International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Determinants of Growth of Micro and Small Petroleum Enterprises in Kenya: a Case of Nairobi County
Jesse Wanjahi, Patrick Ngugi

MSEs and SME’s have always been the backbone and impetus for growth of an economy. To ensure their continued vitality in an increasingly competitive and globalized world, their growth must be ensured. Although recent studies attempt to link determinants of micro and small enterprise growth from different perspectives or dimensions, their explanatory power is low due to the relatively small number of variables, therefore, there exist diverse views, with none of them explaining the determinants of firm growth in a holistic manner. Occasioned by the aforementioned gap in local literature, the present study set out to evaluate the determinants of firm growth in an integrated way, and to identify the most important determinants of firm growth. More specifically the study sought to assess the entrepreneurial skills as a determinant of growth of petroleum sector MSEs in Nairobi County, Kenya, evaluate franchising agreement terms as a determinant of growth of petroleum sector MSEs in Nairobi County, examine profit margins as a determinant of growth of petroleum sector MSEs in Nairobi County and evaluate cost of capital as a determinant of growth of petroleum sector MSEs in Nairobi County. This study takes the descriptive research design. The determined sample size applying the Neuman formula is 134 respondents out of a target population of 7 corporate members listed by PIEA. The study used primary data which was largely quantitative and descriptive in nature. Both descriptive and inferential analyses were conducted. Findings reveal that whereas a majority of MSEs have considerably grown over the last five years in all respects including the number of employees, number of stations, gross sales and net profit, the growth has been largely slow and unstable characterized by declines in between the years, as regards gross sales and net profits. It was also found that a majority of the MSEs surveyed are driven by entrepreneurship skills among their management. The study also found that franchise holding significantly influences firm growth through a variety of attributes including earning the firm competitive advantage; increasing the respective firms’ business opportunities. Profit margin was further found to have considerably influenced the established firm growth across a majority of the MSEs surveyed, most notably through increased profitability, increased return on investment and increased sales among others. Finally, it was found that cost of capital moderately influences growth across a majority of MSEs reached most notably through service tax, irregular cash flows, interest charges, prepayment charges, loan size, asset base, and mismatch of funds

Full Text: PDF