Entrepreneurial Orientation and Enterprise Performance of Selected Small and Medium Manufacturing Enterprises in Nairobi City County, Kenya
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Date
2024-12
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Kenyatta University
Abstract
Entrepreneurial Orientation (EO) has become a focal point in entrepreneurship and strategy research, attracting considerable attention in both theoretical and empirical studies. EO is characterized by various entrepreneurial behaviors such as innovativeness, risktaking propensity, proactiveness, competitive aggressiveness and autonomy, that guide the pursuit of opportunities. The success of an enterprise is often assessed by the extent to which these EO dimensions are practiced. SMEs face a persistent risk of failure, with a notable proportion failing to transition into larger enterprises. The SME sector in Kenya, experiences a high mortality rate, where over 60% face closure annually, with many not surviving beyond the third anniversary. SMEs in Kenya, constitute about 80% of the manufacturing sector. However, their contribution to GDP stands at less than 20%, lagging behind larger enterprises. This poor performance is likelydue to a lack of entrepreneurial orientation. Hence the purposeof this study was to identify the EO factors that can enhance SMMEs performance, to enable them contribute effectively to economic development. The study is significant and timely, because the EAC Industrialization Policy (2012-2032) and Kenya’s Vision 2030, envision SMMEs transforming into vibrant businesses, contributing at least 50% to manufacturing sector GDP. A mandate that is unlikely to be achieved, if the current sub-optimal performance of SMMEs continues. A descriptive and explanatory survey research design was employed, with the study being guided by EO Theory, supported by Resource-Based View and Dynamic Capabilities Theories. The EO variables that were analyzed are innovativeness, risktaking propensity, proactiveness, competitive aggressiveness and autonomy as independent variables with enterprise performance as the dependent variable. The study targetted 309 Nairobi based SMMEs, from which 93 SMMEs were derived. A likert-type questionnaire was used for data collection and descriptive and inferential statistics were used for data analysis. Findings revealed that all five EO dimensions had a statisticallysignificant relationship with Enterprise Performance as follows: Innovativeness (β = .148, Sig.=.006<.05), Risk-TakingPropensity (β = .167, Sig.=.020<.05), Proactiveness (β = .489, Sig.=.000<.05), Competitive Aggressiveness (β = .393, Sig.=.000<.05), and Autonomy (β = .203, Sig.=.001<.05). The study concluded that all five EO dimensions, individually and collectively, significantly influence performance among the SMMEs under study. The study therefore recommends that SMMEs embrace all EO dimensions to synergistically enhance enterprise performance.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of the Degree of Master of Business Administration (Entrepreneurship) of Kenyatta University, December 2023