Influence of Entrepreneurial Strategies on Performance of Micro Enterprises in Mukuru Informal Settlement, Nairobi, Kenya

Abstract

Entrepreneurship is an important means to poverty reduction due to its capacity to identify and exploit business opportunities with a view to meeting an existing need. The determination of factors that increase the successful functioning of micro enterprises acts as an important step to the enhancement of the operational performance of these catalysts to economic development in a country. This project is vital determining the influence of entrepreneurial strategies on the performance of micro enterprises in Mukuru informal settlement, Nairobi Kenya. The entrepreneurial strategies considered in the study included social learning, financial management, trust and community development. Social learning strategy had a positive impact on performance of micro-enterprises (β = 0.398; p= 0.000) this was found to be as a result of resultant business ideas and also due to the realization that business flourish due to the support of other persons who come to buy goods or services. Limited knowledge on financial management was a common challenge faced by the MSME surveyed and as a result the entrepreneurs faced challenges to mobilize resources to finance their businesses. Capacity to keep business records and choose appropriate financing mix and investment options was found to be important to the improvement of performance of the firms. The financial management strategy was found to positively and directly influence performance of the firms (β = 0.590; p= 0.000). Similarly, strong trust ties among business partners facilitate mobilization of resources, reduction of transaction cost and resulted in improved cooperation among actors and thus improved the overall performance of the firms. The research recommended that government agencies in partnership with lenders to the small enterprises should organize for period training on financial education programs that will create awareness on available sources of funding to the small enterprises and start-up in the informal settlements. Since the study was relational factors in nature, it is recommended that future research should consider operational variables as well.