Relationship between firm core competence and performance of small and medium enterprises in Nairobi county, Kenya
Muniu, Charity Wambui
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Increased competition threatens the attractiveness of an industry and reducing the profitability of the players. Firms therefore focus on gaining competitive advantage to enable them respond to, and compete effectively in the market. By identifying their core competences, firms are able to concentrate on areas that give them a lead over competitors, and provide a competitive advantage. The role of small and medium enterprise (SMEs) in a national economy has been accentuated all over the world as to their contribution to the total productivity and job opportunities (World Bank, 2012). Zeller, (1994) focused on the direct link between individual strands or configurations of personal resources and access to bank credit while less attention has been devoted to how small enterprises can utilize these resources more effectively in its pursuit of sustainable competitive advantage. This study seeks to determine the relationship between firm core competence and performance of small and medium enterprises in Nairobi County, Kenya. The study adopted descriptive survey. The study targets all the 2,061 SMEs in Nairobi County. Due to the high level of homogenous nature of the population this study was randomly sample 10% of the 2,061 licensed. The study used stratified random sampling method. A questionnaire will be administered to the sample chosen for the study. The questionnaires were tried out. Data analysis started with coding of the question items, then coded data will be tabulated in excel and computer program statistical package for social sciences (SPSS). Data was analysed using descriptive statistics: - frequency Distributions and measures of central tendency, of mean. The results of the survey were presented using tables, charts and graphs. The SPSS computer software (Version 17) was used to aid the analysis. The study established that most organizations focus on developing human resources which help in identifying and operating in the markets. The organizations also evaluate their resources and capabilities and understand their value for the firm. The study found that organizational internal resources had a positive influence on the performance of small and medium enterprises in Nairobi County. The study also established that most of the organizations aimed at building business strategies that helped in establishing competitive advantage. Therefore the study found that capabilities had a positive influence on the performance of small and medium enterprises in Nairobi County. The study established that most organisations focus on developing human capacity for strengthening new ideas, and encourage employees to develop mastery of their jobs which impact on the performance. The study concluded that sustainable competitive advantage had a positive influence on the performance of small and medium enterprises in Nairobi County. From the findings the study recommends that there is need for SMEs to adopt various strategies that will enable them gain and sustain their competitive advantage. The study also recommends that SMEs should engage in corporate social responsibility projects to enhance their image and customer loyalty. Also extra effort on brand identity, brand awareness, promotions and advertisements is necessary to enhance sustainable competitive advantage.