The Effect of Leadership on Small and Medium Sized Enterprises Debt Management: a Case of Kandara Town
Abstract
The study sought to establish the effect of leadership on SME’s debt management.
Leadership has been measured using leadership skills, styles and ethics in leadership. The
study was conducted to establish the effect of leadership on SMEs debt management at
Kandara town. Over the years, a great deal has been written about leadership, with
particular emphasis being paid to identifying the core traits and personal characteristics of
effective leaders. However, there still remains scarcity in the studies conducted locally,
particularly on the SME sector. Moreover, there is no consensus on the exact relationship
that exists between leadership and debt management in spite of the high SME failure rate
and importance in the country has been established. The study adopted the descriptive
research survey design. Population of the study consisted of small and medium
enterprises in Kenya. Due to the size and dispersion of this target population, the study
was limited to small and medium enterprises within Kandara town. This entailed a total
of 187 SMEs in Kandara town as per the Murang’a County Integrated development plan
(2013 – 2017). The study adopted simple random sampling to obtain 30% of the study
population. This totaled to 56 SMEs; these SMEs were studied. The study used entirely
primary data which was collected through use of structured questionnaires with both
close ended and open ended questions. The questionnaires were organized into sections,
each section addressing the specific research question. They were administered by drop
and pick method. To enhance reliability and validity, the questionnaire was pre-tested on
10 respondents who were selected using purposive sampling from SMEs in Nairobi
County. The qualitative data from the open ended questions was analyzed using content
analysis because the focus was be on interpretation of the results rather than
quantification while quantitative data from the close ended questions was entered into
statistical package for social sciences (SPSS) version 23 and analyzed through the use of
descriptive statistics which included frequencies, percentages, standard deviation and
arithmetic mean. Correlation and multiple regression analysis were used to show the
relationship between the study variables. The study found that leadership skills,
leadership styles and leadership skills had significant effect SMEs debt management.
Leadership was found to have significant positive effect on the SMEs debt management.
The leadership skills which were crucial in improving SME debt management included
communication skills, financial planning, listening to others views, and negotiation skills.
The study concludes that leadership has significant positive effect on SMEs debt
management at Kandara town. Therefore, effective leaders will lead to improved SME
performance in terms of debt management. Today’s organizations need effective leaders
who understand the complexities of the rapidly changing global environment. For small
businesses to prevail, they need practitioners with knowledge, skills, and education
appropriate for their operations. The study therefore recommends that the government
and development partners to regular conduct leadership training workshops on SMEs
leaders. This can be done by through the County governments so as to reach SMEs
leaders in rural areas. The training should cover personal leadership and financial
management, record keeping.
Publisher
University of Nairobi
Subject
Enterprises Debt ManagementRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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