Determinants of Performance of Small Firms within Four Peri-Urban Centres of Eldoret Town

Abstract

Small and Micro Enterprises (SMEs) are important vehicles in generating employment and alleviating poverty in the country.  However, three out of five SMEs which are established fail within the first few months of operation while many of them remain small-sized affairs.  The purpose of the study was therefore to investigate the factors which affect the growth of SMEs located within four Peri -urban centres of Eldoret Town.  The study employed an explanatory research design to collect data from owners/managers of SMEs within the Peri -urban centres of Chepkanga, Cheptiret, Juakali and Mlango.  The study collected data, which is both primary and secondary in nature.  Primary data was collected using structured likert scale type of questionnaires while secondary data was collected through analysis of documents. Quantitative data was summarized using a variety of descriptive statistics such as the mean, the mode and standard deviation.  A Multiple Linear Regression (MLR) was used to to test hypothesis. The study findings showed that customers of the business highly affect the growth of SMEs. Business environment was observed in the findings to affect the growth of SMEs positively  More findings showed that both business and entrepreneurial characteristics (positively affect the growth of SMEs. Thus the study concluded that customers of the business, business environment, and entrepreneur characteristics affect SME growth positively. Thus, the study recommends that entrepreneurs should understand their customers and improve their characteristics so as to improve the growth of their SMEs. In addition, government should support the SMEs particularly by improving the SMEs operating environment.

Keyword; Entrepreneurship, Performance, SME, Business, Characteristics