THE INFLUENCE OF BUSINESS STRATEGY ON PERFORMANCE OF START- UPS IN NAIROBI CITY COUNTY

Abstract

The need for the establishment of influencing mechanisms for nurturing new ideas into actual
business, especially on new technological platforms necessitates business strategy to secure
networks that guarantee growth. The study sought to establish whether business strategy
influence performance of startups in Nairobi City County, Kenya. Business strategy was
evaluated using Ansoff (1957) model while taking into account the argument of Kleinschmidt and
Cooper (1991) on the application of product development strategy when processing new
knowledge to manage little demand. Although there are four strategic alternatives depending on
the nature of the product and the marketing environment, not all are applicable to startups
category of business (March,1991). Out of the four strategic alternatives, three were considered
under this study which comprise, diversification, market penetration and market development.
The study adopted a positivist research philosophic reasoning to exploring new knowledge
through verification of observable evidence. This approach enabled the researcher to derive
information logically from empirical data using scientific method thereby testing the hypotheses
about the constructs under theoretical underpinnings. This study followed a cross-sectional
survey design as it assured similar data collection procedure and precise verification across
many respondents at a particular point in time. This study applied Structural Equation Model
(SEM) to analyse data and deduce conclusions. The results showed that holding other factors
constant, there exist significant relationship between business strategy (β=2.1089, P=0.000) and
performance of start-ups in Nairobi City County. The study recommends the development of a
framework that supports young entrepreneurs increase their capacities on the application of
diversification, market penetration and market development business strategic mix to ensure
startups’ survival, better performance financially and increase jobs opportunities.
Key Words: Business Strategy, Firm Performance at Nairobi City Count, Kenya