Market Orientation and Business Performance in Kenyan SME’s

Abstract

Micro and Small Enterprises have been acknowledged as very important in economic development for job creation and poverty reduction. The government of Kenya has also acknowledged that these firms face a lot of challenges and that there is need to enhance their performance and competitiveness. This study examined market orientation in Micro and Small Enterprises in Kenya in relation to their performance. Micro and Small Enterprises are faced with many problems that include stiff competition by multinationals and government owned organizations and this has implication on their performance. With their large resource base and support from their parent organizations and the government, subsidiaries of multinationals and government organizations are a force to reckon with in the marketplace. Market Orientation is a strategy that firms can use to gain competitive advantage and enhance their performance. Dimensions of market orientation include innovativeness, competitive aggressiveness, pro-activeness and information sharing. The study was conducted in Nairobi where most of these SMEs are found and the target population was all the SMEs which have been in existence for 3 or more years. A list of SMEs was obtained from the Kenya Business directory whereby out of the target population of1600 employees, a sample population of 160 employees (10%) were selected after cross-checking the 2013 and 2015 directories to ensure that only those firms that are 3 years and above are in the study. The study used the explanatory and descriptive approach to examine the relationship between the dimensions of Market Orientation (innovation, information sharing, pro-activeness and competitive aggressiveness) and the performance of Micro and Small Enterprises in Nairobi County using a questionnaire. The study established a positive relationship between Market Orientation and the performance of Micro and Small Enterprises in Nairobi County. All the four dimensions of market orientation were positively related to performance and the regression analysis indicated that an increase in each of them would result into an increase in performance. The study recommends the integration of Market Orientation posture into the SME’s strategic behavior so as to be more competitive and improve their performance. The study also established that education, and firm age had moderating influence on the relationship between market orientation and performance. These findings are of importance to policy makers who can come up with different programs aimed at improving the competitiveness of these firms through creativity, experimentation and development of wholesome market orientation strategies. The Micro and Small Enterprises sector will further be enriched if further research is carried on in the other counties in Kenya as recommended in this study, thus establishing other market orientation factors that can increase the competitiveness and performance of these firms.