Competitive Strategy Drivers, Entrepreneurial Orientation, Macro Environment and Performance of Manufacturing Small and Medium Enterprises in Nairobi City County, Kenya

Abstract

main study objective was to determine the impact of entrepreneurial orientation and macro environment on the relationship between competitive strategy drivers and performance of0 manufacturing0 small0 and0 medium0enterprises (SMEs) in0 Nairobi0 City0 County0 in0Kenya. SMEs0are critical players in most economies, the world over. They provide synergies within economies through creation of job opportunities and provision of market linkages, boost government revenue and support wealth creation among many entrepreneurs. With evidence indicating limited studies seeking and providing answers on how competitive0strategy0drivers0influence0 performance0 of0 manufacturing0SMEs, this gap influenced the need for this research study. The resource-based theory was the overarching theory in this research study supported by game theory, open systems theory, dynamic capability theory and the resource-dependency theory. These theories helped articulate the variables in this study by providing a comprehensive framework0 for0 examining0the0link0between0the0research0variables.A0crosssectional0survey0was0done0covering 334 manufacturing0 SMEs in Nairobi City County. Data collection as through structured questionnaires distributed to business owners or senior managers in the participating firms which yielded 89.82 percent rate of response. Both descriptive and inferential measurements were utilized to analyze collected data. Pearson correlation0 coefficient0 was0 used0 to0 measure0 the0 direction0 and0 magnitude0 of0 the0 relationship0 between0 the0 study0variables. Hypotheses were formulated from the specific objectives of the study. Simple regression0 analysis0 was0 used0 to0 test0 for0 the0 direct0 relationship0between0the0study‟s0variables0while0the0moderating0effect0was0tested0using0stepwise regression0analysis. The0intervening influence was tested using path analysis and the joint effect was tested through multiple regression technique. The study hypotheses were all supported. The study found that0 the0 three0 competitive0 strategy0 drivers0namely, the0 environment-based0drivers, and resource-based0 drivers0 and0 the0 hybrid0 strategy0 drivers0 had0 significant0 impact0 on0 performance0 of0 manufacturing0SMEs. It was also noted that firm performance was significantly and positively influenced by entrepreneurial orientation illustrated by the degree at which the manufacturing SMEs innovates, takes risks, proactively pursues market opportunities and adopts competitive aggressiveness. Macro environment demonstrated significant moderating effect in the relationship0 between0 competitive0 strategy0 drivers0 and0 performance0 of0 the0 manufacturing0SMEs. The0study also generated an integrated model that examined the joint effect of the study variable which positively influenced performance0 of0 the0 manufacturing0 SMEs0collectively. The0 study0 concluded0 that0 performance0 of0 manufacturing0 SMEs0 are influenced by competitive strategy drivers, macro environment and entrepreneurial orientation. The results support resource-based theory, game theory, open system theory and dynamic capabilities theory. The study results offered direction for policy guidelines touching on manufacturing SMEs operations and enable business owners and managers employ appropriate strategies in their business operations.