Entrepreneurial Orientation, Technological Capability, Environmental Dynamism and Firm Innovativeness in Manufacturing Small and Medium Enterprises in Nairobi City County, Kenya

Abstract

The study sought to establish the factors that influence innovativeness within manufacturing Small and Medium Enterprises (SMEs) in Kenya. The general objective of the study was to establish, analyse and determine the effect of entrepreneurial orientation, technological capability and environmental dynamism on firm innovativeness within manufacturing SMEs in Nairobi County. The guiding philosophy of the research was realism philosophy. The study was anchored on five theories namely General Systems Theory as the main anchor, the Resource Based View, the Industrial Organisation Theory and the Institutional Theory of Organisations. A triangulated research design was adopted. Four hypotheses were formulated. Technological capability as a mediating and environmental dynamism as a moderating variable, were conceptualized as affecting the relationship between entrepreneurial orientation and firm innovativeness. Stratified random sampling was applied to obtain 363 samples. A series of descriptive and inferential analyses were carried out on the primary data that was collected. The study also purposively identified and qualitatively studied four cases. Entrepreneurial orientation was established as having a significant effect on firm innovativeness. The study also confirmed that there was a moderating effect of environmental dynamism on the relationship between entrepreneurial orientation and firm innovativeness. The effect of technological capability on the relationship between entrepreneurial orientation and firm innovativeness was inconclusive. The study further confirmed that the joint relationship between entrepreneurial orientation, technological capability, and environmental dynamism had an effect on firm innovativeness. These findings were triangulated by the qualitative study. The study has made a contribution to theory, policy and management in relation to innovativeness in SMEs. The study recommended additional contextual bases studies on the variables. It also recommended that active decision-making on the basis of internal and external circumstances as being important for a firm to be innovative. The study also recommended a raft of policy considerations that sought to address the diffusion of innovation across various SME segments. The study had a number of limitations which included the use of a cross-sectional survey approach method and the use of a single respondent in data collection. This may have led to biases and not addressed causalities. The study recommended that future studies should consider exploratory designs, apply longitudinal methods and make use of multiple respondents.