Effects of Transformational Leadership and Prior Knowledge on Growth of Women-owned Micro and Small Enterprises in Kasarani Division, Nairobi County, Kenya

Abstract

The growth of women-owned enterprises is currently attracting much policy and literal attention. There is debate that transformational leadership and prior knowledge are essential to the growth of micro and small enterprises (MSEs). However, empirical evidence of the role of transformational leadership and prior knowledge on the growth of women-owned enterprises in Kenya is scarce. The purpose of this study was to examine the effects of transformational leadership and prior knowledge on the growth of women-owned enterprises in Kasarani Division in Nairobi County. A random sample of 400 women-owned and managed MSEs was surveyed using a structured questionnaire. The Multifactor Leadership Questionnaire (MLQ) was used to measure transformational leadership while prior knowledge was measured using educational attainment, networks and experience of women entrepreneurs. Regression models were used to examine the effects of transformational leadership and prior knowledge on enterprise growth. Transformational leadership had a positive and statistically significant relationship with enterprise growth (β = 0.57, ρ < 0.05). Having parents in business and obtaining business advice were negatively associated with growth. Further, the age of the business and obtaining credit for business operations were positively associated with enterprise growth. These results cast doubt on the role of prior knowledge on enterprise growth. The results of this study suggest that enhancing transformational leadership in women-owned enterprises is a viable policy option. The need to enhance business heritage is recommended.