Moderating effect of social networking on relationship between learning orientation and performance of small and medium enterprises in Baringo and Elgeyo Marakwet Counties in Kenya

Abstract

Small medium Enterprises are the backbone of most economies worldwide, SMEs that have capacities to learn faster are likely to respond to market challenges better than competitors. Statistics from Small and Medium Enterprises authority shows that SMEs in Kenya are characterised by lack of resources, poor performance, and lack of expansion. The performance of SMEs in Baringo and Elgeyo-Marakwet counties in Kenya declined over the last decade. However, the explanation for decrease was unclear this study investigated the effect of social networks on the relationship between learning orientation and performance of small and medium enterprises in the two counties. The study examined the effect of commitment to learning, shared vision, knowledge sharing and open mindedness on the performance of SMEs. It also looked at the moderating effect of their social networking on relationship between learning orientation and performance. Positivist research paradigm was adopted. The study is based on resource-based view and social network analysis theories, and it adopted the survey research design which targeted 2492 SMEs in the Counties. Systematic sampling technique was used to select 332 respondents to participate in the study. Data was collected using structured questionnaires and analysed using descriptive and inferential statistics. Factor analysis was carried out using principal components analysis to extract factors from the data. The data had average reliability coefficient of 0.807. Results indicated that shared vision (β = 0.072, p-value =0.00), organizational knowledge sharing (β = 0.085, p-value =0.00) and open mindedness (β = 0.061, p-value =0.02) positively and significantly affected performance of SMEs. Commitment to learning did not affect SME performance (β = 0.054, p-value =0.08). Social networking significantly moderated the relationship between commitment to learning (β = 0.08, p-value =0.01), shared vision (β = 0.09, p-value =0.00), and open- mindedness (β = 0.04, p-value =0.00) but failed to moderate the relationship between learning orientation and SME performance (β = 0.01, p-value =0.48). The results supported the hypothesis and revealed that learning orientation was critical and may be helpful to SMEs in the two counties, through understanding of the crucial link between learning orientation and performance. The results may assist consultants and support agencies that aid SMEs. The more the understanding on the importance of learning orientation, the greater is the insight on how firms, SMEs can develop competitive strategies to improve its performance in the selected counties.