ENTREPRENEURIAL STRATEGIC PLANNING PRACTICES AND FIRM PERFORMANCE AMONG WOMEN-LED SMALL AND MEDIUM ENTERPRISES IN KENYA

Abstract

The purpose of the study was to explore the degree to which women-led SMEs embrace the entrepreneurial strategic planning practices (ESPP) dimensions of EO (Entrepreneurial Orientation), SI (Scanning Intensity), PF (Planning Flexibility), PH (Planning Horizon) and LP (Locus of Planning) for enhanced firm performance. This study was aimed at providing insight and a model that would enable women- led enterprises to be more profitable and achieve sustainable enterprise goals and graduation to large enterprises. This was to be achieved by identifying and employing entrepreneurial growth oriented planning strategies that could reduce constraints brought by the changing environments that these enterprises operate in. This study was based on the logical positivism philosophy whereby the research design was of an explorative approach combining both qualitative and quantitative research designs, techniques and measures. This mixed approach provided a basis for the study to triangulate the empirical, constructs and the reality approaches. A cross-sectional survey and interviews were used to collect data. The multi-stage sampling technique was used namely, first stage - stratified sampling according to the 4 sectors, that is, agro-based industries, other industries, service and trade and second stage - simple random sampling. The sample size was 128 enterprises drawn from a target population of 226 enterprises distributed across the four sectors – Agro-based Industry (70 enterprises), other industry (38), services (58) and trade (47). The key respondents were top managers, entrepreneurs and 3 employees from each of the 128 enterprises drawn from a 50Km radius of Nairobi and within the Nairobi metropolitan area. The study employed four basic methods to collect data - three sets of questionnaires, two sets of interview guides, review of secondary data and computer-based data provided by Pamoja Women Development Program (PAWDEP). Cronbach’s alpha was used as a measure of reliability, to test the hypotheses developed for the study, appropriate statistical tests such as the F test was used. This was achieved through structural equation modeling, correlation analysis, multiple and step-wise regression analysis, ANOVA and univariate ANOVA. Path analysis was carried out to establish the causal relationships between the various variables using Analysis of MOment Structures (AMOS) Version 16 software. The research results showed that the attitudes towards entrepreneurial orientation by both the top management and the employees had a positive relationship and played a major role on the average sales growth. However, there was poor enterprise performance, when measured in terms of sales-employee growth and profitability during the 2007-2008 periods as a result of the political volatility and economic instabilities experienced at that period. Two specific variables of planning flexibility, that is, ease at which enterprises are able to adjust to emergence of new technology and the entry of new competition were found to be significantly related to sales growth and levels of performance. Time periods that were less than one year and over a five year period had significant influence on firms’ performance. The entrepreneurs’ age and education were important factors to consider when deciding the depth in locus of planning and had a significant impact on return on assets. The results showed that the enterprises’ age, size and legal status were significant factors to consider when deciding the depth of employee involvement in the firms’ strategic planning activities (locus of planning), length of planning (planning horizon) and how flexible plans were (planning flexibility). These were however not important in determining the entrepreneurial orientation of the enterprise or scanning intensity for the women-led enterprises in the Kenyan setup. Strategic management process elements had a significant negative moderating influence on ESPP and therefore performance of firms. The research results showed that there was poor enterprise performance, when measured in terms of sales-employee growth and profitability during the 2007-2008 period as a result of the political volatility (pre-election phobia and post election chaos) and economic instabilities experienced at that period. The predictor planning flexibility influence on the performance of enterprises was negative. The implication of this is that the more inflexible the plans, the better the performance of enterprises. For entrepreneurial orientation, the most important predictor was propensity to take risks. The implication of this is that the influence of the tendency to take risks had a significant part to plays in making it entrepreneurial. The study concluded with recommendations that further study should be carried out to cover other aspects of entrepreneurial orientation besides risk-taking, innovation and proactiveness; strategic planning practices other than SI, PF, PH and LP as well as other moderating variables or factors. Future studies could also be carried out during periods of low political and economic turbulence.