Factors influencing the adoption of technology by SMEs: an empirical study of family- owned businesses in Nairobi County

Abstract

In developing countries, the rate of technology adoption among small businesses remains low. Family businesses, which constitute a significant portion of small and medium enterprises in these regions, often experience additional hurdles, such as conservative decision-making and intergenerational conflicts, which further impede technological advancement. There is a notable gap in the Kenyan literature specifically addressing the factors influencing adoption of technology among family-owned businesses. This research aimed to fill this gap by examining these factors having a bearing on the uptake of technology in family-owned small businesses in Nairobi, providing insights that could help these businesses overcome barriers and leverage technology for sustainable growth and competitiveness. More specifically, the study set out to establish the influence of perceived benefits on the adoption of technology by family-owned SMEs in Kenya; determine the influence of technological literacy on the adoption of technology by family-owned SMEs in Kenya; examine the influence of top management support on the adoption of technology by family-owned SMEs in Kenya; and evaluate the influence of competition on the adoption of technology by family-owned SMEs in Kenya. The theoretical framework establishing the foundational theory underpinning this research was the Diffusion of Innovations Theory. The target population was family-owned small and medium enterprises in Nairobi County. From the target population a sample of 399 respondents was drawn. The study used individual family-owned business as the units of analysis and designated persons responsible for technology adoption as units of observation. To ensure that the sample was representative of the diverse sectors within the small business population, both the stratified random and purposive sampling techniques was used, with the business sectors forming the strata. Quantitative data for this study was collected using a structured questionnaire. To ensure the quality and reliability of the research, a pilot study was conducted prior to the main data collection phase. The quantitative data was analyzed using both descriptive and inferential statistical techniques. The study revealed that competition is the strongest driver of technology adoption among family-owned SMEs in Kenya, with a statistically significant positive effect, indicating that businesses facing intense competition are more likely to invest in new technologies to stay competitive. Perceived benefits also contribute to technology adoption, though its impact is marginal, suggesting that SMEs that recognize technological advantages are more inclined to adopt them. However, technology literacy does not directly influence adoption, implying that knowledge alone may not be sufficient without other enabling factors. Similarly, top management support has a weak and statistically insignificant effect, indicating that managerial involvement alone does not strongly predict technology adoption and may sometimes introduce bureaucratic hurdles. The study recommended that policymakers should leverage technology dynamic by fostering open, competitive, and innovation-driven markets. From management point of view the study recommended that more action-oriented leadership within family-owned SMEs. Business owners and leaders should: Develop clear digital strategies aligned with business goals, including defined budgets, timelines, and performance indicators for technology investments; delegate decision-making authority to digitally skilled staff and invest in creating cross-functional teams to drive implementation