ENTREPRENEURIAL ORIENTATION AND SMALL AND MEDIUM ENTERPRISES GROWTH: EMPIRICAL EVIDENCE FROM SMES IN THE MANUFUCTURING SECTOR OF NAIROBI COUNTY, KENYA
Keywords:
Small and Medium Enterprises, Entrepreneurial Orientation, Growth, Manufacturing SectorAbstract
Purpose: This study sought to investigate then effect of entrepreneurial orientation on the growth of small and medium manufacturing enterprises in Nairobi County, Kenya.
Methodology: The research adopted a cross section design and descriptive research approach. Stratified random sampling was used to collect primary data from 265 SMEs in the manufacturing sector from a population of 853 SMEs registered with Kenya Association of Manufacturers (KAM) in Nairobi County, Kenya. Data was collected by use of a self-administered questionnaire and analysed by statistical computations of means, percentages, and correlation and regression analysis using STATA statistical software.
Findings: Findings of this research indicate that with the exception of risk taking and proactiveness; innovativeness, autonomy and competitiveness aggressiveness were all statistically significant in explaining the growth of Small and medium manufacturing enterprises in Nairobi County, Kenya. Evidence from this study supports the evidence that innovativeness, autonomy and competitiveness aggressiveness are key entrepreneurial dimensions that are imperative for enhancing SME growth.
Unique contribution to theory, practice and policy: From the empirical findings we recommend that the management of SMEs need to put more emphasis on innovativeness, autonomy and competitiveness aggressiveness in order to enhance the growth of their firms
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References
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Casillas, J. C., & Moreno, A. M. (2010). The relationship between entrepreneurial orientation and growth: The moderating role of family involvement. Entrepreneurship & Regional Development, 22(3-4), 265-291.
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Slater, S. F., & Narver, J. C. (2000). The positive effect of a market orientation on business profitability: a balanced replication. Journal of Business Research, 48(1), 69-73.
Soininen, J. (2013). Entrepreneurial orientation in small and medium-sized enterprises during economic crisis. Unpublished PhD Thesis. Lappeenranta University of Technology, Lappeenranta, Finland.
Thornton, P H, Ribeiro-Soriano, D & Urbano, D (2011). Socio-cultural factors and entrepreneurial activity: An overview. International Small Business Journal, 29 (2), 105-118.
Turyakira, P.K., (2018) Ethical practices of small and medium-sized enterprises in developing countries: Literature analysis, South African Journal of Economic and Management Sciences, 21(1), 1756-1776.
Uddin, R, Bose, K.T & Yousuf, S. (2014). Entrepreneurial orientation (EO) and performance of business in Khulna City, Bangladesh. Journal of Small Business & Entrepreneurship, 27(4), 343-352.
Venkatraman, N., & Prescott, J. E. (1990). Environment-strategy coalignment: An empirical test of its performance implications. Strategic Management Journal, 1(11), 1-23.
Wales, W. J., Gupta, V. K., & Terry Mousa, F. (2011). Empirical research on entrepreneurial orientation: An assessment and suggestions for future research. International Small Business Journal, 31(4), 357-384.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171-180.
Wiklund, J. (1999). The sustainability of the entrepreneurial orientation-performance relationship. Entrepreneurship Theory and Practice, 24(1), 37-48.
Wiklund, J., & Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses. Strategic Management Journal, 24(13), 1307-1314.
Wiklund, J., & Shepherd, D. (2005). Entrepreneurial orientation and small business performance: a configurational approach. Journal of Business Venturing, 20, 71-91.
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Zahra, S. A., & Covin, J. G. (1995). Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis. Journal of Business Venturing, 10(1), 43-58.
Babbie, E. R. (2013). The practice of social research (13th ed.). Belmont, CA: Wadsworth Cengage Learning.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.
Barney, J. B., Wright, M., & Ketchen, D. J. (2001). The resource-based view of the firm: Ten years after 1991. Journal of Management, 27(6), 625-641.
Beck, T., and A. Demirguc-Kunt (2005). Small and Medium-Size Enterprises: Overcoming Growth Constraints. Policy Research Working Paper, No. WPS3127. Washington, D.C.: World Bank.
Brown, T. E., Davidsson, P., & Wiklund, J. (2001). An operationalization of Stevenson's conceptualization of entrepreneurship as opportunity-based firm behavior. Strategic Management Journal, 22, 953-968.
Casillas, J. C., & Moreno, A. M. (2010). The relationship between entrepreneurial orientation and growth: The moderating role of family involvement. Entrepreneurship & Regional Development, 22(3-4), 265-291.
Cochran, W. G. (1977). Sampling techniques (3rd ed.). New York: John Wiley & Sons.
Cooper, D. R., & Schindler, P. S. (2013). Business research methods (11th ed.). New York, NY: McGraw-Hill/Irwin.
Covin, J. G., & Slevin, D. P. (1991). A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1), 7-25.
Covin, J. G., Slevin, D. P., & Schultz, R. L. (1994). Implementing strategic missions: Effective strategic, structural and tactical choices. Journal of Management Studies, 31(4), 481-506.
Covin, J., G., Green, K., M, & Slevin, D., P. (2006). Strategic process effects on the entrepreneurial orientation-sales growth rate relationship. Entrepreneurship Theory and Practice, 30(1), 57-78.
Davidsson, P., Delmar, F., & Wiklund, J. (2002). Entrepreneurship as Growth; Growth as Entrepreneurship. In M. A. Hitt, R. D. Ireland, S. M. Camp & D. Sexton (Eds.), Strategic Entrepreneurship: Creating a New Mindset. Blackwell: Oxford.
Deloitte Kenya Economic Outlook (2016). Deloitte Kenya.
Eggers, F., Kraus, S., Hughes, M., Laraway, S., & Snycerski, S. (2013). Implications of customer and entrepreneurial orientations for SME growth. Management Decision, 51(3), 524-546.
Government of Kenya. (2016). Micro, Small and Medium Enterprises (MSME) Survey Basic Report. The Government Printer: Nairobi.
Government of Kenya. (2018). Economic Survey 2018. Nairobi: The Government Printer: Nairobi.
Harms, R., Reschke, C. H., Kraus, S., & Fink, M. (2010). Antecedents of innovation and growth: Analysing the impact of entrepreneurial orientation and goal-oriented management. International Journal of Technology Management, 52(1), 135-152.
Hofstede, Geert. (2001). Culture's consequences: Comparing Values, Behaviors, Institutions, and Organizations across Nations. Thousand Oaks, CA: Sage.
Hoselitz, B.F. (1964): A Sociological Approach to Economic Development, in Novach, D. & Lehachsuan, R. (Eds.): Development and Society, NY: Harper & Collins.
Katua, T. N. (2014). The Role of SMEs in Employment Creation and Economic Growth in Selected Countries. International Journal of Education and Research, 2(12), 461-472.
Keh, H. T., Nguyen, T. T. M., & Ng, H. P. (2007). The effects of entrepreneurial orientation and marketing information on the performance of SMEs. Journal of Business Venturing, 22(4), 592-611.
Kenya Economic Report (2017). Kenya Institute for Public Policy Research and Analysis (KIPPRA).
Kenya National Bureau of Statistics. (2007). Government Printers: Nairobi.
Kraaijenbrink, J., Spender, C., & Groen, J. A. (2010). The resource - based view: A review and assessment of its critiques. Journal of Management, 36, 364-381.
Lee, C., Lee, K., & Pennings, J. M. (2001). Internal capabilities, external networks, and performance: A study on technology based ventures. Strategic Management Journal, 22(6/7), 615-640.
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-172.
Lumpkin, G. T., & Dess, G. G. (2001). Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle. Journal of Business Venturing, 16(5), 429-451.
Ministry of Industrialization and Enterprise Development (2015). Kenya's Industrial
transformation programme.
Moreno, A. M., & Casillas, J. C. (2008). Entrepreneurial orientation and growth of SMEs: A causal model. Entrepreneurship Theory and Practice, 32(3), 507-528.
Muriithi, S. M. (2017). African small and medium enterprises (SMEs) contributions, challenges and solutions. European Journal of Research and Reflection in Management Sciences 5(1), 36-48.
Mwangi, M. & Ngugi, K, (2014). Influence of Entrepreneurial Orientation on Growth of Micro and Small Enterprises in Kerugoya, Kenya. European Journal of Business Management, 1(11), 417-438.
Mwarari, M. M. & P. K. Ngugi (2013). Factors influencing listing of Kenyan SMEs in the securities market for capital raising opportunities. European Journal of Management Sciences and Economics, 1(2), 99-115.
Mwaura, A., Gathenya, J & Kihoro, J. (2015). Dynamics of Entrepreneurial Orientation on the Performance of Women owned Enterprises in Kenya. International Journal of Academic Research in Business and Social Sciences, 5(9), 14-34.
Ngugi, J. K., McOrege, M. O., & Muiru, J. M. (2013). Influence of Innovativeness on the Growth of SMEs in Kenya. International Journal of Business and Social Research 3(1), 25-31.
Otieno, S., Bwisa, H.M. & Kihoro, J.M. (2012). Influence of entrepreneurial orientation on Kenya's manufacturing firms operating under East African regional integration. International Journal of Learning & Development, 2(1), 299-320.
Rauch, A., Wiklund, J., Lumpkin, G., T., & Frese, M. (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3), 761-778.
Slater, S. F., & Narver, J. C. (2000). The positive effect of a market orientation on business profitability: a balanced replication. Journal of Business Research, 48(1), 69-73.
Soininen, J. (2013). Entrepreneurial orientation in small and medium-sized enterprises during economic crisis. Unpublished PhD Thesis. Lappeenranta University of Technology, Lappeenranta, Finland.
Thornton, P H, Ribeiro-Soriano, D & Urbano, D (2011). Socio-cultural factors and entrepreneurial activity: An overview. International Small Business Journal, 29 (2), 105-118.
Turyakira, P.K., (2018) Ethical practices of small and medium-sized enterprises in developing countries: Literature analysis, South African Journal of Economic and Management Sciences, 21(1), 1756-1776.
Uddin, R, Bose, K.T & Yousuf, S. (2014). Entrepreneurial orientation (EO) and performance of business in Khulna City, Bangladesh. Journal of Small Business & Entrepreneurship, 27(4), 343-352.
Venkatraman, N., & Prescott, J. E. (1990). Environment-strategy coalignment: An empirical test of its performance implications. Strategic Management Journal, 1(11), 1-23.
Wales, W. J., Gupta, V. K., & Terry Mousa, F. (2011). Empirical research on entrepreneurial orientation: An assessment and suggestions for future research. International Small Business Journal, 31(4), 357-384.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171-180.
Wiklund, J. (1999). The sustainability of the entrepreneurial orientation-performance relationship. Entrepreneurship Theory and Practice, 24(1), 37-48.
Wiklund, J., & Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses. Strategic Management Journal, 24(13), 1307-1314.
Wiklund, J., & Shepherd, D. (2005). Entrepreneurial orientation and small business performance: a configurational approach. Journal of Business Venturing, 20, 71-91.
World Bank. (2017). SME Finance. Policy Research Working Paper: No. 8241. World Bank, Washington, DC.
World Trade Organization (2016). World Trade Report: Levelling the trading field for SMEs: World Trade Organization.
Zahra, S. A., & Covin, J. G. (1995). Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis. Journal of Business Venturing, 10(1), 43-58.
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2018-12-22
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Katialem, I. R., Muhanji, D. S., & Otuya, P. R. (2018). ENTREPRENEURIAL ORIENTATION AND SMALL AND MEDIUM ENTERPRISES GROWTH: EMPIRICAL EVIDENCE FROM SMES IN THE MANUFUCTURING SECTOR OF NAIROBI COUNTY, KENYA. International Journal of Entrepreneurship and Project Management, 3(2), 38 – 53. Retrieved from https://iprjb.org/journals/index.php/IJEPM/article/view/797
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