Entrepreneurial Drive and Performance of Value-system Actors Kenya’s Leather Industry

Abstract

Leather is a US$ 100 billion-a-year and growing industry globally of which Africa is a net importer of finished manufactured goods despite having a large share of the natural resources. Africa has one-fifth of global livestock population yet its contribution to value-addition in the global leather industry accounts for only 3.3%. Further, productivity and competitiveness of leather manufacturing is globally lower in the Common Market of Eastern and Southern Africa (COMESA) and Kenya in particular. Entrepreneurship has been recommended as an intervention for its potential to harness the employment, earnings, competitiveness and general socio-economic benefits of the leather industry in Kenya where majority of players are Micro Small and Medium Enterprises (MSMEs). This study adopted an ecosystem perspective and applied a mixed research design to explore entrepreneurial drive as a construct of principal decision-makers in Kenya’s leather industry actors, and its hypothesized relationship with firm performance through innovation. The study carried out a mixed sampling of value-system actors associated with Nairobi-based members of the Leather Articles Entrepreneurs Association (LAEA) in Kenya’s leather industry. A questionnaire was used in guided interviews to collect self-reported quantitative primary data on individual entrepreneurial orientation and competence traits of principal decision-makers and the innovation and performance outcomes of their businesses. Data analysis was performed using Statistical Package for Social Sciences (SPSS v.21). Research instrument validity and reliability were established using the Delphi technique and a pilot test on a separate sample of seventeen actors in the Kariokor Market leather cluster leading to improvements before the main study. Further exploratory analysis of the main study data clarified the variables under study to be in tandem with theoretical and empirical literature. Inferential analysis tested hypotheses on the relationship between entrepreneurial drive variables and performance of value-system actors through innovation. Demographic analysis showed the leather industry in Kenya to be dominated by small and micro enterprises led by an older generation of male owner-managers. Study respondents showed an above average belief in expression of measured entrepreneurial characteristics except risk-taking tendency and the performance outcome. The study empirically validated entrepreneurial drive as a second- and third-order uni-dimensional construct comprising entrepreneurial orientation and competence variables. Further, entrepreneurial drive and its antecedents were found to determine performance and this link was partially mediated by innovation. The results of this study provide an ecosystem perspective of understanding entrepreneurship for theory building, training of nascent and practicing entrepreneurs, and entrepreneurship development policy-making especially in a traditional factor-based industry with unrealized SME and economic development potential such as leather in Kenya. The study recommends the application of the entrepreneurial drive construct in theoretical understanding of entrepreneurship, the development of individual entrepreneurship for firm performance outcomes, and policies for entrepreneurial-ecosystem competitiveness and national economic benefits.