Abstract:
Firm growth is related very closely to firm survival. Specifically, firm growth is
positively correlated with the likelihood of survival. Hence firms that experience
continuous growth will have a higher probability of surviving in the market. Stiff
competition, resource constraints and organizational limitations hinder SMEs growth.
The main objective of the study was to investigate the moderating effect of structural
capital on the relationship between strategic product responses and the growth of
export manufacturing Small and Medium sized Enterprises (SMEs) in Nairobi county.
The specific objectives of the study were to establish strategic product design, to
determine strategic product development, to assess strategic product differentiation
and to evaluate strategic product innovation on the growth of export manufacturing
SMEs in Nairobi county and to examine moderating effect of structural capital on the
relationship between strategic product responses and the growth of export
manufacturing SMEs in Nairobi county. This study used the discrete choice theory,
diffusion of innovation theory and chasm theory of growth (Anchor Theory).
Explanatory research design was most appropriate for its ability in developing an
explanation of a causal relationship between independent and dependent variables.
The study area was in Nairobi County and the target population was 369 export
manufacturing SMEs. Slovin’s formula was applied to generate a sample size of 191
SMEs. The primary data was collected by using a structured questionnaire. The
questions were designed using a 5 point Likert scale ranging (1 to 5). Pilot study was
done in Kiambu County covering 19 SMEs. Validity and reliability were tested. The
data collected was analyzed using Statistical Package for the Social Sciences (SPSS)
version 23.0. Correlation results revealed that product design (r=.476, p=.000),
product development (r=.383, p=.000), product differentiation (r=.275, p=.000),
product innovation (r=.277, p=.000) and structural capital (r=.276, p=.000) had
positive significant correlation with growth of SMEs. Regression results revealed that
product design (β=.560, p=.000), product development (β=.565, p=.000), product
differentiation (β=.442, p=.000) and product innovation (β=.426, p=.000) all had a
positive effect on growth of the SMEs. Product design interaction term (β=.123,
p=.056), product development interaction term (β=.052, p=.001) and product
innovation interaction term (β=.272, p=.001) is significant suggesting that structural
capital strengthens the positive relation between product design, product development
and product innovation and growth of SMEs. Whereas, product differentiation
interaction term (β=.126, p>.05) is not significant suggesting that structural capital
does not significantly moderate the positive relationship between product
differentiation and growth of SME. The study concluded that product design, product
development, product differentiation, product innovation and structural capital
influences export manufacturing SMEs growth. The study recommended that
managers and SMEs owners should implement product design, product development,
product differentiation product innovation and structural capital to improve on SME
growth. Also SMEs should be supported by trade promotion organizations to provide
market information, as well as training and network opportunities so as to attain the
SDGs