Critical factors that influence growth of technology-based Small and Medium Enterprises: case of software as service providers in Nairobi, Kenya

Ngungi, Mark Mwongela
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Strathmore University
Small and Medium-sized enterprises all over the world especially in third world countries play an important role in the economy and contribute substantially to unemployment reduction. This sector is emerging today as an avenue for lucrative employment, is being progressively recognized as the prime means for achieving sustainable as well as equitable industrial diversification, growth, and dispersion; thus, improving both economic and social development. Consequently, the current study aims at examining the critical success factors that influence the growth of small and medium information communication and technology enterprises in Nairobi County. The study's specific objectives were to examine the effect of management skills, competition, regulation, and technology changes on the growth of ICT SMEs in Nairobi City County. The study was based on resource-based theory and diffusion innovation theory. The study adopted a descriptive research design. Primary data was collected using questionnaires from a sample of 160 respondents drawn from SaaS ICT SMEs. Validity was examined through the use of Cronbach's Alpha coefficient and the research instrument was valid. Data was analyzed through descriptive statistics that included mean, standard deviation, percentages, and frequencies. Inferential statistics included correlation and multiple linear regression. Findings were presented in figures and tables. Study findings indicated that there was a positive and significant effect of management skills, competition, regulation, and technology changes on the growth of ICT SMEs in Nairobi County. From the findings, it was concluded that there is need for the development of management skills training programs for ICT SMEs. There is need for the embracement of innovation to respond to competition. There is need for the development of research and development departments to aid ICT in response to technology changes that may impact their performance positively. Policymakers should develop policies that are aimed at enhancing the competitiveness of ICT SMEs.
A Thesis submitted in partial fulfillment of the requirements for the award of the Degree of Masters of Business Administration at Strathmore University Business School
Small and Medium Enterprises, ICT, Business growth, Management skills, Competition, Regulation, Technology changes