Role of Knowledge Acquisition on Firm Performance in the Context of Small and Medium Enterprises in Meru County, Kenya

Abstract

Small and Medium Enterprises (SMEs) are touted as the silver bullet in the revival and flourish of any country’s economy. It has the capacity to gainfully engage the highest number of work force. Effective and efficient performance of the sector is critical to economic growth. Large amounts of resources allocated to the sector have borne little fruit with failure reports in the last decade. This paper seeks to establish the influence of knowledge acquisition strategies on the performance of Small and Medium Enterprises (SMEs) within Meru county. The study was based on three theories; The Resource Based View theory of the enterprise (RBV), Organisation Learning (OL) and Knowledge Based View (KBV) theories. The research study employed a descriptive survey research design. The study’s target population was 500 SMEs in Meru County from which a sample of 150 SMEs was selected using stratified random sampling. The SMEs in Meru County constituted the unit of analysis while the managers, proprietors and senior staff constituted the unit of observation. The researcher utilised questionnaires to collect primary data. The data collection instruments were tested for construct, content and face validity. Cronbach Alpha Coefficient was used to test for reliability. Descriptive and inferential data was analysed. Summary measures of the sample which included frequency distribution tables, percentages, standard deviations and mean was generated from the descriptive statistics. Multivariate analysis and inferences made at 95% confidence level included the inferential statistics. Owners of SMEs will find the study’s results effective in enhancing their entity performance as they can make viable business decisions based on acquired knowledge. Academicians, researchers and lay readers with an interest in knowledge acquisition will find the study useful. From the findings, SMEs in Meru County embraced knowledge acquisition strategies and practises to a moderate extent. The study concludes that the knowledge acquisition strategies had a significant positive effect on the performance of SMEs in Meru County. From the study findings, it can be concluded that there is a strong relationship between the study variables as shown by a correlation coefficient of 0.781. The study concludes that the SMEs have enhanced knowledge acquisition through use of capacity development, mentorship programs, modern technology and consultations. It is a recommendation of the study that the SMEs should embrace the trainings and microfinance services offered by Micro-Finance Institutions and other financial sector players to enhance their capacity in knowledge acquisition.