International Journal of Business and Social Science

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

Entrepreneurial Orientation, Micro, Small and Medium Enterprise Growth and the Moderating Role of Environmental Factors in the Manufacturing Sector in Nairobi County, Kenya
John K. Mosonik, Loice C. Maru, Joyce K. Komen

The growth and survival rate of Micro, Small and Medium-sized Enterprises (MSMEs) in Kenya has been one of the major concerns of the policy makers, practitioners and scholars. Whereas entrepreneurial orientation (EO) has been identified to underpin MSME growth, several studies on entrepreneurial orientation-growth nexus have provided mixed results based on the aggregated one-dimensional measure of EO. While some report a significant association, some report no significance. The mixed findings imply that the relationship between EO and growth is not linear, pointing to other causal factors either internal or external to the enterprise. Against this backdrop, this study set out to assess the effect of entrepreneurial orientation on the growth of manufacturing sector MSMEs in Nairobi County, Kenya and the moderating role of environmental factors. Anchored on the contingency fit view, the economic theory of entrepreneurship and the life cycle theory the study adopted a positivist approach, employing the explanatory research design of a cross sectional nature. With a target population of 98,607 firms, a stratified sample of 384 MSMEs from the manufacturing sector in Nairobi County was drawn. Data was collected by use of structured questionnaires and analysed by both descriptive and inferential statistics including Pearson correlation and regression analyses. The study controlled for both age and sub-sector, as they have been previously found to affect firm growth. Results indicate that entrepreneurial orientation has a significant effect on MSME growth (β=.139, p=.012<.05). The study also found that environmental factors significantly moderate the relationship between entrepreneurial orientation and MSME growth (β =.0092, p=.040<.05; LLCI=.0004; ULCI=.0180). The study concludes that environmental factors significantly influence the extent to which entrepreneurially oriented owners/managers in the manufacturing sector steer their enterprises towards growth. It is recommended that MSME owners/managers innovate, take risks and stay proactive in their businesses in order to grow. MSMEs are also advised to adopt competitive strategies to navigate the competitive business environment in the manufacturing sector. It is further recommended that the government provides an enabling policy environment and business support to foster growth among MSMEs.

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