COMPETITIVE STRATEGY DRIVERS, ENTREPRENEURIAL ORIENTATION AND PERFORMANCE OF MANUFACTURING SMALL AND MEDIUM ENTERPRISES IN NAIROBI COUNTY, KENYA

Abstract

This study sought to establish the mediating effect of entrepreneurial orientation
on the relationship between competitive strategy drivers and the performance of
manufacturing small and medium enterprises (SMEs) in Nairobi City County in
Kenya. SMEs are the backbone of many economies all over the world for they
create employment opportunities as well as wealth to entrepreneurs. Strong
competitive strategy drivers offer advantage to SMEs hence help them achieve
good performance and remain competitive in their respective markets.
Entrepreneurial behaviour including innovativeness, risk taking and proactiveness are indicators of a firm’s entrepreneurial orientation and could
intervene between competitive strategy drivers and the performance of
manufacturing SMEs. The study was anchored on resource-based theory and
supported by dynamic capabilities theory, which together provide a framework
for examining the association between research variables. For the methodology, a
cross-sectional study design was adopted covering 334 manufacturing small and
medium enterprises in Nairobi County, Kenya. Structured questionnaires were
used for data collection which achieved a response rate of 89.6%. Various
descriptive statistics were used to project the demographic characteristics of the
respondents. Inferential statistics was used to build up the connections between the
factors and additionally testing the theories. The results indicated that there was a
significant influence of entrepreneurial orientation (innovativeness, risk taking,
pro activeness and competitive aggressiveness) on the relationship between
competitive strategy drivers and performance of manufacturing SMEs. The study
demonstrated that small and medium enterprises in the manufacturing sector do
operate in competitive environments and their performance is subject to
entrepreneurial orientation dimensions as well as competitive strategies adopted
as postulated in the various paradigms. The findings add on to the knowledge of resource-based theory. Manufacturing small and medium enterprises need to
exercises their innovative ability in renewing their market offers to enable them
survive and grow when they are operating under conditions of stiff competition,
rapid technology advances and resource scarcity. Further research is
recommended to involve manufacturing SMEs in other counties to compare with
the findings of this research.