Ownership Characteristics And Financial Performance Of Micro And Small Enterprises In Starehe, Nairobi City County, Kenya
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Date
2020-01
Authors
Ngureh, John Mwangi
Mungam, Eddie Simiyu
Njangiru, Mungai John
Journal Title
Journal ISSN
Volume Title
Publisher
Research Publish Journals
Abstract
Micro and Small Enterprise immensely contribute to economic development around the world, in Africa and
also in Kenya. Micro and Small Enterprises play a significant role in creation of employment, income generation
and are seedbed for medium and large enterprises. Micro and Small Enterprises face many challenges limiting
their financial performance and survival as measured by return on assets and growth in sales, including lack of
markets, competition, lack of skilled manpower, and poor management practices. In Kenya, Micro and Small
Enterprises failure rate is 67%. In Nairobi City County Micro and Small Enterprises financial economic
performance measured by growth in sales declined from 95.7% in 2011 to 87.2% in 2017. This study
investigated the effect of ownership characteristics on the financial performance of Micro and Small Enterprises
in Starehe, Nairobi City County, Kenya. The study was anchored on Trade-off theory, Pecking-Order theory,
Resource-based theory and financial constraint theory to give direction and support to this study. The study
adopted positivism research philosophy and a descriptive survey design. The research used stratified random
sampling to select 384 Micro and Small Enterprises determined from a target population of 21,869 Licensed by
Nairobi City County. Primary data (cross sectional) were used in the study, and was collected by administering
a questionnaire with closed end-ended questions, with a rating scale of 1-5. Confirmatory Factor Analysis was
used to ascertain the validity of the measurement model before commencing Structural Equation Modeling to
test the hypotheses under study through Amos software. Data was analyzed using descriptive statistics (mean,
frequency distribution standard deviation) and inferential statistics (Multivariate analysis-Structural Equation
Modeling). Diagnostic tests included Keizer-meyer-olkin test, Berletts test of sperecity, Normality test and
Multi-collinearity test. Data results were presented inform of tables, graphs, charts and percentages. The study
found a positive significant relationship between ownership characteristics and financial performance of Micro
and Small Enterprises in Starehe. The study recommended that the government should enhance
entrepreneurship skills to Micro and Small Enterprise owners and managers.
Description
A Research Article in the Researchjournali’s Journal of Finance
Keywords
Collateral, Financing decisions, Financial Performance, , Micro and small enterprises failure, Micro-enterprises, Ownership characteristics, Poor business financial performance
Citation
gureh J.M., Simiyu E., & Mungai J.N.(2020). ).“ Ownership Characteristics and Financial Performance of Micro and Small Enterprises in Starehe, Nairobi City County, Kenya”. Journal of Finance Vol. 8 | | 2020 ISSN 2348-0963, Vol.8| No. 1 January | 2020 ISSN 2348-0963,