Factors Affecting the Perfromance of Islamic Small and Medium Enterprises in Eastleigh Business District, Nairobi County, Kenya

Abstract

Business operating environment is characterized by dynamism that calls for constant adjustments of all business functions, strategies and alignment of the same to ensure sustainable growth of these organizations. Despite these changes, SMEs, in an attempt to remain competitive in this kind of environment have opted to applying various strategies to ensure that they are not pushed out of business by their competitors and larger-sized firms. To ascertain the determining factors of the performance of Islamic SMEs in Eastleigh is a Nairobi County’s environ situated East of Central Business District (CBD) and in Kamukunji Constituency. The study population embroiled all Islamic SMEs in Eastleigh which are 1000 enterprises. The researcher piled up a record of all the SMEs and the most suitable SMEs were picked for the study. The sample size that embroiled 91 respondents was utilized in the research. Secondary data on the performance of SMEs for financial years 2012-2017 was be obtained from the financial statements. The study similarly utilized on primary data sourced by way of semi-structured questionnaire with open as well as closed ended questions. It was grounded on a 5-point Likert scale which was utilized to measure answers on questionnaire elements. The findings from research demonstrated a positive association between the aspects and performance. Sharia compliance index (SCI) had a correlation of 0.545 with ROA. Access to Islamic financial products (ATF) had a correlation of 0.646 while SIZE had a correlation of 0.684. The relationships are both significant at a significant level less than 5%.