Relationship Between Entrepreneurial Orientation and Performance of Small and Medium-Sized Enterprises in Nairobi County

Abstract

Small and Medium-sized enterprises(SMEs) drives Kenya's economic growth and development thus boosting the nation’s GDP by creating employment. However, they face several challenges that might impede their growth and longevity. These encompasses limited financialmresources, fierce market rivalry, and inadequate management skills. These problems reduce profits and competitive advantage for many SMEs. These enterprises are driven by survival or necessity. Previous studies show that 60% of Kenyan small enterprises fail during the first six months (RoK, 2020), and more than 60% fail annually (Ngugi, 2020). This study indicates a deficiency in entrepreneurial orientation (E.O.) among SMEs in Kenya. The primary goal was to investigate how entrepreneurial orientation impacts the performance of SMEs in Nairobi County. To achieve this, the study was guided by four objectives: 1. To analyze the link between innovativeness and SME performance in Nairobi County. 2. To evaluate interrelation between proactiveness and SME performance in Nairobi County. 3. To assess how risk-taking propensity relates to SME performance in Nairobi County. 4. To investigate the relationship between opportunity obsession and SME performance in Nairobi County. Chi-square analysis and binary logistic regression were deployed to examine these relationships between independent and dependent variables.The chi-square test employed the question”Have you identified new businesses opportunities in the past year?” to assessthe variable “opportunitu Obsession”.The findings affirm that innovativeness, proactiveness, risk-taking propensity, and opportunity obsession all significantly impact SME performance. Consequently, the null hypotheses were rejected. The researcher recommends SME managers and owners to formulate effective strategies for improving innovativeness, proactiveness, risk-taking propensity, and opportunity obsession by conducting SWOT analysis . Future research should consider exploring different locations and incorporating additional independent variables to provide a more comprehensive understanding of these dynamics.