Factors Influencing the Use of Business Advisory Services of Micro and Small Enterprises in Nairobi City County, Kenya

Abstract

Business advisory services facilitate sustainable growth and profitability of micro and small enterprises. Micro and small enterprises are of great importance to economic growth of any country. They provide one of the most prolific sources of employment creation, income generation and poverty reduction. While micro and small enterprise development remains central to the economic growth in a country, in Kenya they have not fulfilled their expected mandate due to a number of challenges they face. Inability to seek business advisory services is one of such challenges. The general objective of the study was to assess the factors that influence the use of business advisory services of micro and small enterprises in Nairobi City County, Kenya. The study specifically assessed the effect of employees competence on the use of business advisory services; determined the effect of adoption of technology on the use of business advisory services; established the effect of organization structure on the use of business advisory services and examined the effect of characteristics of the owner of the micro and small business on the use of business advisory services of micro and small enterprises in Nairobi City County. The study adopted a descriptive survey research design. A population of 58 registered micro and small enterprises in the industrial area of Nairobi City County formed the sample frame of this study. A census approach was used to get its sample size for its population target. The sample, therefore, constituted all the 58 registered micro and small enterprises in the industrial area of Nairobi County. The sample was stratified with two (2) strata that classified the enterprises as either food manufacturing or non-food manufacturing. The respondents were the chief executive officers of micro and small enterprises within the sample frame. A pilot study was done to pre-test the research instruments to ensure reliability and validity. Data collected was analyzed using measures of central tendency, dispersion and inferential statistics. Statistical software for social sciences version 20 was used as statistical tool for data analysis. The results of the analysis indicated that employee competence, extent of adoption of new technology, and characteristics of the owner of the firm have a positive relationship with the use of xxi business advisory services. A multiple regression was carried out including the test for normality and autocorrelation assumption tests to confirm the results. The study concluded that employee competence have the greatest influence on the use of business advisory services followed by characteristics of the owner of the firm and then the extent of adoption of new technology. The study also concluded that the structure of the organization had no significant influence on the use of business advisory services. The study recommends that the government of Kenya should ensure that basic training and skills acquisition is provided to employees of MSEs formally or informally in order to enable employees become competent. Adoption of new technology in a business is necessary for a business to grow.