Management Consultancy and Performance of the Top 100 Small and Medium Enterprises in Kenya

Abstract

Despite the fact that, small and medium enterprises (SMEs) make positive contribution to the Kenyan economy, their failure rates is extremely high. This study sought to examine how the use of management consultancy affects the performance of SMEs with a specific focus on top 100 SMEs. The study’s specific objectives were to establish the management consultancy services used by SMEs in Kenya and to determine the impact of management consultancy services on SMEs performance. The study targeted firms in KPMG and NMG list of top 100 Kenyan SMEs in 2020. Data was corrected through questionnaires. A total of 100 questionnaires were distributed but 42 were duly completed and returned to the researcher marking a response rate of 42%. Results indicate that management consultancy services are not widely utilized by SMEs in Kenya. IT consultancy is the most widely utilized consultancy service with the majority of the respondents reporting that they make use of these services to a great extent. Result further indicates that the surveyed SMEs had noteworthy growth in most performance areas with the majority reporting either moderate or large growth in these areas. The area in which the SMEs reported the highest growth was service quality followed by customer satisfaction. Regarding the impact of management consultancy on performance, results of the ANOVA showed that when considered in general, management consultancy services have a significant effect on SMEs performance (F= 4.120, sig= 0.007). The model comprising of four consulting services (Business strategy, HR, operations, and IT consulting) explained 30.8% of the variances in the SMEs performance. However, when the consultancy services were considered individually, none was documented to have a significant effect on the SMEs performance. The study therefore concludes that the use of management consultancy is not an established practice within the Kenyan SME sector. The study further concludes that SMEs need to integrate different consultancy services for them to have a significant influence on performance. The study recommends that to improve the performance of SMEs in Kenya, there is need to encourage SMEs to make use of different consultancy services that are available in the market.