Firm Resources, Organizational Characteristics, Macro- Environment and Export Performance of Small and Medium Manufacturing Enterprises In Nairobi City County, Kenya

Abstract

Exporting activities increase productivity, improve foreign exchange, and help to manage poverty and unemployment. Smalliand medium-sizediEnterprises (SMEs) have more motivation to invest in R&D and innovation when they export. However, they face a number of challenges in the export markets, which contribute to a declining trend in terms of their contributionito the national economy in terms of job creation and a reduction of the balance of payments in the GDP. The performance of firms that export is contingent upon several elements, including the firm's resources, the organization's work, and the macro-environment. The exporting companies' firm resources, like financial and human capital, allow them to develop and implement strategies that raise productivity and competitiveness. Organizational characteristics, such as demographic and managerial variables, help manufacturing and export enterprises navigate and adapt to their external surroundings. Finally, the macroenvironment, which includes physical and social elements, influences the business decisions of exporting companies. The study's main objective wasito determineithe relationships between firmiresources, organizationalicharacteristics, macro-environment, and exportiperformance of smalliand mediumimanufacturingifirms in Nairobi City County, Kenya. Four theories underpinned the study; the resource-based theory, Porter's theory of competitive advantage, the industrial economics organization theory, and the firm internationalization theory. The specificiobjectivesiof this studyiwas to: determine the relationship between firm resources and export performance; assess the effectiofiorganizational characteristicsion the relationship between firm resources and export performance; establish the influence of the macro-environment on the relationship between firmiresources and export performance; and combined effect of firm resources, organizationalicharacteristics, and the macro-environment exportiperformance. The research philosophy adopted was positivism. This research was a cross-sectional survey of a randomly selected sample of 265 exporting and manufacturing firms from a population of 852 companies in Nairobi City County. Organizations engaged in manufacturing and exporting served as the unit of analysis. The Cronbach's alphai coefficienticalculatediinternaliconsistency and homogeneity among the research variables. There was a response rate of 89.1 per cent, with 238 out of 265 businesses polled completing the survey. The first hypothesis resulted in a statistically significant influence of firm resources on export performance (β = 0.865, p 0.05). The study established from the secondihypothesis that organizational characteristics had a statistically significant moderating impact on the link between company resources and export performance. In contrast, the macroenvironment moderated the connection underlying company resources with exportiperformance in a statistically meaningful way. There was a statistically significant link involving export performance and company resources (β =-0.134, p 0.05), organizational features (β =0.158, p 0.05), and the macroenvironment (β =0.913, p 0.05). Governments at the state and local levels should use the study's findings to craft statutes and regulations that help small and medium-sized businesses thrive. It could make it easier for them to get loans and advise them on using cutting-edge technologies and efficient manufacturing methods. Since the study was cross-sectional, a longitudinal study to analyze theirelationships betweenifirm resources, organizational characteristics, the macroenvironment, and exportiperformance is recommended. In addition, studies should consider selecting other variables that could impact export performance and wider geographical coverage in Kenya to establish whether there are variations.