FACTORS INFLUENCING PARTICIPATION OF SMALL MEDIUM ENTERPRISES IN EXPORT TRADE IN KENYA: A CASE OF MANUFACTURING SMALL AND MEDIUM ENTERPRISES IN NAIROBI COUNTY

Abstract

The role played by the micro and small enterprises (MSE) sector has increasingly been recognized and appreciated not only in the developing but also the developed countries globally. This appreciation has largely been due to the contribution of the MSE sector to economic development particularly in employment creation. Kenyan small and medium sized enterprises, however, are still not fully competitive, especially in foreign markets which require efficient production, good management structures, market capabilities, product and service development that meets international standards and strong networks in conducting business operations. Despite the importance of export to economic development among economies there is little attention has been given to the factors that influence SMEs participation in export trade. This study sought to investigate factors affecting participation of small medium enterprises (SMEs) in export trade in Kenya with focus to manufacturing SMEs in Nairobi County. The study aimed to investigate whether firm characteristics, skill workforce, government assistance and foreign investment influence SMEs participation in export trade in Kenya. The target population of this study was manufacturing SMEs registered with KRA. The study relied mostly on primary data sources. The study employed a stratified simple random sampling technique in coming up with a sample size of 114 respondents. The study generated both qualitative and quantitative data where quantitative data was coded and entered into SPSS and analyzed using descriptive statistics. The study found that there was a positive correlation between SMEs participation on export trade and firm characteristic, skilled labour, government assistance and foreign investment. Based on the study findings, the study recommended that managers should take into account the marketing and trading dimension of which plays a substantial role in export trade. Management should ensure competency in workforce since it is directly linked to export trade. Government should give priority on promoting SMEs export activity since they have potential to provide sustainable development if they are exposed to foreign trade. On foreign investment, the study recommended that management staffs should recognize collaboration with foreigners, since export performance is influenced by controllable internal determinants.