Entrepreneurial Orientation, Business Incubation, Business Strategies and Performance of Start-ups in Nairobi City County, Kenya

Abstract

The need for the establishment mechanism to influence and run successful start-ups especially on new technological platforms formed the basis for the study of entrepreneurial orientation, business incubation and business strategies. Entrepreneurial orientation, business incubation and business strategies have been identified as feasible players in influencing performance of start-ups globally. Entrepreneurial orientation is observed on its behavioural attributes of innovativeness, risk-taking and pro-activeness towards upcoming business opportunities. Business incubation, on the other hand, is concerned with nurturing conceived ideas and ensuring they are born into start-ups and support them grow. The process involves mentorship, absorption capacity-building and linking new enterprises to resourceful networks. The study considered business strategies as guided by Ansoff (1957) matrix including the critique by Sener (2014). Ansoff matrix alternatively called Product-Market Expansion Grid is widely used globally (Peter and Jarratt 2015) as a decision scale for strategic alternatives involving diversification, market penetration, and product development. The theories of entrepreneurship, resource dependency, endogenous growth and social network considered for underpinning the study. The predominant theory was social network due to its attributes of interacting with the study latent variables. The study considered positivism philosophical reasoning to design, collect data, analyse it, and report the findings in order to reject or accept the hypothesis. This approach enabled the researcher to derive information logically from empirical data using the scientific method thereby testing the hypotheses about the constructs under theoretical underpinnings. The study successfully obtained 210 responses from start-up owners who had used the services of any of the five business incubators situated within Nairobi City County namely; ihub, Strathmore University, C4lab of University of Nairobi, Chandaria – BIIC of Kenyatta University, and Nairobi Industrial Park and Technology. Structural Equation Model (SEM) was applied to analyse data and deduce conclusions. The findings indicate that entrepreneurial orientation explains significantly the performance of start-ups in Nairobi City County (β=.7876, P=0.000) holding other factors constant. It was further revealed that that business incubation significantly influenced performance of start-ups (β=1.8547, P=0.000) in Nairobi City County ceteris paribus. Holding other factors constant, there existed a significant influence of business strategies (β=2.1089, P=0.000) on performance of start-ups in Nairobi City County. Further, it was found that entrepreneurial orientation, business incubation and business strategies jointly had significant influence (R2= 0.5850, chi2=455.94, P=0.000) the performance of start-ups in Nairobi City County. The study, therefore, recommends provision of business incubation services to all new enterprise as primary condition before any incentives in the market. Business incubation services are further recommended to secure entrepreneurial orientation through mentorship, capacity building and networking. The application of business strategies is a skill whose proper use will influence start-up performance as observed in survival, finances and employment. The government at national and county administration levels must establish policy framework to guide the provision of business incubation services for new and ongoing firms to foster entrepreneurial orientation and also in readiness for competence based curriculum (CBC) graduates. Good preparation of entrants into start-up sector will ensure better start-up performance which in turn will guarantee social, economic and political stability.