Networking Capabilities, Entrepreneurial Competencies, Self-Efficacy and performance of Small and Medium Enterprises in North Rift Region-Kenya

Abstract

Small and Medium Enterprises are generally thought to be the backbone of any economy because they drive growth, provide employment opportunities and open new markets. This has attracted the attention of scholars in trying to understand the factors affecting their performance. The main objective of the study was to examine effect of networking capabilities, entrepreneurial competencies, and Self-Efficacy on the performance of Small and Medium Enterprises in selected towns of the North Rift Region -Kenya. Specific objectives were to determine; the effect of networking capabilities, entrepreneurial competencies, and entrepreneurial Self-Efficacy on performance of Small and Medium Enterprise, to determine the; effect of networking capabilities on entrepreneurial competencies, the mediating effect of entrepreneurial competencies on the relationship between networking capabilities and firm performance, the moderating effect of entrepreneurial Self-Efficacy on the relationship between; networking capabilities and entrepreneurial competencies, networking capabilities and firm performance, entrepreneurial competencies and firm performance. Finally, the study sought to determine the moderating effect of entrepreneurial Self-Efficacy on the strength of the indirect relationship between networking capabilities and firm performance via entrepreneurial competencies. The study was anchored by the theoretical approach of Resource Based View, Competency Based, Balanced Scorecard and Social Capital theories. The study employed positivism research philosophy and explanatory research design and using a stratified random sampling technique. Sample size of 323 drawn from a population of 4596 Small and Medium Enterprises registered with the Uasin Gishu, TransNzoia and Nandi Counties was collected using self-administered questionnaires. Hierarchical and multiple regression model using Hayes process Macro were used to analyse data and test the hypothesis. The variables were tested for reliability and validity by computing the Cronbach alpha and factor analysis statistical tests respectively. The study found that; networking capabilities (β =.678 p = .000<.05), entrepreneurial competencies (β =.465, p=.000<.05) and entrepreneurial Self Efficacy (β =.115 p = .009<.05) significantly affects firm performance. In addition, the result showed that networking capabilities directly influences entrepreneurial competencies (β =.404, p = .000<.05), entrepreneurial competencies mediate the relationship between networking capabilities and firm performance (β =.260, LLCI=.194, ULCI=.334), entrepreneurial Self-Efficacy failed to moderate the link between networking capabilities and entrepreneurial competencies (β =.034, p = .392 >.05). The study found that; entrepreneurial Self-Efficacy moderated the relationship of networking capabilities (β =.101, p=.013<.05) and entrepreneurial competencies (β =.090, p=.03<.05) on firm performance, finally the study found that entrepreneurial Self-Efficacy moderates the indirect relationship between networking capabilities and small and medium enterprises performance via entrepreneurial competencies and the conditional indirect effect is much stronger at lower levels of entrepreneurial Self-Efficacy (β=.196,SE=.051,CI=.098, .300), the bootstrap confidence levels were nonzero. The study contributes to knowledge by revealing a complimentary mediation and that entrepreneurial competencies mediates the relationship between networking capabilities and firm performance. Furthermore, contribution is clear in the moderation model of Self-Efficacy between the variables of the study. The new knowledge introduced is that entrepreneurial Self-Efficacy moderates the indirect links between networking capabilities and entrepreneurial competencies thus providing greater predictive power than when testing the direct, mediating, and moderating effects alone. The government should therefore develop effective strategies that will help improve Small and Medium Enterprises performances by applying the networking capabilities, entrepreneurial competences, and entrepreneurial Self-Efficacy unique dimensions.