social Research Foundation.
Akingbade, A. (2014). Competitive strategies and growth of telecommunication firms in Nigeria. International Journal of Business and Social Research, 4(7), 14-24.
Asenahabi, B. (2019). Basics of research design: A guide to selecting appropriate research design. Research Design, 6, 76–89.
Bayraktar, A., Koc, S., & Işik, O. (2017). The Role of Small and Medium Enterprises in Economic Growth: Evidence from Turkey. International Journal of Economics and Financial Issues, 7(2), 408-415.
Cassar, G., & Friedman, H. (2019). Self-efficacy and entrepreneurial success: A study of American entrepreneurs. Entrepreneurship Research Journal, 9(2), 1-25.
Cheng, C., & Krumwiede, D. (2012). The role of service innovation in the market orientation–new service performance linkage. Technovation, 32(7-8), 487–497. https://doi.org/10.1016/j.technovation.2012.03.006
Chiguvi, D., Masarirambi, M., & Mavhunga, E. (2020). Personnel differentiation strategies in private tertiary education institutions in Botswana. South African Journal of Higher Education, 34(2), 89-104.
Delfino, L. (2024). SMEs: The Backbone of the American Economy. U.S. Small Business Administration. Retrieved from https://www.sba.gov.
Floyd, D., & McManus, J. (2022). The Contribution of SMEs to the European Economy: Trends and Insights. European Journal of Business and Management, 14(3), 23-35.
Gall, J. P., & Borg, W. R. (2010). Educational research: An introduction. New York: Longman.
Gatara, B. (2010). Content validity of research instruments. African Journal of Education and Technology, 1(2), 60-70.
Hassion, M. M., & Hart, A. G. (2016). The role of exporting and innovation in small firm growth: Evidence from Egypt. Journal of Business Research, 69(11), 5190-5195.
Karanja, J. M. (2018). Factors Affecting the Growth of Small and Medium Enterprises in Makueni County, Kenya. Journal of Business and Management, 20(1), 1-12.
Kenya National Bureau of Statistics [KNBS], 2018. Economic Survey 2018. Nairobi: Government Printer.
Khan, F., Khan, M. F., & Nawaz, A. (2019). Personnel differentiation and organizational performance in SMEs: Evidence from Pakistan. International Journal of Organizational Analysis, 27(1), 184-203.
Kotler, P. (2020). Marketing management. 15th ed. Upper Saddle River, NJ: Pearson Education.
Lika, B., & Lleshaj, L. (2023). Credit guarantee schemes in Albania and their importance for developing SMEs. In Proceedings of the 3rd International Conference on Scientific and Academic Research (pp. [insert page range]). Turkey.
Mbugua, E. M., & Kinyua, A. (2019). Effects of personnel differentiation strategy on the performance of microfinance institutions in Nairobi City County, Kenya. International Journal of Economics, Commerce and Management, 7(2), 1-14.
Mbugua, J. W., & Kinyua, G. M. (2019). Personnel differentiation and organization performance: An empirical analysis of deposit-taking microfinance institutions in Nairobi City County, Kenya. International Academic Journal of Human Resource and Business Administration, 3(7), 485–495.
Mohajan, H. (2017). Two criteria for good measurements in research: Validity and reliability. Annals of Spiru Harat University, 17, 59–82. https://doi.org/10.26458/1746
Mohsenzadeh, M., & Ahmadian, A. (2016). The influence of competitive strategies on performance in export firms. Journal of Global Strategic Management, 10(1), 73-82.
Muriungi, M. (2018). Competitive Strategies Adopted by SMEs in Kenya: A Case Study of Makueni County. Journal of Business and Management, 20(6), 56-65.
Neely, A., Gregory, M., & Platts, K. (2015). Performance measurement system design: A literature review and research agenda. International Journal of Operations & Production Management, 25(12), 1228-1263.
Ngatia, J. (2018). Challenges Facing Small and Medium Enterprises in Kenya: A Case Study of Makueni County. International Journal of Research in Business and Management, 5(9), 45-55.
OECD. (2022). SME Policy Index: Eastern Partner Countries 2022. Paris: OECD Publishing.
Oladipo, A. (2015). Validity and reliability of research instruments: How to assess them. Journal of Research in Educational Sciences, 2(1), 1-11.
Onyango, O. (2017). Factors Influencing the Growth of Small and Medium Enterprises in Kenya. Journal of Entrepreneurship and Business Innovation, 4(2), 12-23.
Oslo, M. (2019). Barriers to SME Growth in Vietnam: Evidence from Empirical Studies. International Journal of Business and Management, 14(10), 74-85.
Prescott, J. E. (2019). The impact of competitive strategies on firm performance: The gap between standard and actual performance. Strategic Management Journal, 40(2), 287-312.
Pulaj, E., Kume, V., & Cipi, M. (2015). Effects of competitive strategies on organizational performance in Albania. Journal of Business Studies Quarterly, 6(2), 110-119.
Rahman, S., Laosirihongthong, T., & Sohal, A. (2010). Impact of lean strategy on operational performance: A study of Thai manufacturing companies. Journal of Manufacturing Technology Management, 21(7), 839–852. https://doi.org/10.1108/17410381011077946
Rodrigues, S., & Fernandes, L. (2022). Strategic options for enhancing market position in the textile industry: A case study of Operacional Têxtil Ltda. Journal of Business Research, 139, 135-144.
Saah, A. (2015). Financial Management Practices and Performance of Small and Medium Enterprises in Tamale, Ghana. Global Journal of Business Research, 9(1), 85-95.
Savas, E. S. (2010). Government Contracts in an Era of Change. New York: The International City/County Management Association.
Tavakol, M., & Dennick, R. (2011). Making sense of Cronbach's alpha. International Journal of Medical Education, 2, 53–55. https://doi.org/10.5116/ijme.4dfb.8dfd
Tiwari, M., Bryde, D. J., Stavropoulou, F., & Malhotra, G. (2024). Understanding the evolution of flexible supply chains in the business-to-business sector: A resource-based theory perspective. International Studies of Management & Organization, 54(4), 380–406. https://doi.org/10.1080/00208825.2024.2324245
Valcheva, A. (2023). Horizon 2020: Opportunities for SMEs in Europe. European Commission. Retrieved from https://ec.europa.eu.
Venkatesh, V., & Davis, F. D. (2000). A theoretical extension of the technology acceptance model: Four longitudinal field studies. Management Science, 46(2), 186–204. https://doi.org/10.1287/mnsc.46.2.186.11926
Wu, J., Lin, Y., & Perng, Y. (2022). Developing better business performance and competitive advantage in SMEs: A comprehensive approach. Journal of Small Business Management, 60(1), 105-129.
Yoshino, N., & Taghizadeh-Hesary, F. (2018). Financing for SMEs in Asia: A Review of Challenges and Opportunities. Asian Development Bank Institute. Retrieved from https://www.adbi.org.
DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3109
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.