IJEBMR
ISSN: 2456-7760

Title:
FIRM CHARACTERISTICS AND GROWTH OF SMALL AND MEDIUM ENTERPRISES IN NYERI COUNTY, KENYA

Authors:
Robert Ngatia Wathegi, Job Omagwa, Kenya

Abstract:
Growth of SMEs in firm size, age, and industry/sector and management efficiency is an area of concern in Nyeri County. As a result of various challenges most SMEs have not grown in size and collapses within a very short period of time after they start. In addition, several SMEs in Nyeri County have not appreciated concentrating in one industry sector and advancement in management skills which may be a major contributor to slow growth in the enterprises within the County. The study therefore sought to establish the relationship between firm characteristic and growth of SMEs in Nyeri County, Kenya. The specific objectives of the study were to determine the relationship between firm size, age, management efficiency, industry sector and growth of SMEs in Nyeri County, Kenya. The study was anchored on Stakeholders Theory, Resource Based Theory, Agency Theory and Operating Cycle Theory. The research design adopted by the study was descriptive design. The study targeted 840 SMEs and a stratified random sampling method was used to arrive at 126 SMEs. Out of the 126 questionnaire distributed to proprietors who operate small and medium enterprises 104 were filled and returned yielding a response rate of 82.5%. The results of the study indicated that the size of the firm and the age of the firm had positive and statistically significance effect on growth of SMEs. In particular, large firms were found to perform better than small firms due to their ability to source for more funds from external sources, increase in sales turnover and value of capital employed leads to growth of firms. Industry sector had positive but statistically insignificance effect on growth of SMEs while management had negative and statistically significance effect on the growth of SMEs. The study concludes that the management of the SMEs gains experience over time and the longer the time in the operation the more the managers are experienced and efficient in dealing with enterprise challenges. In addition, SMEs need to be trained on entrepreneurship and management skills. The study further concludes that SMEs should evaluate how the industry is performing in order to establish whether their business has adapted well in the industry sector.

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