Entrepreneurial Orientation and Performance of Small and Medium Enterprises in Kenya

Abstract

Many nations acknowledge that SMEs play an important role in ensuring economic stability, growth, job creation, and social cohesion besides development. Despite the importance of SME sector in the growing economy, these enterprises face various challenges that include a shortage of operating funds, diversion of returns to other uses, and personal issues. The objective of this study was to assess the entrepreneurial orientation and performance of SMEs in Kenya. The study also sought to determine the moderating role of information technology capability on entrepreneurial orientation as pertained the performance of SMEs in Kenya. The study was anchored on the resource-based view theory. The study adopted a cross-sectional survey research design and, the targeted population was SMEs. The sample population was a census of top 100 Small and Medium-sized firms which were surveyed by Nation Media Group and KPMG Audit and Management firm for the year 2017. Self-administered semi-structured questionnaires were used to collect primary data. Data was analyzed using descriptive and inferential statistics. The study found that SMEs' performance was influenced positively but insignificantly by entrepreneurial orientation. Results also indicated that in the presence of information technology capability, the contribution of entrepreneurial orientation towards the performance of SMEs is insignificant. The study concludes that it is important for SME firms to build entrepreneurial capacities to enhance performance. The study recommended that SME managers need to put in place resources and mechanisms that encourage and support entrepreneurial activities. Such activities such as encouraging innovation, product offering and continuously assessing risk.