Strategic Orientation, Leadership Support and Growth of Small and Medium Processing Enterprises in Machakos County, Kenya

Abstract

The role of Small and Medium Processing Enterprises (SMEs) in Kenya’s economy cannot be underestimated. However, from evidence, their growth of processing SMEs in Kenya is faced with several challenges including financial constraints, inadequate entrepreneurial skills, unsupportive internal and external business environment, and lack of clear policies and regulations to ensure sustained growth of processing SMEs. These challenges consequently lead to poor innovation orientation, entrepreneurial orientation, and marketing orientation strategies that further exacerbate the poor growth of processing SMEs in Kenya. The study sought to establish the effect of strategic orientation, leadership support and growth of processing SMEs in Machakos county, Kenya. The objectives of the study were to determine the effect of innovation, entrepreneurial, and market innovations on the growth of SMEs in the processing sector as well as establish the moderating effect of leadership support on the relationship between strategic orientation and the growth of SMEs in the processing sector in Machakos County Kenya. The study was underpinned by: The Resource Based View theory, Innovation Diffusion, and Human Capital theories. Positivism research philosophy and explanatory research design was adopted. 384 processing SME owners, and managers were the study respondents. A stratified random and purposive sampling techniques were used. The questionnaire was administered using a drop-and-pick technique. Instrument pretesting and reliability tests were done. The targeted population for the study included 641 processing enterprises where a sample size was determined using Cochrane’s sampling formula. Data was analyzed using descriptive statistics, multiple regression analysis, and hierarchical regression analysis (for moderation) analysis, with the aid of SPSS version 28. Research hypotheses were tested at a significance level of 0.05 using multiple regression analysis. The study documents a significant effect of entrepreneurial orientation on growth (p=0.000) and a significant effect of market orientation on growth (p=0.000). However, innovation orientation had a statistically insignificant effect on growth (p=0.083). Using hierarchical regression analysis, the study finds that leadership support does not have a significant moderation effect (p=0.358) on relationship between strategic innovation and growth of SMEs. The study finds that innovation orientation, entrepreneurial orientation, and market orientation are necessary requirements for the growth of Small and Medium Processing Enterprises. Strategic innovation, however, lacked meaningful impact on this growth. The study therefore recommend that owners of small and medium enterprises should pursue innovation of their processes, products and business models, embrace skills capacitation that would allow them to run their businesses efficiently and effectively despite the challenges in the infrastructure to propel innovation. Despite the failure of leadership support to strengthen strategic orientation for growth, the study recommends that the efforts of the government support should be well pronounced among enterprises as a critical accelerator to growth.