Effect of entrepreneurial competencies on the survival of small and medium enterprises in Kenya

Abstract

Small and Medium Enterprises (SMEs) play an important role in almost all national economies ranking them as the key drivers of economic growth. There has been concerted efforts directed towards enhancing their survival and eventual growth of which researchers, policy makers and governments alike tend to put more emphasis on. The threat to survival is real and unless there is intensive effort from concerned parties, the situation might become out of control. The collapse ration of SMEs is alarming for developing countries as well as developed countries and Kenya is no exception. Their survival is not optimistic the world over. Given this minimal survival rate, it becomes vital to research on the factors/characteristics/management abilities that are required to enable SMEs to survive and indeed progress to the growth phase of the organizational life cycle. The threat to survival is real and requires a concerted effort from both policy makers and the entrepreneurs themselves. This study, therefore, sought to examine the effect of entrepreneurial competencies (innovation, leadership, networking and risk-taking) on the survival of SMEs in Kenya. The study is geared towards assessing survival prospects of SMEs in Kenya should they opt to use appropriate entrepreneurial competencies. The study was guided by the following research objectives which include; finding out what role is played by entrepreneur’s innovation, leadership, networking and risk-taking competencies on the survival of SMEs in Kenya. The study reviewed past activities and this was explained by the literature review. The literature review evaluated the relationship between each of the various entrepreneurial competencies and their effect on survival of SMEs worldwide. The study therefore opted to adopt a descriptive research design. The target population was 268,100 registered SMEs who are operating under single business permit (SBP) in Nairobi City County where a stratified random sampling was applied to identify 400 SMEs. Data analysis was by way of descriptive statistics (frequencies and percentages), tables and graphical presentations, and multiple linear regression model where survival was regressed against the four variables of entrepreneurial competencies to make statistical reference. The findings revealed that entrepreneurial competencies (innovation competency, leadership competency, networking competency and risk-taking competency) of the SME owner-managers (entrepreneurs) have a positive and significant effect on the survival of SMEs in Kenya thereby increasing their chances of survival. The study therefore recommends that SMEs through the management should embrace innovation competency as a means of enhancing their survival, enhance leadership competency which is a key aspect in firm survival and performance, ensure that they embrace networking competency as a way of gaining competitive advantage and widening their customer base and adopt calculated risk-taking strategies in their operations.