Environment as a moderator of the relationship between business strategy and performance:a case of small and medium enterprises in Kenya
Mwaura, Genue R
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For Kenya, integration into the global economy through economic liberalization, deregulation, and democratization has been seen as the best way to overcome poverty, unemployment, dismal economic growth and general decline in Economic development. Crucial to this process is the development of a vibrant private sector being touted in every policy paper, in which the hitherto eclipsed Small and Medium Enterprises (SMEs) plays pivotal role. This in Kenya can be likened to the calling of a new order of things which Machiavelli noted thus, "there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of new order of things" Most notably, in Kenya, SMEs development objectives have been linked to efforts aimed at poverty alleviation, employment creation and increased economic growth mainly in the context of shrinking job opportunities and formal economy as well as the dwindling international investors and suspension of aid on which basis the tenets of energized economic growth was based by the Government. Unfortunately, Globalisation and Liberalisation brought challenges that extrapolation could not address and new factors had to be introduced into the process of management and as a result many SMEs had to scale down their operations or fold up all together, the study revealed. The study further revealed that, SMEs represent an element of competition and counters monopolistic tendencies, provides. consumers with a broader menu of products and contributes to competitive pricing. Managers in this sector are, beyond the overarching worries triggered by the political instability, dilapidated infrastructure, slow pace of formulation and enactment of policies, share some specific anxieties beyond their control or ignorance. SMEs, the study revealed, continue to position themselves by leveraging their strengths by formulating and implementing sound strategies despite hash environmental factors. It is therefore possible, if SMEs policies are developed consciously and purposefully with little Government attention they can claim their rightful role as engines of Economic development and help achieve the millennium goals. This is witnessed by their continued supply of goods to the market that compete with large industries despite the hash environmental conditions in which they operate and seek to endure. Their potential should be used as an ingrained way of perceiving their economic role. The findings of this study suggest that performances of SMEs vary with choice of business strategy they adopt and that the relationship between strategy types and the performance of SMEs is moderated by environment. Therefore, Managers' understanding of the environment, which have become an enduring myth, is of outmost importance. Environment affecting SMEs will need constant review and analysis of its effect to the business if the business is to remain competitive, fulfil its mission, attain its vision and post a notable bottom line-Performance! The novelty and the speed of the developments in the environment call for real time continuous preoccupation with the strategic issues throughout SMEs operations as no policies are well documented to guide them. Those who pretend that the same kind of policy approach can be applied no matter what environment are either naive or charlatans and their operations are doomed. To survive therefore, it seems, SMEs must be able to quickly create, deploy, and implement breakthrough strategies that help them to continually anticipate and meet current-and future challenges, maximize on the performance and withstand any environmental adversity. The onus is therefore on SMEs to design individual framework to follow and produce the expected results.