SMEs In Kenya Research Articles

Sharia-Compliant Sacco Services and Financial Performance of Small and Medium-Sized Enterprises in Nairobi City County, Kenya

Saving and Credit Cooperative societies (SACCOs) are basis of monetary provisions helping entrepreneurs and other upcoming industries connect to banking facilities and other services. They provide monetary provisions to low-income earners who are self-employed. On the other hand, sharia-compliant SACCOs have obtained considerable importance in the modern globe on the foundation of stipulation of loans without interest together with the sharing of losses and profits via the doctrine of profit-sharing (Mudharaba) and joint-venture (Musyaraka). Although numerous researches have been done on areas of Islamic banking, few researches have explored the role of sharia-compliant SACCOs on SMEs in Kenya. Therefore, the motive of this study was to explore the effect of sharia-compliant SACCO services and monetary achievements of SMEs within Nairobi City County, Kenya. The survey was to be informed by four objectives namely; to determine the effect of credit services, training services, banking services and saving services by sharia-compliant SACCOs on financial performance of SMEs in Nairobi City County, Kenya, The study was to be based on three theories namely; financial intermediation theory, credit access theory and the saving culture theory. The project has utilized a descriptive research plan in establishing the effect of sharia-compliant SACCO services on financial performance of SMEs in Nairobi city county, Kenya. The target population was 300 SMEs that operate within Nairobi City County who are clienteles of sharia-compliant SACCOs. Utilizing cluster sampling, the survey has adopted a total of 90 participants from the SME proprietors. The researcher collected primary data utilizing closed questionnaires as the research instrument. The data was obtained by using drop and pick later method and followed it via telephone calls. The collected data was summarized, coded, tabulated and analyzed using SPSS. The study derived the mean, frequencies and percentages from the data analysis for each variable. Findings of the study were obtained by use of charts, histograms and bar graphs where appropriate. The results of the study are believed to add up to existing body of knowledge in the field of SMEs business development as well as in Islamic banking in Kenya. Regression analysis was used to establish the relationship between SACCO services and financial performance of SMEs in Nairobi City County. The study concluded that the services provided by sharia-compliant SACCOs have significantly enhanced the financial performance of SMEs in Nairobi City County. The study recommended sharia-complaint SACCOs and other financial institutions to do frequent trainings for SME owners so as to solidify their capacity, skills and knowledge.

What factors hamper innovation amongst SMEs in Kenya?

ABSTRACT While much of the evidence about innovation amongst SMEs in many developing countries have sought to examine the factors that enhance the propensity of a firm to innovate, far less effort has gone into assessing the factors that hamper it. This paper follows the latter literature to provide an explanation of firm innovation failure amongst SMEs in Kenya by focusing exclusively on external obstacles. By relying on the World Bank Enterprise Surveys and defining innovation as involving product and process innovation, we showed that factors such as political instability and infrastructure, measured as access to electricity, can be critical to firm innovation. We also found that the effects could be context-specific, as the results differ based on various firm characteristics, including firm type, sector, age and size. Our findings provide important policy implications about firm innovation in Kenya as well as the understanding that providing a more conducive business environment is not only critical to enhancing various firm activities but also enhancing innovation performance.

The Effect of Transaction Cost on the Performance of SMEs in Kenya

The astronomical transaction costs due to incomplete information and lack of economies of scale for SMEs contributed the failure of large portion of SMEs in Kenya. Unlike large corporations, transaction cost is a big component of SME expenses due to asymmetry of information and borrowing small amounts of fund at a time. Although virtual lending institutions reduced transaction cost by directly connecting the lender and the borrower, the interest rate charged by these institutions is higher than the mean profit rate for SMEs. The study used regression analysis, ANOVA, and correlation coefficient and the result indicated that transaction cost explained 22.8% of variations in market value (R²=0.228), f(6, 205)=2.181, p< .05, ROA explained 18.0%, (R²=0.180), f(6, 204)=2.904, p< .05, while sales growth explained 14.7% (R²=0.147), f(6, 206)=1.471, p=> .05. It was found that transaction cost was significant in predicting market value and ROA, and null hypotheses were rejected. The correlation result showed that transaction cost was negatively and significantly correlated with SME performance r(210)=-0.363, p<0.05.

Entrepreneurial Networking Strategic Renewal and Performance of Youth-Owned Agro-Processing Small and Medium Enterprises in Selected Counties in Kenya

The current business environment has become very dynamic and this comes with threats and opportunities. Some of the factors that pose challenge in this environment are new entrants, loss of competitive advantage or rapid change of technology. In Kenya, SME suffer the same fate despite the critical role they play in the country. Most of the youth business startups fail at their third year and very few enterprises have grown into large formal organizations. To survive under this dynamic environment, entrepreneurial networking becomes an important strategy that can be adopted by organizations. The objective of this study was thus trying to examine influence of entrepreneurial networking strategic renewal on performance of youth owned SMEs. The specific objectives were membership of social network, professional networks, business networks and social networks and their influence on SMEs performance. The research design adopted was descriptive cross-sectional survey. The study targeted youth owned agro-processing SMEs registered by Ministry of Trade and Industry from four County Governments namely, Nyeri, Kirinyanga, Murang’a and Nyandarua. The population that constituted sampling frame was 287 youth owned enterprises. Quantitative data was collected by use of structured questionnaire. The overall model study was R Square= 0.092, meaning that Entrepreneurial Networking Strategies explained 9.2% of the variation on SMEs performance. The study coefficients indicated that holding all other factors constant, changing Entrepreneurial Networking strategies by one unit would result to a 0.324 change in Performance of Youth Owned Agro-processing SMEs. The value of t is 6.095, which was &gt;2 and p-value of 0.000 which implied that there was statistically significant influence of Entrepreneurial Networking Strategies on performance. The study concluded that entrepreneurship networking influences performance of the youth owned agro-processing SMEs in Kenya. This study recommends there is need for the SMEs to further establish networks outside their business cycle.

Strategic Resources, a Driver of Performance in Small and Medium Manufacturing Enterprises in Kenya

Purpose: This study sought to establish the effect of strategic resources on performance of small and medium manufacturing enterprises. Specifically, the study sought to identify how financial resources, human resources, physical resources and intellectual capital affect performance of small and medium manufacturing enterprises in Kenya. Methodology: Positivism research philosophy was utilised. Cross-sectional descriptive survey as well as explanatory study design were used in the study. The target population for the study was 350 Kenyan SMEs in the manufacturing sector. A sample of 183 firms was selected using stratified random sampling. One respondent from each firm was selected being the managing director. Data was collected using a semi-structured questionnaire. Diagnostic tests for multicollinearity and normality were conducted before data analysis. The research questionnaire was tested for content validity and reliability after. Data was analysed using inferential and descriptive statistics. Data collected was analysed using SPSS V23. Finding: The study found that strategic resources have a significant influence on significant influence on performance of manufacturing SMEs in Kenya. Specifically, financial, human and physical resources all positively and significantly influenced the performance of Kenyan SMEs while intellectual resources as no effect on performance. The study therefore concluded that financial resources have a positive and significant influence on performance of manufacturing SMEs in Kenya, human resource was found to be significant in predicting performance. Physical resources have a significant influence on performance of manufacturing SMEs in Kenya while intellectual capital has no significant influence on performance of manufacturing SMEs in Kenya. Study Implication: The study recommended that Management of manufacturing SMEs should ensure that there are enough financial resources to meet their daily transactions and ensure that they are able to acquire the relevant strategic resources for efficient running of their firms; have adequate, committed and well-skilled personnel with the required expertise; should invest significantly in physical resources in order to maximise the performance of these firms; carry our cost benefit analysis before committing their resources to protect their intellectual capital in form of patents. Value of the Study: The study showcases the influence of strategic resources on performance of manufacturing SMEs in Kenya.

Relationship lending and access to financial services by SMEs in Kenya

Policymakers and scholars acknowledge the significance of small and medium enterprises in stirring the economic growth and development in developing and developed economies. In spite of the generally fast pace by which access to financial services for small and medium enterprises is being established, significant segments of the small and medium enterprises sector do not yet benefit from the expansion. This study, therefore, investigated the effect of relationship lending on access to financial services by small and medium enterprises in Kenya. The study was based on credit rationing theory and information asymmetry theory. The target population comprised 4,253 small and medium enterprises in Kenya. A sample size of 366 SMEs was used by the study. The study adopted a multistage sampling technique to obtain the SME respondents. Primary data was utilized and was acquired through semi-structured questionnaires. Data were analyzed using descriptive and inferential statistics utilizing Heckman two-stage regression model. The study findings showed that relationship lending had a positive and significant effect on access to financial services among SMEs in Kenya. The study concluded that relationship lending plays a critical role in access to financial services by SMEs in Kenya. The study recommends that SMEs owners should strive to meet the terms and conditions provided by lending institutions in their various financing practices while management of the lending institutions should adopt financing practices favorable to SMEs to increase their access to financial services.

Financial Statement Lending, Credit Information Sharing and Access to Financial Services by Small and Medium Enterprises in Kenya

Policy makers and scholars acknowledge the significance of small and medium enterprises in stirring the economic growth and development in developing and developed economies. In spite of the generally fast pace by which access to financial services for small and medium enterprises is being established, significant segments of the small and medium enterprises sector do not yet benefit from the expansion. This study therefore investigated the effect of financial statement lending on access to financial services by small and medium enterprises in Kenya. The study further sought to establish the moderating effect of the credit information sharing on the relationship between financial statement lending and access to financial services by small and medium enterprises in Kenya. The study was based on Financial Intermediation Theory and information asymmetry theory. The target population comprised 4,253 small and medium enterprises in Kenya. A sample size of 366 SMEs was target by the study. The study adopted multistage sampling technique to obtain the SMEs respondents. Primary data was utilized and was acquired through semi-structured questionnaires. Data was analysed using descriptive and inferential statistics. Heckman two step selection model was applied in regression analysis. The findings of regression analysis show that financial statement lending had a positive and significant effect on access to financial services among SMEs in Kenya. The results established that credit information sharing had insignificant moderating effect on the relationship between financial statement lending and access to financial services among the SMEs in Kenya. The study concluded that financial statements play a critical role in ensuring small and medium enterprises access financial services. Lenders can determine the financial position of the business by analysing their cashflow in order to be able to advance the credit that the business is able to pay based on their financial statement. Keywords: Financial Statement Lending, Financial Services, SMEs, Kenya. DOI: 10.7176/RJFA/12-16-06 Publication date: August 31 st 2021

EVALUATION OF COST-BENEFITS OF OYSTER MUSHROOM PRODUCTION USING INNOVATIVE WATER HYACINTH SUBSTRATE FOR SUSTAINABLE DEVELOPMENT OF SME, KENYA

Purpose: The study did an evaluation of cost-benefits of oyster mushroom production using innovative water hyacinth substrate for sustainable development of Sme, Kenya.&#x0D; Methodology: The study employed the Benefit-Cost Analysis (BCA) technique for the evaluation&#x0D; Findings: Oyster mushroom is edible and belongs to fungi Kingdom and can play a key role in economic development of a country. It can also contribute immensely to human wellness through enhancement of body immune system when consumed regularly.&#x0D; Unique contribution to theory, practice and policy There is need to evaluate the Cost-Benefits of Oyster Mushroom Production Using Innovative Water Hyacinth Substrate for Sustainable Development of SMEs in Kenya. Objectives include determination of economic Net present Value (ENPV) and determination of Economic Benefit-Cost Ratio (EBCR). The significance of this study include control of Corona Virus (COVID-19) pandemic disease, poverty reduction, reduction of unemployment crisis and enhancement of sustainable business opportunity for SME.

The Relationship between Democratic Leadership Style and SMEs Growth in the Top 100 SMEs in Kenya

The study sought to investigate the relationship between democratic leadership style and small medium enterprise growth in the top 100 KPMG SMEs in Kenya. A causal research design was employed to investigate the relationship between the independent variable with key constructs being orientation towards teamwork, innovative and creative, delegation of responsibilities and transparency and the dependent variable constructs being workforce growth, sales growth and return on assets. From a target population of 553 owners and Managers of the top 100 KPMG SMEs of 2013 using Stratified random sampling technique a sample of 227 was obtained. The study relied on primary data that was collected using closed-ended questionnaires. Data was analysed using Pearson’s correlation, multiple regression and chi-square techniques. The study findings established that democratic leadership style and SME growth had a strong positive association (r =0.713, p = 0.021 (p&lt; 0.05); the null hypothesis was rejected and alternative hypothesis accepted since the p value was less than alpha =62.146; df. = 52; p= 0.000(p&lt;0.0.) The study concluded that democratic leadership style affected the overall performance of an organization as the employees found satisfaction in their work which positively affected their creativity and innovativeness which in turn affected the overall success and growth of the organization. It was recommended that leaders of SMEs should include employees in the decision-making process in order to facilitate growth of the enterprise.

The Effects of Lending Interest Rates on Performance of SMES in Kenya

Small and Medium Enterprises (SMEs) play a vital role in the country’s economic growth through the creation of employment. They also contribute largely to the Gross Domestic Product (GDP) since 98% of businesses in the country are SMEs. Thus, following Kenya’s Vision 2030 there has been a need to protect these enterprises. However, SMEs in Kenya have been faced with numerous challenges which are not limited to affordability of financing options. These enterprises mostly rely on financial institutions for funding, which at times offer unfavorable conditions for bank loans making it hard to access the loans. These challenges hitherto, have caused the failure of these SMEs, because, without capital, operations are minimal. Empirical research has shown that interest rates attached to loans are a major factor SMEs consider when getting loans. High lending rates discourage borrowing since repayment of such loans may take up all of the business proceeds which limits the performance of these enterprises. The study sought to analyze the effect of lending interest rates on the performance of SMEs in Kenya. The study adopted a descriptive research design with a simple linear regression model. The population of the study comprised of small business owners and financial institutions managers in Nairobi Central Business District (CBD). Nairobi CBD is Kenya’s epicenter for business. The study revealed a direct relationship between interest rates and the performance of SMEs. The study recommended the need to restructure bank interest rates to be more ‘consumer-friendly.’ This would encourage SMEs to take up loans that will enable them finance investments and thus improve their performance. Moreover, this would pave the way for job creation which would eliminate the problem of massive unemployment in the country and bring the country closer to realizing Kenya Vision 2030. Keywords: Interest Rate, Financial Institutions, Performance, Small and Medium Enterprises, Lending Rate DOI: 10.7176/EJBM/13-8-15 Publication date: April 30 th 2021

Influence of Operational Processes on the Performance of Manufacturing Firms: Empirical Evidence from SMEs in Kenya

Manufacturing firms in Sub-Saharan Africa are facing both internal and external pressures from intense global competition, turbulent markets, and the increasing sophistication of manufacturing technologies which influences its performance. This increasing rate of change in the sector is compelling firms to pay attention to the operational processes. Due to this reason, the study sought to determine the effect of operational processes on the performance of manufacturing SMEs in, Kenya. The study adopted an explanatory design had a sample size of 136 firms which was drawn using proportionate stratified sampling. Primary data collection involved the use self–administered questionnaires and instrument validation was achieved through the development of constructs from previous studies, scale development, instrument pre-testing and validation. The instrument was subjected to inter-consistency test using the Cronbach's coefficient with a value ≥ 0.70 affirming that the research instrument was reliable. The results show that operational processes cumulatively explain 37% of the variations in firm performance, therefore, the study concluded that the operational processes have a significant and positive effect on firm performance. The study recommends that the management of these firms should attempt to improve on the strategy processes and contents based on models that have been applied successfully in other contextual areas.

Entrepreneurial Orientation and Performance of Small and Medium- Sized Enterprises in Nairobi City County, Kenya

Kenya’s economic growth is estimated to have decelerated to 4.4 per cent in the third quarter of 2017 compared to 5.6 per cent in a similar period of 2016. During the quarter, the macroeconomic fundamentals remained largely stable and supportive of growth. However, uncertainty associated with political environment coupled with effects of adverse weather conditions slowed down the performance of the economy. As a result, most sectors of the economy posted poor performance during the quarter under review compared to the same quarter of 2016. (Kenya Economic Outlook, 2017).The Micro and Small Enterprises sector in Kenya is regarded as the driving force to spur economic growth, innovation and job creation. The general objective of the study is to investigate the effect of entrepreneurial orientation on performance of SMES in Nairobi County, Kenya. The specific objectives of the study are; to determine the effect of innovation, analyze the effect of risk taking and establish the effect of pro-activeness on performance of SMEs in Nairobi County. This study used descriptive research design. The study population is 2300 SMEs registered to operate in Nairobi County. Stratified sampling was used to obtain a sample size of 230 respondents. Data was collected using semi-structured questionnaires. Descriptive and inferential statistics was used in the analysis of data using SPSS and Ms Excel. Data was then be presented using tables, graphs and figures. Based on the findings, the study concluded that entrepreneurial orientation is useful as a Predictor of performance of SMEs. All the Entrepreneurial orientation dimensions: innovativeness, proactiveness and risk-taking had Positive significant effect on performance of SMEs. This implies that behaviors associated with innovativeness, proactiveness and risk-taking when taken as an overall strategic may indeed help SMEs in Kenya to grow. Further, the results suggests that EO-oriented activities within an organization not only results in better performance but also assist owners of SMEs to make better decision regarding the choice of strategic resources acquired. The findings of this study add to our understanding on the relationship between EO and performance of SMEs and represent an important contribution to the body of knowledge in the field of entrepreneurship. Based on the research findings and conclusion this study recommends that: SMEs need to embrace the entrepreneurial orientation dimensions, innovativeness, risk taking and proactiveness to increase business performance. Entrepreneurs need to consider risk-taking to effectively and successfully respond to the dynamic environments that require organizations to increase decision-making speed. Entrepreneurs should be innovative and develop new products ahead of their competitors. They should also be proactive by carrying out strategic environmental scans for new opportunities in the market. Finally, there is need for the Department of Micro and Small-Enterprise Development (DMSED) to consider in its blue print, facilitation of workshops and seminars for small and medium entrepreneurs to sensitize them on the significance of these dimensions in business performance. This study recommends that future researchers should carry out research on the Factors that play a mediating role in the influence of entrepreneurial orientation on performance like munificence, dynamism and hostility should be in future studies.

A Descriptive Research on the Security Challenges of Cloud Computing Among Selected SMEs in Kenya

Cloud computing can help organizations accomplish more by paying less and breaking the physical boundaries between IT infrastructure and its users, however heightened security threats must be overcome in order to benefit fully from this new computing exemplar. The objective of this research was to determine the fundamental cloud security challenges experienced by SMEs in Kenya. Descriptive survey was therefore chosen for this study because the researcher was interested in the opinions of the respondents in terms of security challenges in cloud computing. The primary area of study for this research was Nairobi, Kisumu and Mombasa and the target population for this study were the Top 100 SME companies in Kenya as of 2016. This information could be useful and vital to policy makers and researchers who are making efforts to improve security in the field of Cloud Computing.

Moderating effect of social media on relationship between entrepreneurial networking and performance of youth owned agro-processing SMEs in Kenya

This paper was anchored on a pragmatic research paradigm. The study used a cross-sectional survey where a self-semi structured questionnaire was administered to collect the primary data from the target population who were youth-owned SMEs. The study was limited to 135 youth-owned enterprises where 357 employees were selected randomly to form the study sample; the key respondents of the study were limited to owner-managers of small and micro enterprises and top management employees. The questionnaires were tested for reliability and validity. Data were analyzed using descriptive and inferential statistics. The study revealed that there is a significant relationship between youth-owned. The study revealed that entrepreneurship networking has a significant effect on the performance of the agro-processing SMEs owned by the youths. However, there is a need for SMEs to further establish networks outside their business circle and seek networks with other bigger firms in the market. The study, therefore, recommends that there is a need for SMEs to invest more in social media marketing and networking of the SMEs for improved performance.

Influence of Training Strategy on Growth of Small and Micro Enterprises in Kenya: A Case of Women Enterprise Fund

The government of Kenya established Women Enterprise Fund to enhance the growth of Small and Micro Enterprises in the country through its training strategy. The purpose of this study was to establish the influence of training strategy on growth of SMEs in Kenya. This research used a descriptive survey based design. The study’s target population was composed of group leaders’ beneficiaries of Constituency Women Enterprise Scheme. Both cluster sampling and simple random sampling were used to select a sample size of 335 respondents. Quantitative primary data was collected by use of structured questionnaires. The data collected was analyzed according to research objectives. The study utilized both descriptive statistics and inferential statistics to analyze data. Both ANONA and Regression Analysis were computed to assess the correlation between the variables. The findings of the study established that majority of clients had acquired relevant business skills. The training was given to most clients on a regular basis and enabled them to operate their SMEs more effectively. ANOVA results showed a correlation between training strategy and growth of SMEs since the calculated P value 0.001 was less than the critical value 0.005. The study therefore established a positive relationship between training strategy and growth of SMEs. The findings of this study will help the government of Kenya to formulate training strategies that would boost the growth of SMEs in the whole country. The study recommends the government to provide frequent training to all SMEs in the country to make them more efficient and effective.

EFFECT OF ACCESS TO FINANCE ON FINANCIAL PERFOMANCE OF PROCESSING SMES IN KITUI COUNTY, KENYA

Purpose: The SMEs play critical role in creating job opportunities and growth of the economy. Currently, the rate at which the new firms formed have stagnated and those with less than 5 years are closing down is very high. This has triggered research on the financial performance of the SMEs especially in areas with high levels of poverty since most studies concentrate on developed economies and urban centres. This study investigated the effect of access to finance on financial performance of processing SMEs in Kitui County.&#x0D; Methodology: Descriptive research design was applied to conduct the study. The target population was the 25 processing SMEs in Kitui County where for each firm; the Chief Executive Officer, the finance manager and the Chief accountant were considered as respondents giving rise to a total of 75 respondents. An interview and Semi- structured questionnaires were used to collect primary data from the respondents. The data was inspected for completeness, accuracy, reliability and consistency then analysed using SPSS Version 20 Software. Descriptive statistics such as mean, and the standard deviation were computed to describe the data collected. Moreover, inferential statistics at 95% confidence level were used.&#x0D; Results: The findings of the study indicated that financial performance positively correlated with the access to finance. The findings were supported by the literature reviewed by the study. With reference to the findings, various recommendations were made.&#x0D; Unique Contribution to Theory, Practice and Policy: To start with, the study recommended financial institutions to create favourable policies to enable SMEs access loans easily. Secondly, the study recommended government to offer incentives and funding to SMEs at a lower cost to boost their financial performance. Finally, the study recommended more studies to identify other factors that influenced the financial performance of SMEs in Kenya.

Skills collaboration during Infrastructure-service Migration to Cloud. Case: SMEs in Kenya.

Skills collaboration during Infrastructure-service Migration to Cloud. Case: SMEs in Kenya.

English

Innovation has been accepted as a key stimulus for growth. This is more so with SMEs which are widely acknowledged as being a significant driver in economic growth. In a review of over 90 peer reviewed journal articles and conference papers; this paper brings together different arguments that have been made in explaining the antecedents for innovativeness. This is a critical review of the literature with respect to innovativeness of manufacturing SMEs. Whereas it is acknowledged that the discussions around innovation are continually evolving, existing literature has shown that there are internal and external factors that affect innovativeness in firms. In addition to this, there is a need to have research that applies universally and hence the need to study this phenomenon in manufacturing SMEs in Kenya and the gaps therein. Even though entrepreneurial orientation, technological capability and environmental dynamism have been identified as variables affecting firm innovativeness, there is no common consensus across various approaches. A need to empirically explore this area further effectively contributing to knowledge in this area has been identified. Key words: SMEs, Innovativeness, Entrepreneurial Orientation, Technological Capability, Environmental Dynamism.

The extent of logistics outsourcing among small and medium-sized manufacturing enterprises in Nairobi

Background: Small and medium-sized manufacturing enterprises (manufacturing SMEs) can facilitate economic growth and development by creating employment and spurring economic activities at low levels of the economy. The performance of SMEs in Kenya has, however, been poor, despite their significance. This poor performance is attributed to the high costs of logistics operations in the country. Manufacturing SMEs can, however, improve the performance of their logistics operations by adopting appropriate logistics outsourcing strategies.Aim: The purpose of this study is to determine the extent of logistics outsourcing among manufacturing SMEs in Nairobi.Setting: Manufacturing SMEs in Nairobi operate from the industrial zones of the Nairobi City County. The enterprises’ logistics operations are characterised by long cycle times, high transportation costs and limited resources. The high operational costs experienced by the SMEs threaten their survival, and they are therefore required, among other things, to manage their logistics more efficiently to improve overall performance.Method: A quantitative research design was used in this study. Data were collected from 163 manufacturing SMEs using a structured questionnaire. Descriptive statistics and (a one-way analysis of variance) ANOVA were used to analyse the data.Results: Most (94%) of the manufacturing SMEs opted to outsource their logistics operations, although the extent of outsourcing was limited (1% – 50% of logistics operations were outsourced). Logistics outsourcing by the SMEs is intended to reduce logistics costs and supplement the limited in-house capabilities. In addition, there were significant differences in the extent of outsourcing of operational, information processing and value-added categories of logistics activities.Conclusion: The results motivate SME owners and managers to acquire logistics resources and capabilities that are lacking in-house through logistics outsourcing to achieve the required efficiencies. Although the majority of SMEs have embraced logistics outsourcing, the low extent of its usage within the enterprises might have limited the ability to achieve high efficiencies.

ERP Adoption and Organizational Efficiency- Balance Score Card Approach among Manufacturing SMEs in Kenya

ERP are comprehensive, fully integrated software packages that provide automated support for most of the standard business processes within organizations. The uptake of ERP in the industry has been impressive but not for SMEs. The SME market in the eyes of ERP developers has been un-lucrative because it is fairly fragmented and rudimental. This means that solutions adopted for one enterprise are not easily replicated on others in the same category. The paper determined the level and extent of ERP adoption in SMEs based in manufacturing sector and the accruing benefits towards organization efficiency as measured using a balance score card (BSC) approach. This study purposively sampled firms under Kenya Industrial Estate cells. In each cell, four firms were selected the inclusion criteria being a manufacturing enterprise and adoption of ERP. Using the BSC five factor model, the effect of ERP adoption was measured. Cross sectional data was collected on a five point Likert scale. This data set gave rise to categorical data. The relationship between ERP adoption and organizational performance was model using a Chi-Square test of independence. The study finds that there at the beginning phase except for customer satisfaction, financial strength, employee perspectives, internal business processes and innovation are independent of ERP adoption. At the consolidation and maturity phases the financial strength, employee perspectives, internal business processes and innovation become dependent on ERP adoption meaning the strength of these factors is determined by the ERP