Firm Characteristics, External Environment and Organisational Performance of Technology Startups in Kenya

Abstract

The purpose of the study was to determine factors influencing the organizational performance of technology startups in Kenya. The overall objective of the study was to determine the effect of firm characteristics and external environment on the organizational performance of technology startups in Kenya. Anchoring the study were two theories namely, the resource-based theory and the contingency theory. The study used stratified sampling to obtain a sample of 150 tech startups in Kenya. Descriptive and inferential statistics were used to analyze data from the 67 respondents in the study. Research findings showed a moderate effect of firm characteristics and the external environment on organizational performance and a moderate effect between the joint effect of firm characteristics and external environment on organizational performance. The study recommends comparative studies, studies on medium and large enterprises, industry specific studies and the use of a longitudinal approach to establish causal relations between firm characteristics, external environment and organizational performance. The study recommends a series of measures to management and policy makers including; regular environmental assessments, diversification of funding sources, bridging of the disconnect between policy, policy makers and tech startups, clustering for collective bargaining and lobbying, choosing incubation services based on needs or intended outcome, establishment of a conducive business climate by the government and the use of government networks vis a-vis other actors to shore up the capacity of Kenyan incubation centers and providers. The study had several limitations including survival bias, unwillingness to divulge information by micro sized and small sized organizations which led to the use of more time convincing and following up on data collection, time and resource constraints that led to the utilization of a cross sectional study which could only establish a snapshot of the relationships between studied variables