Entrepreneurial Orientation and the Growth of Youth Owned Enterprises in Kenya

Abstract

Youth businesses play a key role in poverty alleviation when run on the basis of entrepreneurial orientation. However, these micro and small enterprises face a mix of achievement and frustration, with previous findings showing that three out of five companies fail within the first few long periods of activity, despite government efforts to improve the sector. This study aims to examine the entrepreneurial orientation and business growth of young people in Kenya. The purpose of this research is to examine how innovativeness, proactiveness, competitive aggressiveness and risk-taking are related to growth in terms of number of employees, profit margins and revenue generation. Theories supporting the research were diffusion of innovation theory, Push pull motivation theory, Neoclassical conceptions of competition, expected utility theory and networking theory-Resource Based View. Stratified sampling technique was employed to obtain 397 SMEs from 55,300 SMEs registered by the seven selected counties in Kenya namely; Nairobi, Murang’a, Nakuru, Machakos, Mombasa, Kisii and Isiolo counties. A cross-sectional survey methodology was utilized in the research design, which incorporated qualitative and quantitative research methods. Pilot study was carried out on a sample of 40 persons with SMEs of different categories as those in the final study. A total of 289 filled questionnaires were obtained from the research participants and were used to carry out data analysis. A structured questionnaire was administered to collect the primary data from the target population who were youth owned-SMEs. The questionnaires were tested for reliability and validity. Data was analysed using descriptive and inferential statistics. A questionnaire with closed and open-ended questions was used to gather quantitative data. Respondents received questionnaires from the scientific personnel. The key respondents of the study were limited to owner-managers of small and microenterprises and top management employees. The statistical package for social sciences (SPSS) version 23 program was used to analyse the data. Linear regression and correlation analysis were used to address the study issues and reach the research goals. Similarly, multiple regression was performed to test the possibility that more than one explanatory variable affects the dependent variable. The study's findings demonstrate that individual innovativeness, proactiveness, competitive aggressiveness, and risk-taking had a positive association with the growth of youth owned enterprises in Kenya. In addition, the findings demonstrate that all entrepreneurial orientation, with the exception of originality and invention, have a favourable and significant impact on the expansion of youth-owned enterprises in Kenya. Additionally, the association between entrepreneurial orientation and the expansion of youth-owned businesses in Kenya was positively moderated by networking skills. The model ranks competitive aggressiveness (0.339X3) as the best determinant of growth, followed closely by proactiveness (0.327X2), and lastly risk-taking (0.127X4). Innovativeness (0.02X1) was observed to be weak especially when operating without moderating variable (networking skills), thus, has no much impact on growth of youth businesses. The study came to the conclusion that entrepreneurial orientation help youth-owned businesses in Kenya to expand. The study suggested that owners of youth businesses should improve their innovativeness, which includes introducing new products, implementing improved processes, and offering high-quality, distinctive services; they should also improve their proactiveness, which includes determining the market's needs and demands, looking for new market opportunities, and introducing novel marketing strategies like digital marketing; they should also focus on giving their competitor a competitive edge by introducing business strategies such as price reduction, forcefulness in market positioning and manufacturing of quality products; they should further focus on how to carry out thorough risk assessment and oppose any risk related to financial, social and psychological risk respectively.