Dynamic Capabilities and Performance of the Small and Medium Enterprises in the Manufacturing Sector in Nairobi City County, Kenya

Abstract

Within the last decade, more and more researchers have asserted that a company's strategy and the generation of value revolve around its dynamic capabilities. Small and medium-sized Enterprises (SMEs) help Kenya's economy grow and develop. However, there has been significant impact from the COVID-19 epidemic on the global, regional, and local economies and the consequences of the pandemic are felt most strongly by small and medium-sized enterprises (SMEs).This research aimed to establish the relationship between dynamic capabilities and the performance of Kenya's SMEs in manufacturing industry in Nairobi City County. A review of the institutional theory and the dynamic capacity theory, which combine the internal and external talents and reconfigure to handle changing settings on performance of SMEs, served as the study's main sources of inspiration. Cross-sectional descriptive survey was employed in the study. 30000 licensed small and medium-sized manufacturing enterprises in Nairobi city were the study's target demographic. Using the formulas from Krejcie & Morgan (1970), the research sample size of 264 was established. This study employed a closed-ended questionnaire to collect data. The study results showed that human resource expertise and training is important to the performance of manufacturing sector of small and medium enterprises since performance are dependent on the personnel qualification employed to carry out the task. The adoption of technology and innovation within the organization has enabled creation of new products in the market. Despite the fact that organization conducts regular research on the best market practices in order to improve its internal processes most of the SMEs do not have a designated research department that carries out the role. Due to competency and quality of production realized through dynamic capability, performance of the small and medium enterprises has significantly improved and mangers rarely receive complaints from customers on their products. The study recommends to the managers of small and medium enterprises to employ staff based on their qualification. The study also recommends to the county government information communication technology department and associated ministry of trade to support the innovative technologies that assist small and medium-sized businesses expand.