Influence of Strategic Management Practices on Performance of Small and Medium Enterprises in Nairobi City County, Kenya

Abstract

SMEs are vital in several economies due to the role they play, mainly in developing countries. SMEs must develop strategic management strategies that will help them thrive in the competitive contexts in which they operate. Management of SMEs are concerned with organizational performance and therefore promote and communicates the same to the employees The main objective of this study was to determine the influence of strategic management practices on the performance of Small and Medium Enterprises (SMEs) in Nairobi City County, Kenya. The study examined Survival based theory and Resource based theory and how organizations apply them to achieve their performance goal. A descriptive cross-sectional research design was used in this study. A census of all the 82 SMEs from Nairobi City County that appeared among the Top 100 SMEs in Kenya in 2019 were included. This study relied on primary data gathered through questionnaires. Analysis of the data collected was conducted using SPSS software using descriptive analysis such as mean and standard deviation while inferential statistics including regression analysis were made use of in determining the relationship between the practices of strategic management and performance of an organization. The finding of the study indicated that the respondents perceive that strategy formulation, strategy implementation and strategy evaluation and control is carried out in Small and Medium Enterprises in Nairobi City County. The study established that there was a positive but insignificant relationship between strategy formulation and organizational performance. Results also established a positive and significant relationship between strategy implementation and performance of an organization. Finally, it was established that strategy evaluation and control influenced organizational performance positively. The study recommends that the management of SMEs needs to scale up their efforts in enhancing the practices of strategic management and that they should also budget enough for the implementation of the strategies as well as training of the management on how to implement these strategies.