Effect of Competitive Strategies on Growth of Small and Medium Enterprises in Kenya Funded by Women Enterprise Fund

Abstract

Many women-owned small and medium enterprises (SMEs) are being created every year but the sizes in terms of sales, profits and capitalization remain small majority employing one to two employees. In 2007 the Government of Kenya set up the Women Enterprise Fund (WEF) as part of an integrated strategy on the promotion of women owned enterprises to provide accessible and affordable credit to support women start or expand business for wealth and employment creation. This paper examined the effect of competitive strategies on growth of WEF funded SMES in Kasipul and Kabondo Kasipul Constituencies of Homa Bay County as a representation of rural SMEs with strong agribusiness regions. This study was intended to extend the generalization ability of Ansoff’s growth strategies as well as provide sufficient ground for the government to formulating relevant policy frameworks for guiding the formation, incubation and growth of SMEs in Kenya The study used cross sectional survey as the research design targeted a population of 3768 women owned SMEs funded by WEF in the two Constituencies. Proportionate stratified sampling was used to form a sample of 304 women entrepreneurs. Simple random sampling was applied on the sample to select the respondents from each constituency. Questionnaires were used to collect data which were analysed using descriptive and inferential statistics. The results showed that 85.8% variation on the growth of SMEs was due to the competitive strategies that SMEs applied. Moreover, the data fitted with the ANOVA model very well (P = 0.000). The market penetration strategy had statistically a positive significant effect on growth of the business (P = 0.000). Likewise, product development strategy had statistically significant effect on growth (P = 0.032). However, the market development strategy had insignificant effect on growth of SMES (P = .460). The mean impact of market penetration on growth was 11994.595. The mean influence of product development and market development on growth was less from the reference group by 3680.869 and 996.615, respectively. Hence, the SMES that emphasized on market penetration strategy performed better than those SMES which emphasized on market development and product development strategies. However, the diversification strategy was not included in the ANOVA model in this study. This was because only 8 SMEs applied diversification strategy. The results of the study provided recommendations on competitive strategies to empower women to grow their businesses.