Strategic Management Practices and Performance of Small and Medium-Sized Enterprises in Nairobi County, Kenya

Abstract

This study aimed to assess the relationship of strategic management practices and the performance of Small and Medium Enterprises (SMEs) in Nairobi County, Kenya. The research was motivated by the significant role that SMEs play in economic development, particularly in reducing unemployment and contributing to the GDP. However, SMEs often face challenges such as limited resources, inadequate technology adoption, and poor strategic planning, which hinder their competitiveness. The study adopted a quantitative approach, targeting 250 top-ranked SMEs in Nairobi. Data collection was conducted using structured questionnaires, focusing on the four strategic management practices: strategy formulation, strategy implementation, strategy evaluation, and strategic control. The results of the study revealed that all the strategic management practices examined had a positive and significant effect on the performance of SMEs. Specifically, strategy formulation had the highest impact, followed by strategic control, strategy implementation, and strategy evaluation. The findings indicated that SMEs in Nairobi County that adopted comprehensive strategic management practices were more likely to experience improved business performance. The study also confirmed the importance of involving all levels of staff in the strategic management process, as it fosters a sense of ownership and facilitates successful implementation. Furthermore, the research demonstrated that superior strategies positively contribute to organizational performance. Based on these findings, the study concluded that strategic management practices are crucial for the growth and competitiveness of SMEs. It recommended that SME managers focus on developing and implementing superior strategies through detailed situational analysis and participatory mechanisms. Additionally, continuous evaluation of strategies was advised to ensure sustained performance improvements. This research contributes to the existing literature by highlighting the specific role of strategic management in enhancing SME performance, particularly in the context of developing economies like Kenya