Firm Characteristics and Growth of Small and Medium Enterprises in Nyeri County, Kenya
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Date
2019-05
Authors
Wathegi, Robert Ngatia
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Most of small and medium enterprises in Nyeri County are small scale ventures with
less than 10 employees, whereas 70% of them are single individual worker or Sole
proprietorship. This implies that majority of SME entrepreneurs are working at the
economy base, with a huge percentage of them falling amongst the 53% of Kenyans
living lower than the poverty line of one USD every day. Growth of small and
medium enterprises in firm size, age, industry sector and management efficiency is an
area of concern in Nyeri County. As a result of various challenges most small and
medium enterprises have not grown in size and collapses within a very short period of
time after they start. In addition, several small and medium enterprises in Nyeri
County have not appreciated concentrating in one industry sector and advancement in
management skills which may be a major contributor to slow growth in the
enterprises within the County. The study was guided by the following specific
objectives: to determine the relationship between firm size, age, management
efficiency, industry sector and growth of Small and medium enterprises in Nyeri
County, Kenya. The study was anchored on stakeholder’s theory, resource based
theory, agency theory and operating cycle theory. The research design adopted by the
study was descriptive design. The study targeted 840 Small and medium enterprises
and since the number of Small and medium enterprises is huge, a stratified random
sampling was used to arrive at 126 Small and medium enterprises. Semi-structured
questionnaires were used for collecting data which was analyzed using descriptive
and inferential statistical tools and presented using tables. The study found out that the
size of the firm and the age of the firm had positive and statistically significance
effect on growth of Small and medium enterprises with p value of 0.01 and 0.03
respectively. In particular, large firms were found to perform better than small firms
due to their ability to source for more funds from external sources, increase in sales
turnover and value of capital employed leads to growth of firms. Industry sector had
positive but statistically insignificance effect on growth of small and medium
enterprises with p value of 0.751. Management efficiency had negative and
statistically significance effect on the growth of small and medium enterprises with p
value of 0.001.The study concludes that the management of the Small and medium
enterprises gains experience over time and the longer the time in the operation the
more the managers are experienced and efficient in dealing with enterprise challenges.
In addition, individuals running the small and medium enterprises need to be trained
on entrepreneurship and management skills. The study further concludes that Small
and medium enterprises should evaluate how the industry is performing in order to
establish whether their business has adapted well in the industry sector.
Description
A Research Project Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration (Finance Option) of Kenyatta University