Factors Influencing Performance of Small and Medium Enterprises in Kenya: a Case of Enterprises Supported by Chase Bank in Nairobi County

Abstract

SMEs play an important role in the economy of many countries across the globe, be they developed or developing Nations. However, SMEs have been said to report high rate of failures with many enterprises dying at an infant stage. Very few of the SMEs grow to become big enterprises. The reason to this failure is pegged on the various factors that continue to inflict stagnation of the industry in terms of performance. This study was to evaluate the factors influencing the performance of SMEs supported by Chase Bank in Nairobi County. The objectives of the study were to determine the influence of access to credit on the performance of Small and Medium Enterprises in Nairobi County, to examine the influence of owner’s experience on the performance of Small and Medium Enterprises in Nairobi County, to establish the influence of level of education on the performance of Small and Medium Enterprises in Nairobi County and to establish the influence of management skill of the entrepreneur on the performance of Small and Medium Enterprises in Nairobi County. The empirical literature works of widely published scholars were reviewed. Descriptive survey design with target population of 100 respondents among this 73 was sampled for this study. The study adopted proportionate sampling applying Krejcie and Morgan table 1970 to collect data from the business owners’. The questionnaires consisted of both open and close-ended questions. The close-ended questions were provided more structured responses to facilitate tangible recommendations. Both qualitative and quantitative methods were used to collect data, tabulated and analyzed for purpose of clarity, with the aid of SPSS version 20 software and the data were presented using tables. It also hoped this study generated vital information and added a pool of knowledge for banks and entrepreneurs and finally the information helped the Scholars who undertook research in the University. The study found out that they are different variables to measure the performance of SMEs in Nairobi County. The findings indicate that the four factors (access to credit, owners’ experience, educational level of the entrepreneur and management skill) have a positive (F=19.55) and significant (P<0.05) relationship to financial inclusion. The findings also indicate that only access to credit (p<0.05) is the only statistically significant factor influencing performance of SMEs in Nairobi County. The multiple R shows the relationship multiple linear relationships between the Dependent variables and independent variables. R-Square is the square of the sample correlation coefficient between outcomes and the predicted values. Substituting the coefficients in the study model was: Y = 2.659 + 0.126 AC + 0.005AF + 0.088EL + 0.084MS + 0.2. The study concluded that there was a good number of policies and strategies to benefits SMEs. It also recommended the various measures to put in place in order to improve SMEs in Kenya with the specific focus on Nairobi County.