Effect of Entrepreneurial Orientation on Growth of Small and Medium Size Enterprises in Narok Town

Abstract

The main purpose of this study was to establish the effect of entrepreneurial orientation on growth of small and medium enterprises in Narok town. Specifically, the study sought to establish the influence of innovativeness, entrepreneurial pro-activeness, and risk taking on growth of small and medium enterprises. This study is justified on the basis that even though the present body of literature has delved into relationship between entrepreneurial orientation and organizational growth, there is limited research on how it affects growth of small and medium enterprises. The study adopted Schumpeter’s innovation theory, resource-based theory, and theory of business strategy. Methodologically, the study adopted correlation research design, where the study targets 1,390 SMEs operating within Narok town. The sample size for this study comprised of 139 SMEs, which constitute of 10% of the target population. The study used random sampling owing to the homogeneity of the units of study. Data were collected by means of structured questionnaires. Statistical Packages for Social Sciences version 24 was used to run both descriptive and inferential statistics. Descriptive statistics were used to compute frequencies and to derive conclusions and generalizations regarding the population, while inferential statistics; multivariate linear regression analysis was being used to determine the association between the outcome and predictor variables. Valid and reliability tests were conducted and ascertained data measures were able to measure what they are supposed to measure (validity) and if data collection tools consistently measure phenomenon of interest. Data was presented in form of figures and tables. Analysis of data established existence of a significant (p< .05) and positive relationship between predictor variables (innovativeness, entrepreneurial proactiveness, and risk-taking) on enterprise growth for small and medium enterprises. The study recommends that that SMEs should leverage technological innovation as a basis of enhancing business processes, internal efficiency, and infusing new products and services. Moreover, SMEs should continuously monitor and asses their past and present processes with a view to predicting future trends and patterns in relation to anticipated consumer needs and consumption patterns and even though risk taking an important approach to business growth, there is need to incorporate risk management strategies to mitigate the effect of risks involved in borrowing.