Relationship Between Turnaround Strategies and Performance of Small and Medium Enterprises in Kenya Antony Sije

Abstract

The main objective of this study was to determine the relationship between turnaround strategies and the performance of SMEs in Kenya. The specific objectives were to assess the relationship between financial restructuring, reorganization, repositioning, market redefinition turnaround strategies and performance of small and medium enterprises in Kenya. The population for this study consisted of the owners and employees of SMREs in Thika Sub - County. The total target population was 8604. A total of 375 respondents were used as the sample size for the study. Descriptive survey design and correlational research design were used in this study. Primary and secondary data were used. While self-administered questionnaire and interview guide were used to collect primary data, the study reviews the previous evaluation reports to seek the secondary data on performance. The data collected was then analyzed by both descriptive and inferential statistical tools. Being that the current study was dealing with the relationship study, the study therefore used regression model as a tool of analysis and the results generated were presented in form of tables. The results of this study is to benefit policy makers, managers, administrators, entrepreneurs, researchers, consultants, scholars and trainers involved in strategic entrepreneurship development. This study tested the null hypotheses that financial restructuring, reorganization, repositioning, and market definition turnaround strategies have no relationship with the performance of SMEs in Kenya. Pragmatism paradigm approach and mixed method research was adopted in this study. The questionnaire was tested for validity and reliability. Quantitative and qualitative techniques were used to analyze the collected data with the assistance of Statistical Package for Social Sciences (SPSS) software. Multiple regression and correlation analysis were carried out. The study found out that SMEs performance was influenced positively by the turnaround strategies. The study found out that financial restructuring turnaround strategy had significant relationship with SMEs performance. From the results obtained by the current study, there was positive and significant relationship between reorganization turnaround strategy and performance of SMEs. The study also found out that repositioning turnaround strategy significantly influencesSMEs performance. Finally, there was a positive and significant relationship between market redefinition strategy and SMEs performance. The study therefore recommends that to some extent, some debts need to be converted into equity in cases where the enterprises are facing financial difficulties that they cannot pay back the debts; this will later result into cash flows to the enterprises during the dividend payments. It recommends that the SMEs should focus more on interfirm/ inter-organizational collaborations, group level learning and business level learning to enhance the knowledge. At the same time, it recommends that the SMEs needed to target a new segment of customers to broaden reach and increase the potential to sell products and services to more customers. The last recommendation in the current study was that SMEs need to come up with new products or an improved version of the existing products to impact positively on the profits and also to improve on the customer base