ENTREPRENEURIAL STRATEGIES AND THE GROWTH OF MICRO-ENTERPRISES A CASE

STUDY AT RONGAI

BY

GRACE NYANCHAMA VALENTINE BOSIRE

Reg. No.

A RESEARCH PROJECT SUBMITTED TO THE FACULTY OF COMMERCE, IN PARTIAL

FULFILLMENT FOR THE REQUIREMENTS OF THE AWARD OF DEGREE IN HUMAN
RESOURCE MANAGEMENT

THE CATHOLIC UNIVERSITY OF EASTERN AFRICA

THE SCHOOL OF BUSINESS
DEPARTMENT OF MARKETING AND MANAGEMENT

June 2021

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DECLARATION

I presume that this is my original work and has not been submitted to any other college, institution, or
university other than the Catholic University for academic credit.

Signed……………………… Date…………………….
GRACE NYANCHAMA VALENTINE BOSIRE

APPROVAL
This project has been presented for examination with my approval as the appointed supervisor.

Signed………………………. Date……………………….
MADAM CAROLYNE MUNGAI
SUPERVISOR

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DEDICATION

The insignificance of excellence, diligence, and perseverance, I dedicate this study project to my ----------,
and my immediate family, parents, brother, and sisters.

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ACKNOWLEDGEMENT

I acknowledge the valuable assistance of my academic supervisor, Carolyne Mungai, for the support and
advice in writing this research report. I am indeed grateful and acknowledge the learning that I received.
Many thanks go to the Catholic University for offering me admission to pursue this course. I owe my family,
classmates, and friends a lot for their immense support and encouragement for this academic work. Thank
you to everyone who participated in the interviews; this study project would not have come to fruition
without you all.

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Contents
DECLARATION......................................................................................................................................ii

DEDICATION.........................................................................................................................................iii

ACKNOWLEDGEMENT.......................................................................................................................iv

ABSTRACT............................................................................................................................................vii

CHAPTER ONE........................................................................................................................................1

1.2 Statement of the problem..................................................................................................................1

1.3 Research Objectives............................................................................................................................2

1.4 Research Questions..........................................................................................................................2

1.5 Scope of study.....................................................................................................................................2

1.5 Significance of study......................................................................................................................2

1.7 Conceptual framework.....................................................................................................................3

CHAPTER TWO.......................................................................................................................................4

2.1 Introduction.........................................................................................................................................4

2.2 Theoretical Review..............................................................................................................................4

2.2.1 The Life Cycle Theory.....................................................................................................................4

2.2.2 Resource-Based Theory....................................................................................................................4

2.2.3 Strategic Management Perspective Theory......................................................................................5

2.2.4 Critique of The Theories..................................................................................................................6

2.3 Empirical Review................................................................................................................................6

2.3.1 Risk Taking......................................................................................................................................7

2.3.2 Innovativeness & Competitiveness..................................................................................................8

2.3.3 Knowledge Management..................................................................................................................9

2.4 Knowledge Gap.................................................................................................................................10

CHAPTER THREE.................................................................................................................................11

3.0 RESEARCH DESIGN AND METHODOLOGY.............................................................................11

3.1 Research Design................................................................................................................................11

3.2 Target Population..............................................................................................................................11

3.3 Description of Research Instruments.................................................................................................11

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3.4 Sample and Sampling Procedure.......................................................................................................12

3.5 Data Collection Procedures...............................................................................................................12

3.6 Data Analysis Procedure...................................................................................................................13

3.7 Ethical Considerations.......................................................................................................................13

CHAPTER FOUR...................................................................................................................................14

4.0 Presentation, Discussion, and Interpretation of Findings..................................................................14

4.1 General Information..........................................................................................................................14

4.1.1 Sex of the Respondents..................................................................................................................14

4.1.2 Age.................................................................................................................................................14

4.1.3 Level of Education.........................................................................................................................15

4.1.4 Age of Business..............................................................................................................................15

4.1.5 Department.....................................................................................................................................16

4.2 Factors for a Sustainable Business Enterprise...................................................................................16

4.2.1 Would you take your business to international level......................................................................17

4.2.2 Why did you start your business....................................................................................................17

4.2.3 Strategies applied...........................................................................................................................17

4.2.4 Effectiveness of the strategies........................................................................................................18

4.2.5 Does your enterprise have a business registration..........................................................................18

4.2.6 Are you in a partnership & network..............................................................................................18

4.2.7 Factors hindering your business globally.......................................................................................19

CHAPTER FIVE.....................................................................................................................................20

5.1 Conclusions.......................................................................................................................................20

5.2 Recommendations.............................................................................................................................20

5.3 Suggestions for Further Research......................................................................................................22

5.4 Limitations of Study..........................................................................................................................22

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ABSTRACT

This study was to determine and analyze entrepreneurial strategies and the growth of micro-enterprises in
Rongai Nairobi. The enterprises studied were appraised concerning the characteristics of the owner-
managers and their enterprises. It revealed that most enterprises are in the disengagement stage that is not
growing or having a slight growth. Lack of capital, poor management skills, poor marketing, and
entrepreneurial attribute of the owner-managers were statistically significant in determining the growth of
these enterprises. The study recommends that the Government, other business support organizations, and
stakeholders should team up and develop training programs aimed at providing management skills to the
owner-managers of these enterprises and help avail financial assistance which could channel through Small
and Micro Enterprise groups that need to be formed to champion their common cause

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 CHAPTER ONE

1.1 Background of The Study

The growth of Micro and Small Enterprises has been of great concern to many government policymakers
and researchers globally since the realization of their economic contribution to Gross Domestic Product and
economic growth. Intrinsically they're no longer seen as “stepping stones” to real business but as a way of
commercial and economic process and as tools of poverty eradication (ILO, 1986).
According to OECD (2004), Micro and Small Enterprises contribute to over 55% of Gross Domestic
Product and over 65% of total employment in high-income countries. They account for over 60% of Gross
Domestic Product and over 70% of total employment in low-income countries.
In Kenya, consistent with the 1999 Micro and Small Enterprises baseline survey, the number of enterprises
within the sector had risen from 910,000 in 1993 to about 1.3 million in 1999. The survey points out that
Micro and Small enterprise's contribution to output products and services reached a big 30% of the Gross
Domestic Product in 1999 (GOK, 1999). In job creation, micro and small enterprises are in the pole position
to absorb the ever-increasing supply of young unskilled school leavers and the unemployed generally. In
1999, this sector employed 2.4 million persons. This number increased to four million in 2000 and five
million in 2002, accounting for 74.2% of all persons engaged in employment (GOK, 2005). Emphasizing
their role in employment creation, Wachira (2006) points out that 12.8% of the retrenches who pioneered the
golden- handshake in 2002 started their own business. The percentage grew to 19.2% and 21.4% within the
years 2003 and 2004 respectively. Despite the benefits of the small enterprise and Jua Kali sector, research
reveals that most Micro and Small Enterprises haven’t any growth incentive and the majority remain at their
initial level or prefer to expand horizontally by starting other similar ventures or change to other unrelated
activities (McCormick, 1993; Pedersen, 1998).

1.2 Statement of the problem

Generally, industrial sectors in Kenya are comprised of thousands of Jua Kali micro-enterprises. On the one
hand, fewer are often foreign-owned, large-scale manufacturing and processing firms. What is missing are
locally owned, medium-sized industrial enterprises (Fisher, 1999). For several countries, small and micro
enterprises have been the starting point for export-led industrialization (Kamau and Munandi, 2009;
McCormick, 1992). However, in Kenya, despite the small and micro enterprises sector being a key vehicle
for economic growth, having the potential to provide employment opportunities to the locals and having the
capacity to contribute to Gross Domestic Product (GPD) as well as poverty reduction, the sector is still
dogged by non-growth of its enterprises (Ibid). MC Cormick (1993) observed that instead of growing in
size, they have been growing numerically.

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There is a great danger of remaining small. According to K" Obonyo (1999), enterprises' size and failure are
inversely related, with smaller enterprises facing higher risks of failure than larger ones. Stokes (1995)
found that the smallest firms were most vulnerable and that those that grew were less likely to fail than those
that did not. If growth and largeness reduce failure, there is a need for concerted efforts to find the root cause
of stagnation. This will, in turn, help in curbing the high mortality rates and therefore enhance survival.
However, and most unfortunate as McCormick and Pederson (1996), Orser (2000) put it, most small and
micro enterprises firms begin small and stay that way without any growth taking place. What factors hinder
the growth of these enterprises? The current study aims at answering this perturbing question. The study
hypothesizes that the factors at play include risk-taking, knowledge management, and innovation and
competitiveness
1.3 Research Objectives
1.3.1 General objectives
To determine whether entrepreneurial strategies have any relationship with the growth of micro-enterprises
in Nairobi.
1.3.2 Specific objectives
a) The extent that risk-taking affect the growth of Small and Micro Enterprises
b) Effect of innovation on the growth of Small and Micro Enterprises
c) The extent competitiveness affects the growth of Small and Micro Enterprises
d) Effect of knowledge management on growth of Small and Micro Enterprises.
1.4 Research Questions
The following questions will guide this study
a) To what extent does risk-taking affect the growth of Small and Micro Enterprises?
b) Does innovation affect the growth of Small and Micro Enterprises?
c) To what extent does competitiveness affect the growth of Small and Micro Enterprises?
d) Does lack of knowledge affect the growth of Small and Micro Enterprises?

1.5 Scope of the study

This study is mainly focused on the impact of entrepreneurial strategies on the growth of Micro and Small
Enterprises. It is focused on Micro and Small Enterprises in the Kenyan market, and the location is limited
to the Rongai area. The population for this study comprises the licensed SMEs by the Kajiado Municipal
Council as of 2020 from the local Government ACT (CAP. 265), which have been in business for over three
years, focusing on owners and managers of the SMEs. The total population of SMEs in Rongai as per the
registration office as of 2020 was 420 across the four sectors.

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 1.5 Significance of the study
This study will mainly focus on how entrepreneurial strategies affects the growth of Micro and Small
Enterprises. It will be useful to any enterprise because its effectiveness and realization of objectives depend
entirely on the overall performance of its strategies.
It will help understand how entrepreneurial strategies affect the growth of Micro and Small Enterprises.
The study will help identify what strategies can be adopted by ailing enterprises in Kenya for survival.
This research will be a fertile ground for other researchers to base their research on improving this one.
It will also help the Government find areas to be major in when doing investigations on Micro and Small
Enterprise.

1.7 Conceptual framework

The purpose of the study is to prove whether entrepreneurial strategies have any relationship with the growth
of Micro and Small Enterprise in Nairobi. Specifically, this research is to answer four key objectives,
namely; To what extent does risk-taking affect the growth of Small and Micro Enterprises, does innovation
affect the growth of Small and Micro Enterprises, to what extent does competitiveness affect the growth of
Small and Micro Enterprises and finally does lack of knowledge affect the growth of Small and Micro
Enterprises?

Fig1.1 Conceptual framework model

Independent variables Dependent variables
Risk-taking

Innovation and
competitiveness
Growth of Small Enterprises:

 lifestyle
 Capped growth
Knowledge
management

Source Grace 2021

Source Grace 2021

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 CHAPTER TWO

2.1 Introduction
This chapter reviews literature concerning the particular problem under study. The review identifies,
compares, and recognizes the contributions of other researchers who have done similar research. For this
study, micro and small enterprises are defined as non-primary enterprises employing not more than fifty
workers (Government of Kenya, 1992; CBS et al., 1999). Micro and Small Enterprises in Kenya possess
unique characteristics and features, which are discussed in this section.
2.2 Theoretical review
According to (Saunders, Lewis, and Thornhill, 2000), the theoretical review forms the basis of research. It
helps develop a good understanding by providing insight into relevant previous research and developing
trends.
2.2.1 The Life Cycle Theory
The life-cycle theory is an economic theory that distinguishes people's spending and saving habits
throughout a lifetime. The idea was formulated by Franco Modigliani and his student Richard Brumberg in
the early 1950s. This theory states that individuals seek smooth consumption throughout their lifetime by
borrowing when their income is low and saving when their income is high.

The life-cycle theory assumes that people plan their spending over their lifetimes, taking into account their
future income accordingly. They take on debt when they are young, assuming future income will enable
them to pay it off. They then save during middle age to maintain their level of consumption when they retire.
A graph of an individual's spending over time thus shows a hump-shaped pattern in which wealth
accumulation is low during youth and old age and high during middle age.

Small and Micro Enterprise owner-managers (Massey et al., 2006). Empirical evidence of several authors
(McMahon, 2001) supports the existence of life cycle stages that denote the growth of Small and Micro
Enterprises. They tend to grow organically, whereas large corporations through acquisition (Davidson,
Delmar, and Wilund, 2006). The theory applied in stochastic, meaning that the firm growth is affected by
several factors, and there is no dominant theory to describe growth.
2.2.2 Resource-Based Firm Theory
The resource-based theory of a firm was initially introduced by J.B Barney back in 1991 as a unique
resource where the company must be competitive. These strategic resources must consist of characteristics
of being Valuable, Rare, Imperfectly imitable, strategically irreplaceable. Environmental sustainability is
mostly seen as an effort to keep a sustainable environment where environmental sustainability is placed into
a more strategic position as a company's strategic advantages.

In line with the Resource-based firm theory definition (Goshal et al., 2002), the firm comprises
differentiated technological skills, complementary assets, and organizational routines and capacities.
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Commercial resources such as credit are one of the resources that impact the growth of a firm (Hartarska &
Gonalez-Vega 2006). According to the theory, the readiness of resources like access to entrepreneurial
finance leads to sustained competitive advantage, leading to the growth of small enterprises.
2.2.3 Strategic Management Perspective Theory
Strategic Management Perspective Theory of a firm was initially introduced by McMahon (1998), whereby
SMEs respond to the owner or manager's motives, policies, and strategies. In this context, not all enterprises
aim or desire growth; some are developed for subsistence purposes and are comfortable maintaining their
size. Their aim is, therefore, to survive. In such instances, the entrepreneur is 'pushed' into survival activities
to search for income-generating activities to support family income (Harvie, 2003).
2.2.4 Critique of the Theories
Other authors understand the notion of resource in the model of Resource-Based View as the summation of
all enterprise capabilities, both financial and non-financial, in their classic interpretation (considering, e.g.,
buildings and capital as financial resources and licenses and symbols under non-financial resources), as well
as their abilities to maintain these resources, and knowledge about the market, enterprise products, and
services, etc. (Eriksen, Mikkelsen, 2006; Ray et al., 2004)
Based on Resource-Based View, it assumes and consolidates the most important enterprise resources to be
those that are difficult to copy and replace; it may presume that the advantages of long-term competitive
strength are established by those resources that are related to the knowledge rather than information (which
is comparatively easy to obtain and port with up-to-date information carriers). Therefore, enterprise
capabilities build the most vital enterprise resource group since they form exactly the sensitivity of an
enterprise to variable conditions of the environment and make it produce innovations, consider new business
opportunities, etc.
The next line for Resource-Based View utilizes the notion of dynamic capabilities or absorptive expertise,
stressing the ability to develop new competencies as the most important enterprise characteristics in today's
changeable environment (Treece, Pisano, Shuen, 1997; Eisenhardt, Martin, 2000). In addition to this
resource category in Resource-Based View, the knowledge conception is integrated (Gold, Malhorta, and
Segard, 2001; Canter, Joel, 2007). Knowledge management and Knowledge-Based View of the Firm are
separate branches based on Resource-Based View that are focused
Thus, need to develop innovation indicators. Such indicators as total innovation expenses, innovation
proportion in an enterprise turnover, and cooperation indicators are widely used nowadays, helping to obtain
a broader overview of innovation activity within small and medium enterprises. This makes the theory
suitable for my research.
The product life cycle concept is an essential component of the marketing theory. Czinkota, Kotabe, and
Mercer (1997) affirm that the intuitive appeal of an analogy with the human life cycle is a key aspect of the
product life cycle. Critics, however, claim that product life cycles lack what living organisms have. Many
highly respected practitioners and academics have rejected the product life cycle as a useful weapon in the
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marketer's armory. Foremost among the critics are Dhalla and Yuspeh (1976) in Baker (1992). Their article
found considerable support for their contention that the PLC concept is without empirical support and has
led managers to make incorrect decisions, particularly concerning products in the mature phase of the cycle.
They also claim that the product life cycle can lead to flawed marketing decisions, such as premature
withdrawal from markets. If the administration is mistakenly convinced that the product life cycle is
declining and acts as though it is, a self-fulfilling prophecy can occur.

This study, therefore, settles for Resource-based theory arguing that: In this globalized environment, ways of
achieving competitive advantage are changing fast. As such, firms in this marketplace need to have timely
strategies, flexible infrastructures, and an ability to utilize resources and capabilities in coupled and
innovative ways (Teece et al., 1997). Therefore, in contrast to traditional Resource-Based theory
assumptions, competitive advantages gained in the dynamic marketplace may be based on capabilities,
which have greater homogeneity and substitutability across firms (Eisenhardt and Martin, 2000). Therefore,
competitive advantages achieved through dynamic capabilities are based on the ability to change the firm's
resource base. This means dynamic capabilities alter resource bases by creating, integrating, recombining,
and releasing resources (Eisenhardt and Martin, 2000). Dynamic capabilities have been tightly coupled with
a dynamic or rapidly changing environment (Teece et al., 1997; Sher and Lee, 2004). However, Zahra et al.
(2006) also discuss the applicability of such capabilities in non-dynamic marketplaces and suggest that while
organizations that operate in more dynamic marketplaces would gain greater value from dynamic
capabilities, it does not exclude organizations slower to change marketplaces from gaining value from
dynamic capabilities.
2.3. Empirical review
In Kenya, numerous studies have been carried out on the growth of Small and Micro Enterprises.
(Namusonge, 1998) studied Determinants of growth-oriented Small and Micro Enterprises in Nairobi. The
vital determinants were managerial experience, education and training, and the psychology of the
entrepreneur. He concluded that readiness and type of finance are key determinants of the growth
performance of Small and Micro Enterprises. Entrepreneurs' characteristics also influence growth
performance. In the study, the specific measures of growth aren't emphasized. In his study, the role of
quality on the growth of Small and Micro Enterprises in Kenya (Wanjau, 2010) recognized that adoption of
quality impacts the growth of Small and Micro Enterprises. In his study (Mungah, 2010), Determinants of
growth of manufacturing Small and Micro Enterprises in Kenya recognized that interest rate, fuel cost,
business skills, and political instability were key factors that influence Small and Micro Enterprises growth
into enormous business enterprises.
The subject achieves recognized relevance, specifically because limitations on credit to small businesses are
a global phenomenon (Baas and Schrooten, 2006). Small firms are more informational opaque and,
therefore, have not as much access to external funding as larger firms; investors cannot solve problems of
6
asymmetric information and adequately fund small business expansion (Hartarska and Gonzalez-Vega,
2006). The readiness of appropriate economic resources is important for business growth (Tustin, 2003;
Goodal, 2000; Zinkota and Ronainen, 2003). This allows Small and Micro Enterprises to secure the required
expertise and raw materials to put entrepreneurial ideas into practice, be competitive, survive during harsh
conditions, and grow (Robertson et al., 2003; Wickham, 2001). The outcome obtained by (Cooley and
Quadrini, 2001) and (Cabral and Mata, 2003) indicates that the growth of new small companies is delayed
by restrictions concerning finance and the shortage of resources of diverse nature. The strategies of Small
and Micro Enterprises for finance are essential in explaining their growth, and this can be seriously delayed
when firms are subject to considerable financial restrictions (Reid, 2003).
(Drever, 2006) reasoned that financial problems constrained the development and growth of micro-
enterprises, as many of them are incapable of accessing the same kinds of growth funding often available to
large enterprises (Watson, 2006).

Empirical proof reveals the importance of internal finance for Small and Micro Enterprise growth,
highlighting a positive relationship between growth and internal finance in different economies, namely
Germany (Audretsch and Elston, 2002), United States (Carpenter and Petersen, 2002), Portugal (Cabral and
Mata, 2003; Oliveira and Fortunato, 2006) and Spain (Moreno and Casillas, 2007). Meyer (1998) concludes
that in cases of inadequate internal finance, access to external finance can be vital to encourage firm
investment and consequently growth. However, internal inadequacy funding can be problematic, given the
greater problems faced by Small and Micro Enterprises in acquiring external finance (Becchetti and Trovato,
2002).
The majority of financial institutions like banks are very conservative and risk-averse and therefore avoid
Small and Micro Enterprises that are well-thought-out to be risky and with no collateral or dependable track
records (Mughan, Lloyd, Reason Zimmerman 2004; Leah and Trucker, 2000; Luiz 2002). Those Small and
Micro Enterprises that can secure start-up finance find the cost of capital too high (Rwigema and Venter,
2004). Financial restrictions remain a major challenge facing Small and Micro Enterprises in Kenya
(Wanjohi and Mugure, 2008), and this is the situation in Nairobi. Therefore, the study will determine how
access to finance influences the growth of Small and Micro Enterprises in Nairobi.
2.3.1 Risk-taking
According to Keil, Wallace, Turk, Dixon-Randol, and Nulden (1998), the exact nature of the relationship
between risk perception, risk propensity, and decision making is not well- understood. Previous research has
examined the effects of risk perception on decision making and the relationship between risk propensities
and decision making; they were only aware of one study that has examined all three constructs together
(Sitkin &Weingart, 1995). In this study, Sitkin and Weingart (1995) conducted laboratory experiments to
manipulate outcome history and problem framing while measuring risk propensity, risk perception, and
decision making. The results of their study suggest that risk propensity is inversely related to risk perception,
7
which, in turn, is inversely related to the tendency to make risky decisions. Found No significant effect
between risk propensity and decision making.
Keil et al. (1998) established two key findings from their study: (1) an individual’s risk perception appears
to be shaped more by perceived downside potential than the actual probability of failure occurring, and (2)
an individual's willingness to pursue a risky project appears to be influenced more by risk perception than by
any innate propensity to take or avoid risks. Forlani and Mullins (2000) found that entrepreneurs with
greater risk propensities tend to choose riskier ventures. Risk propensities did not significantly influence
their subjects' perceptions of venture risks, contrary to the prediction by Sitkin and Pablo (1992). The
absence of an effect of risk propensity on risk perceptions is consistent with the findings of a study by Palich
and Bagby (1995). They found a consistently optimistic pattern of categorization of business situations
among entrepreneurs compared to non-entrepreneurs (Forlani & Mullins, 2000).
Willebrands et al. (2012) found robust evidence that higher risk perception leads to better performance due
to precautionary action by individuals to contain risk. Weber et al. (2002) provided more evidence for the
hypothesis that perceived-risk attitude, which factors domain differences in risk perception out of risk
behavior, is significantly more consistent across domains for a particular respondent than conventional risk
attitude. Most respondents were significantly or mildly perceived-risk averse in all content domains. What
differed between individuals (partly as a function of gender) and between domains were perceptions of the
benefits and threats of risky activities. Simon, Houghton, and Aquino (1999) asked whether cognitive biases
lead individuals to perceive different levels of risk. They also studied the variations in risk perception
associated with decisions. Their findings were that risk perception affects decision-making and that
individuals who perceive lower levels of risks were more likely to form a venture.
Willebrands, Lammers, and Hartog (2012) found mixed support for the view: "entrepreneurs who are
willing to take risks, will, on average, perform better." Taking the literature into account, they moved
towards the view that entrepreneurs distinguishing skills between risk propensity and risk perception are
different than those of non-entrepreneurs. For example, Barbosa, Gerhardt, and Kickul (2007) found that
individuals with a high-risk preference have higher levels of entrepreneurial intentions, are more
opportunity-seeking, and have higher levels of self-efficiency. Individuals with a low-risk preference, on the
other hand, had higher levels of relationship efficacy and tolerance efficacy. They also found that intuitive
individuals with a higher preference for risk exhibited higher levels of opportunity identification efficacy.
Forlani and Mullins (2000) provide evidence which extends the work of March and Shapira (1987) that
differences in entrepreneurs' new venture choices were influenced not only by differences in the risks
inherent in the patterns of anticipated outcomes for different ventures but also by differences in the
entrepreneurs' perceptions of those risks, as well as their willingness to take risks. Weber et al. (2002)
provided strong evidence with their study of 560 undergraduate students by assessing their risk-taking in
five different domains: financial, health/safety, recreational, ethical, and social, in favor of the hypothesis
that risk-taking is domain-specific. This means that, by definition, conventional risk attitudes, i.e., risk
8
attitudes inferred from behavior either directly or via utility functions derived from risky choices, are also
domain-specific rather than reflections of a stable attitude or trait (Weber et al., 2002). In addition to
documenting the domain-specificity of risk attitudes for a far more comprehensive set of risk domains than
previously compared in a single study, their paper makes three other contributions.
2.3.2 Innovativeness & Competitiveness
Today's marketplace's preponderance of technology and innovation has revolutionized business management
(Lindgren, 2012; McDermott & Prajogo, 2012). A technological era has replaced the industrial age. The
Kenyan Small and Micro Enterprises leaders need to begin to reward managers for innovative ideas to
encourage organizational learning and improve organizational performance (Vega, Brown, & Chiasson,
2012). In other words, for any business to remain relevant in today's competitive markets, the organizational
leaders also need to establish a competitive advantage to move the enterprise forward. Hence, the
competitive edge is a business concept; it is the threshold used to determine most companies' success and
failures and identify leaders and followers of firms in the industry (Porter, 2008). Therefore, to be successful
in today's global business environment, Small and Micro Enterprises leaders need to endeavor to apply
business concepts and practices to compete globally and increase business growth and development
(Meihami & Meihami, 2014).
Chun and Mun (2011) asserted that the innovative capacities of Small and Micro Enterprises could benefit
from cooperation to expand access to external knowledge. Cooperation between different sized firms
provided more knowledge spillover for the Small and Micro Enterprises than the larger firms, thereby
stimulating interest in collaboration despite management expertise and extensive intellectual property
protection. Small and Micro Enterprises that fear sharing innovation secrets leaned toward cooperation with
research institutions and universities. The ability to absorb and exploit knowledge spillover from
cooperation is essential for small firms to innovate. A quantitative examination of a nationwide innovation
survey provided data to confirm a positive correlation between innovation and Small and Micro Enterprises'
decision to pursue cooperation.
Gardet and Mothe (2012) conducted a qualitative multiple-case study that explored the role of SMEs in
innovation networks. The study focused on organizational innovation in Small and Micro Enterprises and
inter-organizational networks. There was a gap in the study of innovation networks amongst Small and
Micro Enterprises. The qualitative empirical analysis examined that gap. The results indicated the existence
of a correlation between network size and benefits sharing. Also, the findings led to the fact that firm size
influenced trust in conflict resolution amongst the hub and suggested items that managers to consider when
adopting coordination mechanisms.
2.3.3 Knowledge Management
Gholami, Asli, Shirkouhi, and Noruzy (2013) examined the Influence of Knowledge Management Practices
on Organizational Performance: An Empirical Study aimed to examine the influence of knowledge
management practices on organizational performance in small and medium enterprises using structural
9
equation modeling (SEM). Several 282 senior managers from these enterprises were chosen using simple
random sampling and analyzed the data with the structural equation model. The results showed that
knowledge acquisition, knowledge storage, knowledge creation, knowledge sharing, and knowledge
implementation significantly affected knowledge management. Also, productivity, performance, staff
performance, innovation, work relationships, and customer satisfaction significantly impact organizational
performance.
Gholami, Asli, Shirkouhi, and Noruzy (2013) Examined the Influence of Knowledge Management Practices
on Organizational Performance: An Empirical Study aimed to examine the influence of knowledge
management practices on organizational performance in small and medium enterprises using structural
equation modeling (SEM). Several 282 senior managers were chosen using simple random sampling and
analyzed the data with the structural equation model. The results revealed that knowledge acquisition,
knowledge storage, knowledge creation, knowledge sharing, and knowledge implementation significantly
impact knowledge management. Also, productivity, performance, staff performance, innovation, work
relationships, and customer satisfaction significantly impact organizational performance.
Wanjiru and Gathenya (2015) conducted a study on the Role of Knowledge Management on Performance of
Social Enterprises in Kenya: A Case Study of Nairobi City County. This study examined the role of
knowledge sharing on the performance of social enterprises in Kenya. They selected Ten social enterprises
in Nairobi for the study. A sample of 90 individuals was interviewed from the ten organizations. Data were
collected using questionnaires, interview guides, and review organizations" documents—analyzed Data
through quantitative and qualitative methods. Most social enterprises document shares knowledge, as
indicated by 65% of the respondents who reported that their organizations had established ways of
documenting and sharing knowledge.
Daud and Yusoff (2010) conducted a study on Knowledge Management and Firm Performance in SMEs:
The Role of Social Capital as a Mediating Variable. The study examined knowledge management, social
capital, and firm performance by using a questionnaire directed to small- and medium-sized enterprises, all
of them situated within the Multimedia Super Corridor in the Klang Valley of Malaysia. The results based
on 289 usable questionnaires confirmed that knowledge management processes (creation, sharing,
acquisition, and implementation) influence social capital positively; social capital enhances firm
performance, and social capital is a mediator between knowledge management processes and firm
performance. The research could be integrated knowledge management processes (creation, sharing,
acquisition, and implementation) and social capital to enhance firm performance.
2.4 Knowledge Gap
This study aims to assess the use of strategic entrepreneurship within Rongai area SMEs link these factors
and a firm's performance. The study was inspired by Olawale and Garwe (2010), namely that the failure rate
of SMEs is one of the highest in the world and currently stands at 75%. Improving the performance of SMEs
will contribute positively to their success, which as a result, will contribute to national job creation
10
objectives in the country. The Kenyan Government has put in place measures, such as tax relief for SMEs,
incubation programs, and Enterprise Finances to encourage and support SME activity, sustainability, and
success.
However, despite the support programs implemented by the Government, SMEs are not achieving the
Government's desired performance and growth rate of 5% per annum (Olawale and Garwe, 2010). Failure of
SMEs to reach the desired performance levels has motivated this study to examine other SME management
and operation areas that could potentially stimulate higher performance. Although several studies have been
conducted on the SME sector in Rongai, Kenya, this is the first study to show the correlation between
strategic entrepreneurship and performance in this sector.
Concerning Robinson (1982), small business owners and managers don’t engage in systematic planning.
Studies conducted (Trombetta, 1976; Shane and Venkataraman, 2000) show that a thorough planning effort
and adoption of the strategic plans result in increased sales. The business gap identified in the SME sector is
the empirical study that links strategic planning, entrepreneurial orientation, and performance. The results of
the studies and the recommendations resulting from them can encourage small business owners and
managers to engage in strategic planning and entrepreneurial activities and advise on the best methods to do
so.

11
 CHAPTER THREE

3.0 RESEARCH DESIGN AND METHODOLOGY

This chapter reveals how the research was conducted and analyzed. This chapter describes the research
design, population, sampling frame, sample and sampling technique, data collection methods, data
collections procedure, description of research instruments, data processing, and analysis.
3.1 Research Design
Kothari (2003) defined research design as the conceptual structure within which research is conducted. It
constitutes the blueprint for the collection, measurement, and analysis of data. According to Burns and
Groove (1997), the study's design is the result of a series of decisions made by the researcher concerning
how the study will be conducted. The design is closely associated with the framework of the study and
guides planning for implementing the study. According to Polit and Hungler (1995), research designs vary
concerning how much more structure the researcher imposes on the research situation and how much
flexibility is allowed once the study is underway.
The research used the descriptive research design. According to Kothari (2004), descriptive research design
seeks to establish factors associated with certain occurrences, outcomes, conditions, or types of behavior.
The researcher preferred this method because it sought to identify and describe how the independent factors
influenced the dependent variable. For this study, the independent variables were Strategies adopted by
surviving enterprises, Strategies that ailing enterprises could adopt, Strategies needed to survive in the
Global Market, and Guide for prospective entrepreneurs in Kenya. In contrast, the dependent variable was
the growth of Small and micro-enterprises.
3.2 Target Population
Cooper and Schindler define a population as the total collection of elements from which individuals wish to
conclude. The target population comprises the licensed SMEs by the Kajiado Municipal Council as of 2020
from the local Government ACT (CAP. 265), which have been in business for over three years, focusing on
owners and managers of the SMEs. The total population of SMEs in Rongai as per the registration office
was 420 across the four sectors. The study population was drawn from four small and micro-enterprises
operating with Rongai town. The research was interested in the impact of entrepreneurial strategies on the
growth of Small and micro-enterprises.
3.3 Sample and Sampling Procedure

12
A sample is defined as a group of individuals or objects selected from the targeted population of the research
study to conduct the survey or interview (Denscombe, 2014). Mvumbi and Ngumbi (2015) indicated that a
sample ought to be large enough to represent the significant features of the target population. According to
Mugenda and Mugenda (2013), a sample size between 10%-30% is adequate for the study. According to
Cooper and Schindler (2001), sampling lowers cost, gives more accurate results, and ensures greater speed
of data collection and availability of population elements. This study adopted the A simple random sampling
technique. The sample size is the finite part of a statistical population whose characteristics are researched to
gain information about the organization (Naoum, 2009). The criteria used when deciding the sample size is
the extent to which the sample represents the population. The sample size for this study was 204 employees
operating a different kinds of enterprises. To achieve the appropriate sample size for the employees, the
study used Yamane (1967) scientific formula:

n = N / (1 + Ne2)

Where:
n = sample size
N = total population (in this case, 160)
e = margin of error (at 95%, e=0.05)
The sample size shall be computed as follows:
n = N / (1 + Ne2)
n = 420/ (1 + 420× 0.052)
n = 420/ (1 + 420× 0.0025)
n = 420/ (1 +1.05)
n = 420/ 2.05
n = 204
Department Number of Employees Percentage

Salon & barbershop business 57 27.94

Dressmaking business 52 25.49

Cyber café and movie shop 50 24.51

Smokies and egg sellers 45 22.06

Total 204 100

Table 3.1 Sample Distribution

3.4 Description of Research Instruments
The researcher developed the instrument for this study under the supervision and guidance of the Catholic
University Supervisors due to this appointment.
13
The Structured questionnaire was used to formalize a set of questions for obtaining information from
respondents. According to Dawson (2002), three basic types of questionnaire items are closed-ended, open-
ended, or a combination of both. The questionnaire for this study was closed-ended, containing boxes that
the respondents ticked to indicate the extent to which the respondents agreed or disagreed with the research
statement. The questionnaire was designed in a simple, understandable language to provide accurate,
unbiased, and complete information.
3.5 Data Collection Procedures
This research used both primary and secondary data. Primary data for this study will be collected using
structured questionnaires. Schwab (2005) defined a questionnaire as measuring instruments that ask
individuals to answer a set of questions or respond to a set of statements. Mugenda and Mugenda (2003) and
Kothari (2004) defined a questionnaire as a document that consists of several questions printed or typed in a
definite order on a form or set of forms. The overriding objective of the questionnaire was to translate the
researcher's information needs into a set of specific statements that respondents were willing and able to
answer. It was simple to administer, time-saving, and collected a lot of information within a short period.
Kothari (2004) defined secondary data as data that is already available, referring to the data which have
already been collected and analyzed by someone else. Polit and Beck (2003) explained that secondary
research involves using data gathered in a previous study to test a new hypothesis or explore new
relationships.

Secondary data was obtained through published and unpublished materials and annual reports of the four
selected enterprises. This method of data collection was time-saving.

The questionnaire was guided by the research objectives, which formed the sections of the questionnaire.
The sections were as follows: Demographic characteristics of the respondents to ascertain if there were
employees with institutional memory, entrepreneurial strategies, and enterprises' growth. The other section
sought to find out types of entrepreneurial strategies, and another section focused on how those strategies
mentioned above influence growth. This formed the research data that was analyzed, interpreted, and made
conclusions and recommendations.

The Structured questionnaire was used in formalizing a set of questions for obtaining information from
respondents. According to Dawson (2002), three basic types of questionnaire items are closed-ended, open-
ended, or a combination of both. The questionnaire for this study was closed-ended, containing boxes that
the respondents ticked to indicate the extent to which the respondents agreed or disagreed with the research
statement. The questionnaire was designed in a simple, understandable language to provide accurate,
unbiased, and complete information.

3.6 Data Analysis Procedure

14
data gathered was subjected to descriptive and non-parametric analysis. Before the actual data analysis, the
gathered data were validated, edited, and then coded. During the validation process, I checked questions to
obtain an accurate or acceptable sample in terms of the proportion of the issued questionnaire. Also checked
them to verify completeness. The questionnaires were scrutinized to determine whether there were errors
and omissions, ambiguous, inadequate, illegible, and irrelevant responses.
The researchers used content analysis which examined the intensity with which certain words have been
used. In content analysis, a classification system is developed to record information. In interpreting the
result, the frequency in which the idea appears was interpreted as a measure of importance or emphasis. The
results are descriptive but will also indicate the trends or issues of interest. Pragmatic content analysis will
be used to emphasize why something is said and understand people's perceptions and beliefs. The
summarized data were further visually presented in frequency tables.
3.7 Ethical Considerations
Participants were fully informed about the objective of the study. At the same time, I reassured them that the
answers they deliver would be treated as confidential and used for academic and research purposes only.
All participants did have a word with the researcher in charge, and this reassured them that their
participation is voluntary and that they were free to withdraw from it at any point and for any reason. The
researcher made an honest report of the study and the methods used to collect and analyze the data and also
kept the agreements made to the participant and acted sincerely. The researcher ensured the study's
objectivity by avoiding bias in any aspect of your research, including design, data analysis, interpretation,
and peer review.

15
 CHAPTER FOUR

4.0 Presentation, Discussion, and Interpretation of Findings

Chapter four provides the results and findings of the entrepreneurial strategies and the growth of micro-
enterprises, a case study at Rongai. The chapter is divided into sections starting with section 4.1 that
describes the demographic representation of the population of study and analysis the influence of
entrepreneurial strategies and the growth of micro-enterprises.
A total of 20 questionnaires were administered, and 18 were realized. This translates to a response rate of
90%. Then presented the findings in the same order as the research questions.

4.1 General Information

collected the general information about the respondents based on sex, age, level of education, and years of
experience. The majority of the respondents were male (51.4%), between 31-40 years (35.7%), most of the
respondents had a university education (57.1%), and the majority had worked as entrepreneurs for 1-5 years
(42.9%). This was collected to ascertain the quality and link of responses given concerning the influence of
entrepreneurial strategies and the growth of micro-enterprises.
The section also sought to ensure there was age diversity of respondents such that all ages were represented
in the study and to ascertain whether the age of the respondents affected the quality of responses, education
levels of the respondents and if there was a link of the responses concerning the influence of entrepreneurial
strategies and the growth of micro-enterprises. In addition, the years of work experience of the respondents
sought to ascertain whether the respondents had worked long enough to be knowledgeable on the area of the
study and if this influenced their responses on the influence of entrepreneurial strategies and the growth of
micro-enterprises.
4.1.1 Sex of the Respondents
The general information found out that 51.4% of the respondents were male while 48.6% of the respondents
were females, as shown in Table 1 below.

16
 48.60% 51.40%

Male Female

Figure 1: Gender of the Respondents

4.1.2 age
The general information based on the ages of the respondents found that 5.7% of the respondents were
between 18-20 years old, 22.9% were between 21-30 years old, 35.7% were between 31-40 years old, 21.4%
of the respondents were between 41-50 years old, and 14.3% of the respondents were between 51-60 years
old as shown in figure 2 below.
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Age

18-20 21-30 31-40 41-50 51-60

Figure 2: Age of respondents

4.1.3 Level of Education

The general information provided on the level of education found that 15% of the respondents had
secondary certificate as their highest level of education, 20% of the respondents had a College certificate as
the highest level of their education, 55% of the respondents had university Bachelor Degree as their highest
level of education, and 10% of the respondents had a post-graduate degree as their highest level of
education. The majority (55%) of the respondents had a university certificate as the highest level of
education, as shown in Table 3 below.
Level of education Frequency Percent
Secondary 3 15
College 4 20
University 11 55

17
 Post-graduate 2 10
Total 20 100

Table 3: Level of education

4.1.4 Age of Business

The general information based on the work experience as an entrepreneur found that 15% of the respondents
had less than one year of experience, 40% of them had 1-5 years of experience, 25% of the respondents had
5-10 years of job experience, and 20% of the respondents had over ten years of experience. The majority
(40%) of the respondents had 1-5 years of experience, as shown in Table 4 below.
Period Frequency Percent
Less than one year 3 15
1-5 years 8 40
5-10 years 5 25
Above ten years 4 20
Total 20 100

Table 4: years worked for the organization

From the general information of the respondents, it is observed that there was a good representation of
respondents in terms of sex, age, and level of education. There was also a good distribution of respondents
with different years of experience.
4.1.5 Department
The information provided by the respondents found that 28.6% of the respondents were in the Salon and
Barbershop, 22.9% of the respondents were in the Dressmaking business, 22.9% of the were from cyber café
and movie shops, 25.7% were in smokies and egg sellers. The majority (28.6%) of the interviewed were in
the salon and barbershop business, as shown in figure 5 below.
35.00%
30.00%
25.00%
Percentage

20.00%
15.00%
10.00%
5.00%
0.00%
Departments
Departments

Salon & Barbershop Dressmaking Smokies& egg Cyber café & movie shop

Figure 5 Department

4.2 Descriptive Results of Risk – Taking

18
The purpose of this study is to evaluate risk-taking and performance of SMEs in Rongai. The respondents
were asked to show the degree to which they concur or do not concur with the statements regarding risk
taking based on a Likert scale where 1=Strongly Disagree, 2= Disagree, 3= moderately agree, 4=Agree and
5=strongly agree. The results are as presented in table 5 below. The results of the study showed that 30.5%
of the respondents indicated that they usually practice “wait and see” tendency to minimize risks, majority
32.6% of them indicated agree, those who indicated moderately agree were 12.9% while those who
indicated disagree were 9.2% and those who strongly disagree were only 14.8%. Majority of the respondents
agreed to practice “wait and see” tendency to minimize risks.
The findings of the study also revealed that the majority 43.3% of the respondents strongly agreed that their
business borrows heavily to invest in new products, technologies, markets and services,14.5% the
respondents indicated agree, 27.4% of them moderately agreed while only 3.75 of them indicated disagree
and those who strongly disagreed were 11.1%. Overall, the respondents strongly agreed that their business
borrows heavily to invest in new products, technologies, markets and services. Moreover, the results of the
study revealed that 30.5% of the respondents strongly agreed to employ a brave and open minded approach
to achieve business goals, majority 54.2% of the respondents strongly agreed, those who indicated agree
were 27.4% while those who indicated moderately agree and disagree were both 7.4% while those who
strongly disagreed were only 3.7%. Overall, the respondents agreed to employ a brave and open minded
approach to achieve business goals.

The findings of the study further revealed that 30.5% of the respondents strongly agreed that they have a
specific strategy that enables me to spread business related risks, those who indicated agree were 32.6,
12.9% of the respondents moderately agreed with the statement while only 9.2% of them indicated disagree
and 14.8% of the respondents strongly disagreed. Largely, the respondents indicated that they have a
specific strategy that enables me to spread business related risks. Additionally, the results of the study
showed that majority 43.4% of the respondents strongly agreed with the statement that the firm invests in
high risk projects, unexplored technologies and take new products to new markets, those who indicated
agree were 14.5%, those who moderately agreed with the statement were 27.4% while those who indicated
disagree were only 3.7% and those who strongly disagreed with the statement were 11.1%. Generally, the
respondents agreed that the firm invests in high risk projects, unexplored technologies and take new
products to new markets.

Last but not least, the findings of the study showed that 10.8% of the respondents strongly agreed that the
Entrepreneurs who enter unknown new markets are likely to grow their businesses, those who indicated
agree were the majority 56%, those who moderately agreed were 7.4% while those indicated disagree were
14.8% and lastly those who strongly disagreed were 11.1%. Overall, the respondents moderately agreed that
the Entrepreneurs who enter unknown new markets are likely to grow their businesses. Finally, the results of

19
the study revealed that majority 32.3% of the respondents strongly agreed that the Businesses that commit a
large portion of resources to ventures with uncertain outcomes grow in business, those who indicated agree
were 27.1%, those who moderately agreed with the statement were 11.1% while 22.2% of them indicated
disagree and only 7.4% of the respondents strongly disagreed with the statement. In general, the respondents
agreed that the Businesses that commit a large portion of resources to ventures with uncertain outcomes
grow in business.

Statement Strongly Agree Neutral Disagree Strongly

Agree disagree
I usually practice “wait and see” tendency to 14.8% 9.2% 12.9% 32.6% 30.5%
minimize risks
My business borrows heavily to invest in new 11.1% 3.7% 27.4% 14.5% 43.4%
products, technologies, markets and services
I employ a brave and open minded approach to 3.7% 7.4% 7.4% 27.4% 54.2%
achieve business goals
I have a specific strategy that enables me to spread 14.8% 9.2% 12.9% 32.6% 30.5%
business related risks
The firm invests in high risk projects, unexplored 11.1% 3.7% 27.4% 14.5 % 43.4%
technologies and take new products to new markets
Entrepreneurs who enter unknown new markets are 11.1% 14.8% 7.4% 56.0% 10.8%
likely to grow their businesses

Businesses that commit a large portion of resources to 7.4% 22.2% 11.1 % 27.1% 32.3%
ventures with uncertain outcomes grow in business
Table 5 Descriptive Results of Risk – Taking

4.3 Descriptive Results of Innovation

The majority 69.2% of the respondents agreed and strongly agreed with the statement that we continually
make improvements in our products and processes., 4.6% of the respondents disagreed and strongly
disagreed with the statement while 26.2% of the respondents were neutral about the opinion. 76.6% of the
respondents agreed and strongly agreed with the statement that We explore non-traditional and creative
ways of doing business, 7.5% of the respondents disagreed and strongly disagreed with the statement while
15.9% of the respondents were neutral about the statement. 49.5% of the respondents agreed and strongly
agreed with the statement that We actively research and brainstorm on better methods of conducting our
business, 26.2% of the respondents disagreed and strongly disagreed with the statement while 24.3% of the
respondents were neutral about the statement. 64.5% of the respondents agreed and strongly agreed with the
statement that We find ways to add value to our existing products/services to differentiate our business from
20
our competitors, 14.9% of the respondents disagreed and strongly disagreed with the statement 20.6% of the
respondents were neutral about the statement. 68.3% of the respondents agreed and strongly agreed with the
statement that We are open to partnerships with other businesses to develop new products and services,
7.4% of the respondents disagreed and strongly disagreed with the statement 24.3% of the respondents were
neutral about the statement as shown in Table 6 below

Statement Strongly Agree Neutral Disagree Strongly

agree disagree

We continually make improvements in our products 39.2% 30% 26.2% 3.6% 1%

and processes.

We explore non-traditional and creative ways of doing 20% 56.6% 15.9% 5.5% 2%
business.

We actively research and brainstorm on better 9.5% 40% 24.3% 20% 6.2%
methods of conducting our business.
We find ways to add value to our existing 50% 14.5% 20.6% 12.1% 2.8%
products/services to differentiate our business from our
competitors.
We are open to partnerships with other businesses to 30.3% 38% 24.3% 4.2% 3.2%
develop new products and services
Table 6 Descriptive Results of Innovation

4.4 Descriptive Results of Competitiveness

From the data gathered below, 84% of the entrepreneurs' believed that the availability of capital is the key
reason for any business to survive. In contrast, 58 % of the participants believe that a comprehensive
management system is also an essential recipe for the survival of a business. In the third (3 rd) place comes
access to raw materials with 82%, and finally, the business location comes in at the fourth (4 th) place with
44% of the participants. Therefore, most participants strongly believe that once there is easy access to
capital, whether personally or through debt, a business will have robust chances of surviving.

Factors 1st 2nd 3rd 4th

Accesses to Capital 84% 12% 0% 0%
Good Management 16% 58% 12% 18%
Location of Business 0% 14% 6% 44%
Easy Accesses to Raw 0% 16% 82% 18%
Materials

21
Table 7 Descriptive Results of Competitiveness

4.5 Descriptive Results of Knowledge Management

The majority 48.6% of the respondents agreed and strongly agreed with the statement that The company
successfully applies its own past experiences in addressing new challenges, 20.6% of the respondents
disagreed and strongly disagreed with the statement while 30.8% of the respondents were neutral about the
statement. 66.3% of the respondents agreed and strongly agreed with the statement that The company knows
how to successfully exploit the potential of its employees, 10.3% of the respondents disagreed and strongly
disagreed with the statement while 23.4% of the respondents were neutral about the statement. 67.3% of the
respondents agreed and strongly agreed with the statement that Employees are encouraged to apply new
knowledge in practice, 11.2% of the respondents disagreed and strongly disagreed with the statement while
21.5% of the respondents were neutral about the statement. 68.3% of the respondents agreed and strongly
agreed with the statement that The company successfully markets its products or services, 7.4% of the
respondents disagreed and strongly disagreed with the statement while 24.3% of the respondents were
neutral about the statement. 67.3% of the respondents agreed and strongly agreed with the statement that
The company has an efficient system for counselling and mentoring junior co-workers, 12.1% of the
respondents disagreed and strongly disagreed with the statement while 20.6% of the respondents were
neutral about the statement. 70.1% of the respondents agreed and strongly agreed with the statement that
The company regularly stores the knowledge (has archives) on the implementation and contents of the
research process, 10.7% of the respondents disagreed and strongly disagreed with the statement while 19.2%
of the respondents were neutral about the statement. 68.2% of the respondents agreed and strongly agreed
with the statement that The company has an efficient computerized system for accessing and searching in its
own knowledge bases, 7.5% of the respondents disagreed and strongly disagreed with the statement while
24.3% of the respondents were neutral about the statement as shown in Table 8 below.

Statement Strongly Agree Neutral Disagree Strongly

agree disagree

The company successfully applies its own past 6.3% 42.3% 30.8% 18% 2.6%
experiences in addressing new challenges.

The company knows how to successfully exploit 4.3% 62% 23.4% 9.1% 1.2%
the potential of its employees.

Employees are encouraged to apply new 7% 60.3% 21.5% 7.2% 4%

knowledge in practice.

The company successfully markets its products or 30.3% 38% 24.3% 4.2% 3.2%

22
 services.

The company has an efficient system for 40.3% 27% 20.6% 9.1% 3%
counselling and mentoring junior co-workers.
The company regularly stores the knowledge (has 50% 20.1% 19.2% 5.3% 5.4%
archives) on the implementation and contents of
the research process.

The company has an efficient computerized 30.2% 38% 24.3% 5% 2.5%

system for accessing and searching in its own
knowledge bases

Table 8 Descriptive Results of Knowledge Management

CHAPTER FIVE

5.1 Summary
The first research variable of the study was to determine what extent does risk-taking affects the growth of
Small and Micro Enterprises. The findings of the study revealed that Overall, the respondents strongly
agreed that their business borrows heavily to invest in new products, technologies, markets and services,
they employ a brave and open minded approach to achieve business goals. They also strongly agreed that
they have a specific strategy that enables them to spread business related risks. Additionally, the results of
the study showed that majority of the respondents strongly agreed with the statement that the firm invests in
high risk projects, unexplored technologies and take new products to new markets. Last but not least, the
findings of the study showed that respondents strongly agreed that the Entrepreneurs who enter unknown
new markets are likely to grow their businesses, the results of the study also revealed that a good number of
the respondents strongly agreed that the Businesses that commit a large portion of resources to ventures with
uncertain outcomes grow in business.

The second research variable of the study was to determine how innovation affect the growth of Small and
Micro Enterprises. The majority of the respondents agreed and strongly agreed with the statement that we
continually make improvements in our products and processes, They explore non-traditional and creative
ways of doing business, they actively research and brainstorm on better methods of conducting our business,
they find ways to add value to our existing products/services to differentiate our business from our
competitors, they are open to partnerships with other businesses to develop new products and services.

The third research variable of the study was to determine what extent does competitiveness affect the growth
of Small and Micro Enterprises. From the data gathered, a good number of the entrepreneurs' believed that

23
the availability of capital is the key reason for any business to survive. In contrast, they also believe that a
comprehensive management system is also an essential recipe for the survival of a business. In the third (3 rd)
place comes access to raw materials, and finally, the business location comes in at the fourth (4 th) place.
Therefore, most participants strongly believe that once there is easy access to capital, whether personally or
through debt, a business will have robust chances of surviving.

The fourth research variable of the study was to determine whether lack of knowledge affect the growth of
Small and Micro Enterprises. The majority of the respondents agreed and strongly agreed with the statement
that The company successfully applies its own past experiences in addressing new challenges, The company
knows how to successfully exploit the potential of its employees, Employees are encouraged to apply new
knowledge in practice, The company successfully markets its products or services, The company has an
efficient system for counselling and mentoring junior co-workers, The company regularly stores the
knowledge (has archives) on the implementation and contents of the research process, The company has an
efficient computerized system for accessing and searching in its own knowledge bases.

5.2 Conclusions
Whilst there are numerous studies carried out on the entrepreneurial strategies and the growth of micro-
enterprises, risk-taking, innovation, competitiveness and knowledge management, most of them tend to
concentrate on firms in big towns and very little is available on the influence of these factors on MSEs in
small rural towns. This paper has investigated factors influencing growth of youth owned micro and small
enterprises. Based on the study, it was concluded that there was a significant relationship between age,
gender, highest level of formal education influence growth of youth owned micro and small enterprises. The
study also concluded that risk-taking, innovation, competitiveness and knowledge management influenced
the growth of youth owned micro and small enterprises. The study further concluded that access of financial
resources influenced the growth of youth owned micro and small enterprises.
Further conclusion was that business environment on growth of youth owned micro and small enterprises.
Social networks were also found to influence growth of youth owned micro and small enterprises.
5.3 Recommendations
I could consider the following strategy recommendations to encourage the growth of Micro and Small
Enterprises.
Empower women entrepreneurs: Women have an important role in the economy, but they face many
difficulties running a business. Therefore, the Government should support women entrepreneurs further to
enable them to access credit, access education, access land, and worksites while addressing other factors that
may discriminate against women entrepreneurs. Micro and Small Enterprise Development Department
should support collaboration with the Department of Gender in the Ministry of Gender, Sports, Culture and
Social Services and other relevant stakeholders, such as women self-help groups, to address concerns unique

24
to women entrepreneurs. The Women Enterprise Fund and other similar sources of finance for women
should also include an element of capacity building to support women in entrepreneurial initiatives.
Business registration: The Government should minimize red tape, time, and costs to registering a business.
The Government should speed the computerization of the Registrar of Companies' office and decentralize
the business registration process. Currently, businesses can register only in Nairobi with the Registrar of
Companies, which means that businesses located outside Nairobi bear additional compliance costs brought
about by having to travel to Nairobi to register.
Promoting partnerships and linkages: Forward and backward linkages and partnerships with the private
sector, development agencies, and the Government should be encouraged through sub-contracts and tenders.
This could include purchase orders by local, regional, and international markets for locally manufactured
products such as ceramic jikos, hurricane lanterns, local handicrafts, apparel, accessories, and other local
products. Sub-contracting is valuable because it would improve the quality and standards of goods and
services. Large companies should also be encouraged to subcontract certain services to Micro and Small
Enterprises.

Level of education: Given that education of the owner has a positive effect on the growth of the enterprise,
schools and universities need to be encouraged to impart entrepreneurial skills and knowledge to the
students and provide technical assistance training and technical assistance provided to entrepreneurs.
Business sector: Kenyans services sector is an important and growing sector, especially the tourism sector.
However, several sub-sectors such as business process outsourcing are emerging, where investments are
increasingly being made in labor-intensive industries such as call centers. The Government should endure
the growth and development of such industries locally as there is a lot of potential growth. Businesses
locally and internationally are increasingly opting to outsource certain processes to firms with relevant skills
to improve overall efficiency.
Access to capital: The supply of credit to Micro and Small Enterprises has been increasing with the
emergence and growth of microfinance institutions, which have improved entrepreneur’s access to capital. It
should be encouraged to provide integrated financial advice and business advisory services to ensure that the
credit is utilized properly.
Business support services: Department of Micro and Small Enterprise Development should take a central
role in supporting and coordinating business support and technical services provided to Micro and Small
Enterprises. This encourages the growth and expansion of Micro and Small Enterprises by improving their
access to land, capital, inputs, markets, information, and technology. An important function of such business
support services would be to provide access to suitable worksites and in a planned and coordinated manner.
Business support centers should encourage the development of small-scale formal enterprises by providing
special tax reductions or subsidies, providing raw materials, and conducting research on Micro and Small
Enterprises, as is the case in India and Japan. This would lower production and operation costs. The business
25
support centers should have resources and be located at the district level to offer direct essential services to
cater to the specific needs of enterprises. Countries such as Japan have decentralized business support
services for small and medium enterprises.

5.4 Suggestions for Further Research

It is important to understand the problems facing growth-oriented and survivalist enterprises at the different
stages within the firm cycle. This study would be very useful in assisting policymakers in understanding the
different needs for the different types of enterprises at their different stages of maturity. Secondly, since
1999, there have been several changes that may have impacted Micro and Small Enterprises' growth. These
include advancements in information and communication technology, such as mobile telephones and the
Internet. It would be important to assess, using up-to-date data, the impacts of such factors on Micro and
Small Enterprises' growth.
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Andersson Th., Curley M.G., Formico P. (2010), Knowledge-Driven Entrepreneurship, Springer, New York
NY.
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