Relationship between Entrepreneurial Orientation and Performance of Small and Medium Enterprises in the Agro-Based Manufacturing Sector in Kenya

Abstract

way of assessing an entrepreneur’s chances of success is by establishing the Entrepreneurial Orientation (EO) of an individual. EO refers to the strategy making processes that provides the basis for entrepreneurial decisions and actions. The study sought to establish the relationship between the entrepreneurial orientation and performance of Small and Medium Enterprises (SMEs) in the agro-based manufacturing sector in Kiambu County. To achieve the objectives, the proposed study used mixed research design. The target of the study included the 250 registered agro-based manufacturing SMEs in the food subsector in Kiambu County. Stratified random sampling techniques were used to draw a sample size of 69 enterprises. To collect the data, questionnaires with both closed ended and open ended questions were administered. The data collected was analyzed using Statistical Package for Social Science version 21 to generate descriptive statistics including percentages, frequency tables and mean scores. Correlation coefficient was used to determine the magnitude and direction of relationship between the five entrepreneurial orientation dimensions and the performance of the SMEs. A stepwise regression procedure was used to determine the nature of the relationships. The correlation coefficient between the Entrepreneurial orientation dimensions namely, autonomy, innovativeness, Proactiveness, risk taking and competitive aggressiveness and performance of SMEs was found be significant with Pearson correlation coefficient index as 0.652, 0.833, 0.704, 0.636,0.512 respectively. This depicts strong positive correlation between each of the EO dimensions and performance of the SMEs. Further regression analysis revealed that autonomy explains the variation in performance by 42.5%, innovativeness by 69.4%, Proactiveness by 49.6%, risk taking by 40.5%, and competitive aggressiveness by 69.3%.The study recommends that entrepreneurs in the agro-based manufacturing sector should practice autonomy, be innovative, proactive, take risks and be competitively aggressive. This is because they improve the performance of the SMEs .The study recommends areas of further research among them, carrying out a longitudinal study in the same area as well as carrying out the study in a different geographical region.