Determinants of crowdfunding success among Micro, Small and Medium Enterprises in Nairobi County, Kenya
Date
2025
Authors
Haji, A.
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Crowdfunding has become an increasingly popular alternative financing mechanism for Micro, Small, and Medium Enterprises (MSMEs) that face persistent challenges accessing conventional financial services. This study explored the determinants of crowdfunding among MSMEs in Nairobi County, Kenya, with a focus on four key factors: entrepreneur’s characteristics, market-related factors, regulatory factors and technological factors. The research was anchored on the Transaction Cost Theory and the Diffusion of Innovations Theory, which informed the understanding of financing behaviour and technology adoption. A descriptive research design and positivist research philosophy guided the study, with data collected through structured questionnaires. The target population comprised 399 registered MSMEs, and the sample size was determined using the Yamane formula. Ultimately, 354 valid responses were received, resulting in an 88.7% response rate. Although the study aimed to cover all 17 sub-counties in Nairobi County, responses were successfully collected from 10 sub-counties namely: Embakasi West, Embakasi East, Embakasi North, Embakasi South, Kamukunji, Makadara, Mathare, Roysambu, Ruaraka, and Starehe. A stratified random sampling technique was used to ensure representation across different business sizes. Data was analysed using descriptive statistics, Pearson correlation, and multiple linear regression analysis. Diagnostic tests for normality, multicollinearity, and heteroscedasticity confirmed the model's validity. The findings revealed that entrepreneur’s characteristics and market-related factors were statistically significant determinants of crowdfunding success, while technological factors and regulatory factors were not statistically significant. These results highlighted the importance of individual entrepreneurial capacity and effective market strategies in enabling successful crowdfunding initiatives. Although digital infrastructure and regulatory conditions were considered relevant, they did not show a significant direct impact on crowdfunding success. The study concluded that enhancing digital literacy, strengthening entrepreneurial competencies, and improving market visibility can significantly improve crowdfunding outcomes for MSMEs. It recommended that policymakers streamline regulatory processes and create targeted support programs to foster crowdfunding adoption. The research offered valuable insights for entrepreneurs, digital platform developers, and regulatory bodies aiming to enhance financial inclusion and economic resilience through alternative financing models.
Key words: Crowdfunding, MSMEs, Entrepreneurial Characteristics, Market Conditions, Regulatory Environment, Technology Adoption, Alternative Financing, Transaction Cost Theory, Diffusion of Innovations Theory.
Description
Full - text thesis
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Citation
Haji, A. (2025). Determinants of crowdfunding success among Micro, Small and Medium Enterprises in Nairobi County, Kenya [Strathmore University]. http://hdl.handle.net/11071/16001