Small firm growth: a case of 'mama mboga' Micro and Small entrepreneurs at Kasarani and City park Hawkers market

A Research Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA)The purpose of this study was to investigate the effect of factors of growth on mama mboga micro and small businesses at Kasarani and City Park Hawkers Markets in Nairobi. The study was focused on answering the following research questions: what are the antecedents and determinants of growth for micro and small businesses?; how does the environment affect the growth of the small firm?; does entrepreneurial orientation affect growth of small businesses?; and does the availability of underlying resources foster the growth of small businesses? This study adopted a descriptive research design. The population of interest was the mama mboga entrepreneurs who do business on the sides of the road at Kasarani and those located at City Park Market in Parklands, Nairobi. The population size at Kasarani was 900 while City Park Market had a population size of 1500. The sample frame of this study was the list of all registered mama mboga businesses in Kasarani Ward and City Park Market registered with the County Council of Nairobi. The researcher used systematic random probability sampling techniques. The sample size of the study was 216. Primary data was gathered through questionnaires. The data collected was analyzed by use of Statistical Package for Social Sciences (SPSS) and Excel programmes and presented in form of tables and figures. The findings on measures of micro and small businesses revealed that the entrepreneurs were positive about growth of their businesses with more than 60 percent attributing growth to increases in sales, profits, and business assets. Some of the factors that the entrepreneurs considered as important for growth of their businesses were; that business growth increased as the age and size of the firm increased, favorable location of the business positioned their businesses to grow and, management know-how and being able to motivate employees. However, legal registration of the businesses had not affected growth of the businesses positively. Mama mboga entrepreneurs had the desire/ plan to expand their businesses in the region or neighboring countries in order to increase opportunity for growth. They perceived that government institutions - like county council, KRA, and others had not contributed positively to increasing their businesses. Concerning measures of entrepreneurial orientation, More than 70 percent of the entrepreneurs eluded that introduction of unique products and processes that customers liked had helped their sales to increase, they went into new locations, tried out new items for sale verses waiting for the wholesalers to supply, and that they regularly monitored and evaluated the latest trends for opportunities for growth; portraying innovation and pro-activeness. The entrepreneurs were high risk-takers because more than 90 percent acknowledged to noticing new business opportunities and pursuing them for business growth, and introduced new things into their businesses with little consultation as long it provided increase of business. The entrepreneurs did not indicate competitive aggressiveness in that the business relationship between the entrepreneurs and their competition was characterized by cooperation and coexisting verses fighting. However, they regularly monitored and evaluated latest trends for opportunities and introduced them before their competitors did, and most of them spied to know what their competition was planning, then outdid them so that their businesses would grow. The entrepreneurs attitude towards growth for their businesses is highly positive because for more than 95 percent of them, it was important that the firm s sales and the number of employees to increase, had desire to open more outlets, and to get self-fulfillment from growth of their businesses. Concerning measures on environment, findings revealed that political changes like introduction of counties had not brought new opportunities for business. Government institutions did not provide assistance for the entrepreneurs businesses to gain markets for their products, their businesses were negatively affected by levies charged by the county council, and the procedure for paying those levies was not favourable for doing business. The interest rates charged by the banks were very high compared to returns from sales and the cost of living exceeded their income most of the time. More than half of the entrepreneurs could not access the finances they needed for business expansion, and more than 90 percent disagreed that political instabilities provide business opportunities for growth. Government did not assist the entrepreneurs with trainings aimed at helping them become better business people; the availability and cost of business premises was not prohibitive to almost half of the entrepreneurs; and entrepreneurs could attribute growth of their businesses from the business they got from social organizations. Due to environmental hostility, there was decreased demand for the entrepreneurs products in the local market attributed to rivalry of competition; entrepreneurs sales and opportunities often suffered due to effects of new entrants in the market, and that the business environment was constantly threatened by price competition. Regarding measures of underlying resources, financial capital was considered to be most important type of resource that would enable growth, but, availability of capital had been insufficient and a great impediment for their business development. Micro credit was noted to be the most important lending facility that contributed to growth of the entrepreneurs businesses. Technical training for entrepreneurs or that of their employees would enable to increase their business activity, and if offered, the entrepreneurs would take and apply business advice and support in order to grow their business. Concerning network capital, a large majority agreed that forming associations with other business people facilitated development and higher growth rate and that being a member of a chama, increased business opportunities for the entrepreneurs. Key conclusions in measures of micro and small business growth revealed that some of the factors the entrepreneurs considered as important for growth were; that business growth increased as the age and size of the firm increased, favourable location, management know-how, and motivation of employees. Regarding entrepreneurial orientation, entrepreneurs were able to introduce new and unique products that customers liked, they introduced new processes that helped to increase sales, they noticed new opportunities and pursued them for business growth, and they ventured into new locations. Regarding the environment, Political changes like the introduction of new counties had not brought new opportunities for businesses, and political instabilities did not provide opportunities for growth of business. On measures of underlying resources, availability of capital was insufficient and a great impediment for their business development. The study revealed that lack of technical training, business advice and support hampered business growth. Networking capital was listed as important in that entrepreneurs agreed that forming associations with other business people and links with larger firms would facilitate development and growth. The study recommends that the government should find ways of giving energy and growing optimism to micro and small businesses owners whose perception is that government does not contribute positively to the growth of their businesses. Identify, and support social factors and technological solutions that would make doing business easier and cheaper for the entrepreneurs, and introduce policies to promote and manage healthy competition. A new supporting small business charter and award scheme should be introduced in each county to encourage business schools to play a greater role in growing the local economy and supporting local business. A risk mechanism that allows entrepreneurs to enter and exit businesses without consequences should be put in place so as to encourage entrepreneurship and growth. Financial funding should be made eased by favorable policies, removing collateral inhibits, and supporting micro finance institutions. A law should be enacted to promote organizational networking where large organizations are encouraged to promote micro and small business development