Entrepreneurial orientations, financial capital access and business performance of Small and Medium Enterprises in Eldoret Town, Uasin Gishu County, Kenya

Abstract

Despite the small and medium enterprise's contribution to the economy, their business performance has not been impressive. They are experiencing various difficulties in improving their financial performance, stagnating, and others failing within two years of starting. Therefore, the study's primary purpose was to establish the effect of entrepreneurial orientations, financial capital access, and business performance of small and medium enterprises in Eldoret town, Uasin Gishu County. The study's specific objectives were to examine the effect of innovativeness, risk-taking, pro-activeness, competitive aggressiveness, and autonomy on the business performance of small and medium enterprises. To determine the moderating effect of financial capital access on the relationship between innovativeness, risk-taking, pro-activeness, competitive aggressiveness, autonomy, and business performance of small and medium enterprises. The study has been guided by discovery theory, Schumpeter's innovation theory, and dynamic capabilities theory. The study has been carried out using an explanatory research design. The target population for this study was 2053 owners/managers of small and medium enterprises. The sample size for the survey was 335 managers of small and medium enterprises. The study adopted stratified and simple random sampling methods to select the owners/managers per sector. Primary data was collected using questionnaires. The validity test has been carried out using factor analysis and correlation, while the reliability test has been carried out using Cronbach's Alpha. The collected data was analyzed using both descriptive and inferential statistics. Descriptive statistics were frequency, mean, standard deviation, and percentage. The inferential analysis was done through correlation and hierarchical moderating regression analysis. The data analyzed has been presented in tables. The study findings revealed that innovativeness positively and significantly affected business performance (β1=0.222, p<0.05). Risk-taking positively and significantly affects business performance (β2=0.166, p<0.05). Pro-activeness positively and significantly affected business performance (β3=0.178, p<0.05). Competitive aggressiveness positively and significantly affected business performance (β4=0.103, p<0.05). Autonomy positively and significantly affected business performance (β5=0.144, p<0.05). Financial capital access had an enhancing moderating effect on the relationship between innovativeness and business performance (R2 change =0.010). The financial capital access had an enhancing moderating effect on the relationship between risk-taking business performance (R2 change=0.014). Financial capital access had an enhancing moderating effect on the relationship between pro-activeness and business performance (R2 change =0.008). Financial capital access had an enhancing moderating effect on the relationship between competitive aggressiveness and business performance (R2 change =0.009). Financial capital access has an enhancing moderating effect on the relationship between autonomy and business performance (R2 change=0.014). The study concluded that increased business innovation leads to increased productivity across various business dimensions, including individuals, processes, and business models. Pro activeness builds self-motivation, leads to creative problem-solvers, and is eager to seize chances. Risk-taking motivates entrepreneurs to find a strategy that works because of the significant risk taken. Employees who engage in competitive aggressiveness can better overcome anger towards a specific person. Autonomy boosts motivation and enjoyment while reducing employee turnover. The study recommends that firms to enhance entrepreneurial orientation to improve business performance. This proves that entrepreneurial-orientated culture should enhance entrepreneurial behaviour within the firm.