Influence of Intellectual Capital on the Growth of Small and Medium Enterprises in Kenya

Abstract

Small and medium enterprises (SMEs) in Kenya represent a vital part of the economy, being the source of various economic contributions through the generation of income via exporting, providing new job opportunities, introducing innovations, stimulating competition, and engine for employment. Present economy is known as a knowledgebased economy where, knowledge, information and soft assets have more importance rather than the physical assets. The role and importance of SMEs in a knowledge-based economy has been highly appreciated and acknowledged. Moreover, in the present economy, SMEs are facing tremendous challenges and threats to survive in a competitive environment. The study examined the influence of Intellectual Capital (IC) and growth of SMEs in Kenya. The study was guided by the following research objectives which include; finding out to what extent managerial skills, entrepreneurial skills; innovativeness, structural capital and customer capital influence the growth of SMEs in Kenya. The study adopted descriptive survey and exploratory design. The study targeted 4560 SMEs in Nairobi County who are registered by Ministry of Industrialization and Ministry of Trade. Regression models was used to examine the influence of intellectual capital on growth of SMEs in Kenya. The study found that intellectual capital components (managerial skills, entrepreneurial skills, innovativeness, structural capital, and customer capital) have a great positive influence on the growth of SMEs. Managerial skills was International Journal of Arts and Entrepreneurship Special Issue, 2013 http://www.ijsse.org ISSN 2307-6305 Page | 14 most significant with correlation coefficient of 78.9% elements of intellectual capital influencing growth of small and medium enterprises in Kenya.