Opportunity Recognition and the Perfomance of Small and Medium Enterprises in Kasarani Sub-County, Kenya

Abstract

Being the first stage of entrepreneurship, opportunity recognition is essential in determining the success or failure of businesses. Despite its importance, many SMEs have failed to conceptualize on future market opportunities available for exploitation and this has contributed to their dismal performance and failure. The objective of this study was to investigate the effect of opportunity recognition and the performance of SMEs in Kasarani Sub-county. The research study was underpinned by the Kirzenian and Schumpeterian theories and it will be of value to practitioners, policy makers, and academicians. The limitations to this study were: fear of victimization and confidentiality issues. This study embraced the cross-sectional survey design technique. The target population to the study was 839 respondents from which a sample of 86 SME owners and managers was drawn. Stratified random sampling technique was the sampling method employed. A structured open and close-ended questionnaire was utilized as the data collection instrument. A five point Likert scale was used to evaluate the research participants’ level of satisfaction from the group of questions present in the tool. The data gathered was then analyzed quantitatively and the results presented via tables. From the research findings, many of the research participants agreed that customer satisfaction positively correlated with opportunity recognition (Mean= 4.36), growth in customer base positively correlated with opportunity recognition (Mean= 4.23), venture stability positively correlated with opportunity recognition (Mean=3.86), profitability positively correlated with opportunity recognition (Mean=3.66), and employee retention showed positive relations with opportunity recognition (Mean= 3.65). The findings of the study also showed that SMEs in Kasarani Sub-County are not alert to market gaps (Mean= 3.23), and they do not keep abreast of market changes (Mean= 3.15). The study concluded that the performance of SMEs in Kasarani Sub-County is dependent on their abilities to continuously identify opportunities. SMEs that are continuously keeping ahead of market changes and striving to develop unique ideas are likely to thrive in their market segments. The study suggested for further similar research on SMEs to be conducted in other counties to allow for comparisons and generalization to be made.