The growth of a nation is determined by various micro and micro economic parameters. The emerging economics have of recent decade blossomed due to art of entrepreneurship. The study examined the entrepreneurship growth opportunities among the Somali people at the coastal region of Kenya, Mombasa County. The study objectives are pegged on: owner manager characteristics, effect of competition, customer availability effect and firm specific characteristics. The major theories applied in the study and linked to the study objectives are: shackle theory of entrepreneurship action, the entrepreneurial theory of the firm and the Schumpeter theory of innovation

DETERMINANTS OF THE GROWTH OF ENTREPRENEURIAL VENTURES AMONG THE SOMALI COMMUNITY IN MOMBASA COUNTY

BY

SAEED SHEIKH ABDIRAHMAN

A RESEARCH PROPOSAL REPORT SUBMITTED IN PARTIAL FULFILMENT FOR THE REQUIREMENTS OF THE AWARD OF THE DEGREE OF MASTER OF ARTS IN PROJECT PLANNING AND MANAGEMENT OF THE UNIVERSITY OF NAIROBI

2018

DECLARATION

This research project report is my original work and has not been presented for any academic award in any university.

Saeed Sheikh Abdirahman

Reg No: L50/89728/2016

Signed ……………………………………… Date ……………………..

This research project report has been submitted for examination with my approval as the University Supervisor.

Signed ……………………………………. Date……………………………………

Dr. Johnbosco Kisimbii

School of Open and Distance Learning
University of Nairobi 

DEDICATION

I dedicate this project to my father; Mr. Sheikh Abdirahman, my mother; Mrs. Rukia Noor Maalim, my spouses; Mrs. Ilhan Mohamed Osman and Mrs. Fatma Hussein Salim, my Sons; Mohamed Saeed Sheikh, Abdirahman Saeed Sheikh, Abbas Saeed Sheikh and Abdulmalik Saeed Sheikh. I also want to mention my good friend Sir Fred for being with me throughout my research and not forgetting the Almighty Allah our Father.

ACKNOWLEDGEMENT

I would like to thank my supervisor Dr. Johnbosco Kisimbii for his guidance, mentorship and support in his characteristic, humble and respectful way. My special gratitude is extended to my lecturers at the school of open and distance learning, University of Nairobi. Special appreciation goes to Sidoman team including my immediate supervisor and mentor for giving me flexible time to carry out the research, my work mates who constantly reviewed my work and encouraged me to complete. Finally I would like to thank my colleagues for their constant support and encouragement during the research development.

TABLE OF CONTENTS

DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS v
ABBREVIATIONS AND ACRONYMS viii
ABSTRACT ix

CHAPTER ONE 1

INTRODUCTION 1
1.1 Background of Study 1
1.2 Statement of Problem 3
1.3 Purpose of the Study 3
1.4 Objectives of the Study 4
1.5 Research Questions 4
1.6 Research Hypothesis 4
1.7 Significance of the Study 5
1.8 Delimitation of the Study 5
1.9 Limitations of the study 5
1.10 Assumptions of the Study 6
1.11 Definition of Significant Terms 6
1.12 Organization of Study 6

CHAPTER TWO 8

LITERATURE REVIEW 8
2.1 Introduction 8
2.2 Concept of Entrepreneurial Growth 8
2.2.1 Influence of Owner-Manager Characteristics on Entrepreneurial Growth 9
2.2.2 Competition Effect and its influence on Entrepreneurial Growth 10
2.2.3 Customer Availability and its Influence on Entrepreneurial Growth 12
2.2.4 Firm Specific Determinants and its Influence on Entrepreneurial Growth 14
2.3 Theoretical Framework 14
2.3.1 Shackle theory of Entrepreneurial Action 14
2.3.2 The Entrepreneurial Theory of the Firm 15
2.3.3 Schumpeter Theory of Innovation 16
2.3.4 Sociological Theory of Entrepreneurship 16
2.4 The conceptual Framework 18
2.5 Knowledge Gap 20
2.6 Summary of the Chapter 21

CHAPTER THREE 22

RESEARCH METHODOLOGY 22
3.1 Introduction 22
3.2 Research design 22
3.3 Target population 22
3.4 Sampling Size and Procedure 23
3.5 Data collection instruments and procedures 24
3.5.1 Pilot Study 25
3.5.2 Validity of the Research Instruments 25
3.5.3 Reliability of the Research Instruments 25
3.6 Data presentation and analysis 25
3.7 Ethical considerations 26
3.8 Operation Definition of Variables 27

CHAPTER FOUR 28

DATA ANALYSIS AND PRESENTATION 28
4.1 Introduction 28
4.2 Questionnaire Response Rate 28
4.3 Demographic Characteristics of Respondents 28
4.3.1 Job Title 28
4.3.2 Gender and Age Bracket of Respondents and Age 29
4.3.3 Level of Education of the Respondents 30
4.4 Length of time of Enterprise Operation 31
4.5 Location of the Enterprise 32
4.6 Owner/manager Characteristics and its Influence on Entrepreneurial Growth 33
4.7 Competition Effect and its Influence on Entrepreneurial Growth 34
4.8 Customer Availability and its Influence on Entrepreneurial Growth 35
4.9 Firm Specific Determinants and its Influence on Entrepreneurial Growth 36
4.10 Correlation Model 37
4.11 Hypothesis Testing 38
4.12 Regression Model 39
4.12.1 ANOVA Results 40
4.12.2 The ANOVA Table 41
4.12.3 Regression Coefficients 41

CHAPTER FIVE 44

SUMMARY OF FINDINGS, DISCUSSIONS, CONCLUSION AND RECOMMENDATIONS 44
5.1 Introduction 44
5.2 Summary of the Findings 44
5.3 Discussion 45
5.4 Conclusion 45
5.5 Recommendations 46
5.6 Suggestion for Further Study 46

REFERENCES 47

APPENDIX 1: QUESTIONNAIRE 52

ABBREVIATIONS AND ACRONYMS

DAC: Development Assistance Committee

EDC: Entrepreneurship Development Centre

KNBS: Kenya National Bureau of Standards

KIPPRA Kenya Institute of Public Policy Research and Analysis

SME: Small Medium Enterprises

SPSS: Statistical Package for Social Scientist

MSEA Micro and Small Enterprise Authority of Kenya

NACOSTI: National Commission of Science, Technology and Innovation

OECD : Organization for Economic Co-operation and Development

UNDP : The United Nations Development Program

USAID: United States Agency for International Development

ABSTRACT

The growth of a nation is determined by various micro and micro economic parameters. The emerging economics have of recent decade blossomed due to art of entrepreneurship. The study examined the entrepreneurship growth opportunities among the Somali people at the coastal region of Kenya, Mombasa County. The study objectives are pegged on: owner manager characteristics, effect of competition, customer availability effect and firm specific characteristics. The major theories applied in the study and linked to the study objectives are: shackle theory of entrepreneurship action, the entrepreneurial theory of the firm and the Schumpeter theory of innovation. The moderating variables having an indirect hand in the control of growth of entrepreneurship was the government and the demographics. The study used the descriptive survey design for it provided an accurate portrayal of people’s behavior opinion and beliefs. The population for the study was the registered Somali owned/managed enterprises in Mombasa County. The samples were obtained from Kisauni, Mvita, Changamwe and Likoni areas. Stratified random sampling was used to select sample size to ensure all units had equal chance of selection. The study findings established that attitude of the entrepreneur had the highest impact in relation to owner/manager characteristics. In regards to competition effect service/product had the highest impact to a great extent. In relation to firm specific determinants the availability of capital impacted to a great extent. The study concludes that the growth of entrepreneurial ventures can be harnessed by encouraging entrepreneurs to acquire education and more skills since they had low literacy levels. The human capital should be treated with specialty since it indirectly affects all the study objectives.

CHAPTER ONE

INTRODUCTION

1.1 Background of Study

The growth and development of nations across the globe are pegged mainly on technological progress. The driving aspect of technological progress is at the art of entrepreneurship amongst country’s specific inhabitants. Various countries both developed and developing are grappling with externalities associated with entrepreneurship usually the effect of entrepreneurship is not normally limited to industry in which the enterprise operates but may spill over to close by industries and regions (Acs and Amoros, 2008). Growth of entrepreneurial ventures gives an insight in the vitality and competitive performance of the firms in question. This is because at the seed stage of many enterprises they are usually at the survival level hence need to identify the growth factors (Philipsen and Kemp, 2003).

The Kaldors Laws states that the growth of SME greatly contributes to about 99 percent of industrial establishments. According to the law the major determinants of the firm growth include Psychology, economics, strategy, innovation and general network theory. Majority of the developing nations are applying the policies and models applied in developed countries are either obsolete or not much applicable. This call for countries to device policies that are worthwhile in line with growth determinants of its enterprises. However the information relating to growth of firms is insufficient hence need to examine various theoretical frameworks like: resource based, motivational, strategic and configuration perspectives (Wiklund et al., 2007).

In Netherlands, an OECD country, the Growth of enterprises has been an issue of all time and greatly contributed to growth basket of employment (Gibcus et al, 2006). It is estimated that 99 percent of all SME firms in Netherlands, which have fewer than 100 employees accounted for approximately 55 percent of total employment (EIM, 2005). This brings to book the role of entrepreneurial ventures being envisaged in the national micro economic policies (Audresch et at., 2004). From the year 2004, Netherlands experienced an upsurge of start-ups attributed greatly to pull factors like new market opportunities a positive ingredient for nourishment of entrepreneurial ventures Bangma et al., (2005) noted that despite the growth of entrepreneurial ventures some pull factors like employment slowed down the eagerness of entrepreneurs to set up their own firms. It was examined that almost 16% of entrepreneurial ventures in Dutch land quit in the second year and approximately 63% exited the market after 10 years. Man et al, (2002) and Davis son (1999) conceptualized various determinants of growth of SMEs as market variable, company structure, financial and human capital and the entrepreneurs social capital. Other authors proposed a model mix of organizational, individual and market dimensions rather than each dimensions in isolation (Baum et al., 2001; Dess 2001; Almus and Nerlinger, 1999).

India, a country seen to be an emerging house in the east, has pegged greatly its growth on entrepreneurial ventures. Entrepreneurial ventures have created more employment opportunities as compared to the traditional sectors like Agriculture. The start-ups have immensely brought in India more foreign exchange earnings through the export of value added products and services (Sadfar & Siddiqi, 2011). The small scale start-up in India have generated employment and therefore seen as source for economic growth and technological progress. Sadfar and Sidiqqi (2011) identified and classified the entrepreneurial growth determinants into three: entrepreneurial, non-entrepreneurial and restrictive factors. The research being carried out in Gujarati area with focus on electric fans for automotive. The entrepreneurial characteristics comprises of growth motivation, management know-how technological capabilities of the entrepreneurial characteristics comprises of growth barrier firm individuality, institutional barriers, financial barriers (Becchetti and Trovato, 2008).

Nigeria, in bid to promote and incubate entrepreneurial skills of its citizen mandated every University to set up entrepreneurship development centre (EDC) in the year 2006 under the National Universities Commission. The notion behind the EDC was to check the entrepreneurial propensity among its citizen. The individual determinants for growth of enterprises has notably pegged on risk-averse attitude, academic performance, ethnicity, family background and the gender of the entrepreneurs. It was noted that students who had taken entrepreneurial courses were more inclined in setting up start-up and forge a head (Siyanbola et al., 2009).

In Kenya, the growth of MSEs has been acknowledged by the government since 1986 through the introduction of session paper No. 1 of 1986 for economic management for renewed growth. The launching of Kenya’s vision 2030 rejuvenated the effort of Kenyan Government for the MSEs. Which account up to 75 percent of Kenyan employment (KNBS, 2013). The notable growth determinant for MSE have been internal resources and the investment climate (MSEA, 2013). In regards to investment climate it is composed of infrastructure, institutional policies and regulatory framework. Other determinants to notable impact growth of enterprises are: Bank credit access, connectivity to business utilities like water electricity and internet, the judicial system and the security system (Shibia et al., 2017).

1.2 Statement of Problem

Mombasa county as one of the 47 counties in Kenya hosts the second capital city with a population over 1.8 million people. Comprising of local communities of Mijikenda, Swahili, Swahili and Kenyan Arabs. Lest it is forgotten the Somali community has tremendously increased in population in the country and ran bulwark of business enterprises in Coastal Kenya.

A study was conducted by KIPPRA (2010) in Kenya with a focus on marketing framework and entrepreneurship in enterprises. KIPPRA findings depicted that a positive correlation between marketing and entrepreneurship. However the study did not examine the effect of marketing framework on the growth of entrepreneurial ventures. Kiraguri (2012) carried out a study with focus on social cultural effect on entrepreneurship. The study did not examine factors that led to growth of entrepreneurial ventures in Kenya. KNBS (2011) report indicates that Kenyans aged between 18 years and below 40 years constitute to 50% of the population. This age bracket has a staggering 70% rate of unemployment. Their indulgence in entrepreneurial activities holds the key to survival and good for the Kenyan Economy at large.

There are myriad challenges that Somali business entrepreneurs face. They range from competition from informal sector businesses, misconception of their business ethics from the general public, communication challenges among others. Despite the eminent bottlenecks, the businesses of the Somali’s have blossomed and they indeed command a vibrant share of the existing operational enterprises. The study intends to find out the determinants of the growth of entrepreneurial ventures among the Somali community in Mombasa County.

1.3 Purpose of the Study

The purpose of this study was to determine the growth factors of entrepreneurial ventures among the Somali community in Mombasa County.

1.4 Objectives of the Study

The study was guided by the following objectives

  1. To examine the influence of Owner-manager characteristics on growth of entrepreneurial venture.

  2. To investigate the effect of competition on growth of entrepreneurial ventures.

  3. To access the extent of customer availability effect on growth of entrepreneurial ventures.

  4. To analyze the firm specific characteristics effect on growth of entrepreneurial ventures.

1.5 Research Questions

The study intends to answer the following questions

  1. How does owner-manager characteristics influence the growth of entrepreneurial ventures?

  2. What is the effect of competition on growth of entrepreneurial ventures?

  3. How does customer availability impact the growth of the entrepreneurial ventures?

  4. How does firm specific characteristics impact on the growth of entrepreneurial ventures?

1.6 Research Hypothesis

The study tested the following research hypothesis at a 95% level of significance.

  1. H01: The owner-manager Characteristics has no significant influence on the growth of entrepreneurial ventures.

H11: The owner-manager Characteristics has significant influence on the growth of entrepreneurial ventures.

  1. H02: There is no significant relationship between competition and growth of entrepreneurial ventures.

H12: There is significant relationship of competition and growth of entrepreneurial ventures.

  1. H03: Customer availability has no significant impact on the growth of entrepreneurial ventures.

H13: Customer availability has significant impact on the growth of entrepreneurial ventures.

  1. H04: The firm specific characteristics has no significant impact on growth of entrepreneurial ventures.

H14: The firm specific characteristics significantly impacts on growth of entrepreneurial ventures.

1.7 Significance of the Study

To the national and county Government of Kenya, the study will be of great importance to the government policy makes and partners by enriching them with knowledge on entrepreneurship growth determinants. The recommendations from study can be used in making guidelines and policies that are of great importance to all government lead programs and projects.

To the private business community and non-governmental organizations, the study will inform them on current business status in regards to growth determinants. The study results shall guide the policy options, interventions and support to be instituted for improving business environment.

To the scholars and researchers, the study will form a resource material for entrepreneurship and growth related studies. The concerns raised in the study are also expected to act as a reference point to various studies that could be used to strengthen diversity related entrepreneurship and growth scholarly.

1.8 Delimitation of the Study

The study was carried out in Mombasa County with a target of Somali business enterprise. The regions in which the samples were obtained were: Mvita, Kisauni, Changamwe and Likoni.

1.9 Limitations of the Study

The study was faced by a number of limitations. Firstly, the study adopted a descriptive cross sectional survey that involved a single round of data collection that affected the study effectiveness and accuracy. Secondly, the researcher faced some resistance from some of the respondents as they feared that the information they gave would be used by competitors to fight them in business. This was however resolved through the issuance of the introduction letter and explanation that the information would be confidential. Thirdly, the researcher also faced challenges in terms of resources such as finances for commuting to the different parts of Mombasa County and some were difficult to access. There was laxity in time component in that, a lot of time was needed for going to the firms, meeting with managers/owners, convincing them to fill the questionnaires and finally going back to pick them.

1.10 Assumptions of the Study

The study assumptions are pegged on the objectivity and honesty of the respondents. The data collection instruments will be valid and reliable for the study.

1.11 Definition of Significant Terms

Owner-Manager Characteristics: These are the entrepreneurship characteristics of the firm owner like the personality, mindset, creativity, innovation and level of education.

Competition: These arise through technological advancements, product advantage, price satisfaction and human capital.

Firm Specific Characteristics: these are the characteristics of the firm like capital, research and development, perceived growth barriers.

Entrepreneurial Ventures: This entails the various business opportunities undertaken by entrepreneurs.

1.12 Organization of Study

This study covers five chapters. Chapter one, which is the introduction consists of the background of the study, statement of the problem, purpose of the study, objectives of the study, research questions, research hypotheses, significance of the study, delimitation of the study, limitation of the study, assumptions of the study and definition of significant terms.

Chapter two outlines the literature review discussing themes on the independent and dependent variables, the theoretical frameworks, the conceptual framework and knowledge gap.

Chapter three in the research methodology and it outlines the research design, target population, sample size and sampling procedures, data collection methods, data collection procedures, data analysis, ethical considerations and operationalization of variables.

Chapter four covers data analysis and presentation and interpretation with key themes being questionnaire return rate, demographic characteristics of respondents and analysis based on the themes of the study variables.

Chapter five concludes with summary of findings, discussions, conclusions and recommendation.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter discusses the underlying determinant of growth of entrepreneurial ventures. The major determinants of growth examined in this section are: owner-manager characteristics, customer availability, competition effect and firm specific determinants. This chapter also examines theories that relate to growth of entrepreneurial ventures. Identification of research gaps and formulation of conceptual framework is examined in this chapter.

2.2 Concept of Entrepreneurial Growth

It has been voiced out by Naude and Urban (2008) that entrepreneurship plays a vital role in growth of an economy yet its relevance and contribution has for a long time been marginalized. Botha, Nieman and Van Vuuren (2006) concurred that entrepreneurship is acceptable everywhere around the globe for its role in economic growth, reduction in unemployment rate and not forgetting its role in fighting poverty. Deakins and Freel (2009) conjectures that in its path to growth, entrepreneurial firms create vital spill overs that have overall effect in the long term of increasing regional employment hence the economic growth. Ekpe (2011) posits that in the path to entrepreneurship growth, entrepreneurial attributes play a vital role in individuals when it comes to them venturing in business.

Capital is an essential growth factor for enterprises. Abor (2005) posit that the capital in the firm is contained in both equity and debt. The firm’s choice of capital sources from various avenues. Mazor (2007) defined capital structure as relationship of various forms of financing. The presence of capital structure in the firm greatly determine its growth. The presence of adequate capital translates to better growth levels in the enterprise. If the capital structure model of an enterprise has more debt in its capital mix, then the growth of the firm is hampered since a good portion will go to servicing of the debt. The capital structure decision therefore is considered vital for decision making and also influences the overall rate of return of the business.

Pro-activeness is also one of the entrepreneurial characteristics of entrepreneurs who are deemed successful. Proactive persons are said to be people who scan for opportunities, show initiatives, take action and persevere until remarkable change in entrepreneurial activity takes place. Pro-activeness, as form of personality, is highly correlated to performance in job responsibilities and general outlook of the enterprise. Proactive individuality breeds persons who tend to go beyond normal expectation to achieve results and less emphasis on status quo. Kickul and Gundry (2002) found out that proactive persons influence the small enterprise owners to adopt proactive strategies leading to more innovation and technological change in their entrepreneurial ventures. This means that proactive personality is associated with a positively perceive entrepreneurial opportunity.

2.2.1 Influence of Owner-Manager Characteristics on Entrepreneurial Growth

The growth of entrepreneurial ventures is greatly influenced by the presence of the owners (entrepreneur) or manager. Lau and Busenitz (2001) examined various growth intentions of entrepreneurs and found out that entrepreneurs need for achievement, social environment and general commitment played a great role. Davidson (2001) also posits that growth of an enterprise is motivated by growth motivation, opportunity, ability and need to achievement.

The mindset of an entrepreneur is the driving engine of the enterprise. It greatly determines the success or failure of the venture in question. James (20160 a psychologist posits that attitude plays a vital role in shaping the way an entrepreneur utilizes the innate talents. Dweck (2007) categorizes mind set of business persons into two: fixed mindset and growth mindset. Persons with fixed mindset in entrepreneurial ventures do believe intelligence is fixed and that talent is what creates success but shun away mistakes as sign of failure. The entrepreneurs with growth mindset do believe that intelligence can be developed through process of hard work. They accept failure and see it as sign of gift. If the business venture isn’t growing it’s mostly pegged on the mindset of the owner or manager in question. In as much as mindset is key determinant in growth of an enterprise, it goes hand in hand with the attitude of the owner.

Personality traits have time immemorial shown to greatly impact the entrepreneurial behavior in individuals. Westhead et al. (2011) posits that the possession of certain character exposes individuals towards an entrepreneurial behaviour. Ahmad (2010) reviewed the psychological theories used to predict human behavior in the 1960s including entrepreneurship. It was noted that entrepreneurs were good reasonable risk takers as compared to fellow peers. It was also examined that entrepreneurs had great need to achieve than the non-entrepreneurs. Gupta and Muita (2013) through their research, noted that the kind of business activity one indulges in is usually attributed to the entrepreneur’s personality characteristics. There are various ways used to define an entrepreneur personality group (Wickham, 2006). The major personality’s categorization are: cognitive approach, social development approach, personality trait, personality type, social misfit and the ‘great person’.

Education and skills are perceived to be added component that actually catapults the entrepreneurial capability in individuals. Education equips entrepreneurs with vital skills to operate and manage the enterprises. Business education skills enable one to use the SWOT model for analysis and critical decision making. Skills in financial management form all integral part in management of enterprises. Book keeping skills promote prudence and business success. Work cash flow can be well maintained if the owners and managers are cognizant with financial aspect of the business with the ever rising aspect of competition, the marketing skills come in hand to book the product and service branding. Lastly through business education, it helps the management in the enterprise avoid business failure by being able to understand the red flags in case they appear (Baroon, 2004).

The family background is important aspect and plays a vital role in the owner-manager characteristics. The decision of an entrepreneur to kick start and enterprise as a prospect in life has been linked to the family setting. Kirkwood (2007) posits that parents are strong influencers in deciding the career path the children take. When the parents ascend to the decision of their child doing business, the entrepreneur children are motivated to surge forward with enthusiasm. The family background and support comes in handy when it comes to support of the enterprise with capital and business advisory services. Heck et al. (2008) also noted that family which run business are more likely to have children who end up being entrepreneurs. An entrepreneurial life is influenced by both the personal life of the entrepreneurs and family background.

2.2.2 Competition Effect and its Influence on Entrepreneurial Growth

The competition effect has various factors affecting it as a growth determinant in a firm: technological advancement, product advancement, price satisfaction and human capital. Technological advancement, over the last one decade has had impact on various business enterprises. It’s through the technological advancement that the world has become a global village through internet and cell phone communication. Every enterprise should strive to keep up with the changing technology so as to stay relevant. Technological advancement can be applied in various aspects of the enterprise setting. The communication aspect gives the employees virtual space for interaction and development of ideas by use of tech-savvy gadgets like upgraded computers (Singh, 2015).

Research and design is part and parcel of technological advancement which should be gladly embraced. Business can use computer Aided Telephone interviews for online surveys and customer feedback. With the up rise of social media platforms, business have been able to adopt web based advertising to advertise and reach millions of people around the globe. It’s through being abreast with technological advancement that a firm can become competitive. Technological advancement has immensely modernized the work places and also the staff. Staffs in remote areas have been able to communicate and carry on the daily business operations with ease. Technological advancement has led to cutting down of overhead costs like reduction in office working space due to existence of virtual offices (Lashbrooke, 2016).

Product advantage, as component of competition effect, entails having a superior product or superior service. The superiority of a product or service by an enterprise is usually seek through innovation. Technological superiority breeds the competition aspect in the market. Friar (1995) stated that the most notable way in which business creates product advantage is through differentiation strategy on product performance. Lewis (2018) posits that an enterprise in bid to differentiate itself with the competitors, it should strive to typically look for more than one marketable attributes. This can be enhanced by improving the research and design process of the business. In as much as product differentiation creates product advantage, the owners of enterprise should strive to have a market niche in which the products sells can be relied upon in case of turbulent times.

Boldin and Levine (2008) conjectured that human capital is one of the most priced asset of the enterprise although usually under looked upon. When there is intense competition, the probability of business survival and anticipated growth rate of the business is much dependent on the entrepreneurial human capital. Well established entrepreneurial human capital translates to greater survival of the business enterprise. When an enterprise is at the seed stage of the growth curve, it should strive to recruit the best talents which will execute goals and strategies laid down (Marimon & Quadrini, 2010). Lesser barriers should be instituted in place so as to act as incentives for accumulating human capital this will greatly contribute to the growth of the enterprise.

2.2.3 Customer Availability and its Influence on Entrepreneurial Growth

Customer availability contributes immensely to growth of an enterprise. There are various components which impact it: customer acquisition, customer satisfaction, customer loyalty, customer retention and complaint management. Customer acquisition is an important aspect of ensuring that the customers are available. Customer acquisition can be defined as a process by which a business gains new customers to consume the goods and services on offer. The customer acquisition has strategy that in the end determines how the potential customers will be reached. The method applied in the customer acquisition determines the viability lead of the process. The sales persons in their line of duty usually identify the unmet needs of customers in relation to line of goods and services offered. It’s through the process that salespersons can identify additional needs and services that some of the customers are put in the client base. In as much as customer acquisition is vital component of customer availability, there is need to estimate the cost of customer acquisition before beginning the onboarding process. The cost of customer acquisition is basically the cumulative costs of sales and marketing over a stipulated period of time.

Customer satisfaction as a component of customer availability is used to scale the degree to which the customers are happy with company products and services. Customer satisfaction process gives an avenue to determine those customers that are unsatisfied. When the business enterprise can’t devise methods of establishing the rate of satisfaction of the customers, then in the long run the customer base is likely to be in a limbo. Bernazzani (2015) posits that it is very crucial to identify customers who are finding success with the products and services offered. This process is long term and involves also wooing new customers and turning them into staunch customers of business products and services. Happy customers usually translate to happy employees. Therefore an all-round system in place should ensure the employees are happier and in turn transfer the happiness to the customer satisfaction. The most efficient way of customer satisfaction is the business processes to be consistent.

In relation to customer loyalty, it can be examined as a behavioral or attitudinal way of favoring a brand over the others. Customer loyalty is a continuous cycle of already existing processes like the customer satisfaction. Dowling and Uncles (2007) conjectured that customer loyalty can never be 100%. Sometimes the allegiance may shift from one brand to another, also called brand switching. Attitudinal loyalty may occur in situation whereby one promotes the product or service but never uses it regularly. The most revered way of customer loyalty known is the behavioural loyalty. This is whereby companies strive to reward their customers for spending more on their goods and services. When defining customer loyalty, history of actions plus feelings and intentions towards the brand are considered.

Galeto (2018) defines customer retention as activities and programs that organizations institute in place so as to reduce the number of customer defections. The thematic issue under customer retention is to retain many customers as possible. As earlier discussed, brand loyalty and behavior loyalty are some of the instituted measures. The customer retention process begins at the first contact with the customer by the business enterprise and continues for a better part of lifetime. There is a high correlation that exists between customer retention and profits. Studies done by Baln and company have depicted that 5% increase in customer retention leads to 25%-75% increase in profits. In as much as companies strive to have a significant customer retention process, there is need to also track the attrition rate. The attrition rate can be defined as the process by which the business enterprise loses the customers.

Complaint management as an important aspect of the customer availability measures the growth of the enterprise. Sheahan (2017) defines complaint management as process by which an organization handles, manages, responds and report the complaints of the customer. In as much as the business enterprise maybe small in stature, there is great need to institute measures from the customers. The most revered method of handling the complaints and giving the report back to the customer. Complaint management processes is equally important and interlinked to customer loyalty and customer retention process in the business enterprise. It also translates to growth of the business enterprise.

2.2.4 Firm Specific Determinants and its Influence on Entrepreneurial Growth

The firm specific determinants includes: growth objective, perceived growth barriers and capital. The growth objective is the first and foremost determinant of firm specific objectives. Growth objective is defined as set of goals which guide the business decision making so as to enable the business to reduce the gap between present and projected earnings. How is the growth objectives identified? The growth objectives are derived from business goals and the growth strategy. Many small business enterprises find it hard to manage the business growth in cases where the business runs out of employees and there is voluminous order of goods and service from customers. Sometimes when there are good sales volumes and the owner of business decides to invest in purchase of fixed assets, then there should be a balance between current growth and anticipated future growth.

It should be noted that for an enterprise to achieve the growth it desires, the owner should be able to establish the perceived growth barriers. The most perceived business growth barriers are: marketing challenges, inadequate financing, regulatory issues and unfair competition. According to Gibrats law, the growth of business is negatively linked to the firm’s size and age. This means that the larger the size the firm is, the lesser it will grow. Also, the older the firm the lesser it will experience growth in its parameters.

2.3 Theoretical Framework

The study is based on three key theories: Shackle Theory of Entrepreneurial Action, The Entrepreneurial Theory of the Firm, Schumpeter Theory of Innovation and Sociological theory of entrepreneurship.

2.3.1 Shackle Theory of Entrepreneurial Action

This theory was postulated by G.L.S Shackle, an English economist and developed by Deakin and Freel (2009). An entrepreneur is examined as imaginative and creative person. Deakins and Freel (2009) called the entrepreneurs as ‘Shackle Entrepreneurs’. Shackles Entrepreneurs are imaginative of existing opportunities and creative to turn them to profits. Shackle theory of entrepreneurial actions greatly pegs on the imagination aspect of an entrepreneur to convert situations to opportunities. The actual potential of the opportunities lies greatly on the availability of resources within reach.

Shackle (1990) noted that entrepreneurship ability commenced when one’s decision examined the resources and turn them into a produce. Another component that goes hand in hand with entrepreneurship ability to imagine is the creativity aspect. Creativity was noted to influence the final outcome of how successful the entrepreneur stood out in the competitive field. Deakin and Freel (2009) examined that in as much as the creativity was very important, other underlying components like entrepreneurship education played a great role in bringing out outstanding entrepreneurs. Other factors like past experiences, attitudes and personal background played a good mix in bringing out the entrepreneurial ability of ‘Shackle Entrepreneurs. The Shackle Theory of entrepreneurial Action has some shortcomings. According Nieman et al. (2009) entrepreneurs in the process of creating innovations, they break and slow down the existing market equilibria hence disrupting goals and change the direction taken by economy.

2.3.2 The Entrepreneurial Theory of the Firm

This theory was postulated by Mark Casson (2010). Casson (2010) observed an entrepreneur as a person who envisages new opportunities and does the co-ordination of them. This theory examines the entrepreneur personal comparative advantage of synthesizing and processing information that is of great value to entrepreneurial activities. The core competencies of the firm are proportionately linked to the synthesizing skills of the entrepreneur. According to Casson (2010) the knowledge and skills possessed by the entrepreneur enables one to make a coordination of scarce resources and make proper judgments.

Cassons (2013) views are closely linked to Knightian Judgement (2002), beliefs of an entrepreneur operating within a set of technological conditions. The entrepreneurs are able to be rewarded for bearing the risk and also making difficult decisions. Deakins and Freel (2009) made an observation that entrepreneur’s ability to make judgment enabled them to coordinate the supply and demand under various uncertainties. Deakins and Freel (2009) also observed that the growth of entrepreneurial activities is actually linked to the growth of entrepreneurial activities is actually linked to the pace of change of opportunities surrounding the entrepreneur. The synthesis of information by the entrepreneur can lead to growth of the firm through: mergers and acquisitions, joint ventures and diversification.

This theory has great shortcomings, in as much as it gives reasons for the growth of entrepreneurial activities. Godley (2013) postulated that with a major focus on technological innovation, the markets are bound to fail because of poorly and costly distributed information. This theory in essence suggest need to focus more on understanding how lack of information and nature of uncertainty influences the growth of enterprises.

2.3.3 Schumpeter Theory of Innovation

This theory was postulated by Joseph Schumpeter in the year 1949 but revisited in 2017 as Mark I and Mark II. Schumpeter was indeed the first scholar to theorize the concept in 1946 in his book entitled ‘Economic Theory and Entrepreneurial History’. The theory classification into two classes has arguments. The Mark I class argued that source of technological change and innovation in a nation emanated from the entrepreneurs (Donalay, 2017). Antonelli (2009) further conjectured that a supply of entrepreneurs who were able to spot new technological opportunities and comprehend possible technological applications and comprehend possible technological applications and breakthrough in scientific methods are deemed changes of innovation.

Joseph Schumpeter as a member of classical thought, linked innovation in a firm and its growth (Winata, 2008). Growth in a firm, according to classical thought comes about due to division of work and specialization. This classical thought adopted the demand pull model which has better preference for customer oriented innovation. It is also further argued that the growth of an entrepreneurial firm occurs as a result of the learning curve (Knell, 2010). The relevance of this theory pegs upon the concept of entrepreneurial ventures. Despite the flourishing of this theory of innovation, it has been noted to have set backs. The setbacks arise when many new entrepreneurial firms are introduced in the market and the positive effects of monopolistic firms start to disappear. Competition arises and this impedes growth of entrepreneurial ventures. Debts may pile in due to entrepreneurs not being able to service their loans hence recession may cripple in (Fischer, 2010).

2.3.4 Sociological Theory of Entrepreneurship

The sociological Theory of entrepreneurship borrows a leaf from the Max Weber idea, which had a bias of capitalism as form of economic growth in an economy (Winata, 2008). This theory focuses on various group characteristics and the eventual business activities. Some of the notable group characteristics are: age, race and ethnic affiliation (Godley, 2013). This theory states that various group depict various levels of entrepreneurship in relation to developing, maintaining and expansion of entrepreneurial ventures (Bernazzani, 2015).

The sociological theory is of great relevance to the study since it examines the entrepreneurship capability of various ethnic settings and race. The ethnic setting for this study is the Somali people operating enterprises in the Mombasa county of Kenya. This theory has attracted many scholars and the most Notable one is Edna Boniach from America. Edna (2002) through an expansion of the Sociological theory of entrepreneurship was able to develop “Theory of Middleman Minorities”. Through the study various ethnic minorities were studied and how the respective entrepreneurship ventures blossomed. However, the shortcoming of Sociological theory is that it doesn’t factor in change in sociological aspects in various economic groups that are bound to occur in near future (Winata, 2008).

2.4 The Conceptual Framework

The conceptual framework for the study encompasses the vital variables for the study: independent variable, moderating variables and dependent variables.

Owner-Manager character

  • Mindset
  • Attitude
  • Personality
  • Creativity & innovation
  • Education & skills
  • Family background

Independent Variables Moderating Variables Dependent Variable

Govt. Policies

  • Tax
  • Legislation
  • Business requirement
  • Licensing

Growth of Entrepreneurial Ventures

Competition Effect

  • Technological advancement
  • Product advantage
  • Price satisfaction
  • Human capital

Demographic Characteristics

  • Age
  • Gender

Customer Availability

  • Customer Acquisition
  • Satisfaction
  • Loyalty
  • Retention
  • Complaint management

Firm Specific Determinants

  • Growth objectives
  • Perceived growth barriers
  • Capital
  • Research and development

Figure 1.1: The Conceptual Framework

The conceptual framework in figure 1.1 above examines the relationship independent variables, moderating variables and dependent variables toward entrepreneurship growth. The independent key variables factored for the study and have significant impact on the entrepreneurial activities are: owner manager characteristics, customer availability, competition effect and the firm specific determinants. The moderating factors which also have a significant effect on the eventual entrepreneurial growth are the government policies and the demographic factors.

2.5 Knowledge Gap

Variable

Author and year

Findings

Knowledge Gap

Owner-manager

Characteristic

Delmar & Shane 2006

  • Past experience helping

managing new entrepreneurial ventures

-Firms performance is positively affected by prior entrepreneurial experience

-Belonging to entrepreneurial family augments probability of enterprise survival

-Literature emphasizes family’s background and pat entrepreneurial experience yet some entrepreneurs are successful without these attributes

– This family background is enshrined in the examination of owner/manager characteristics which are more holistic.

Customer availability Sadfar & Siddiqqi 2011 -Availability of customers meant that business could quickly respond to customer needs and utilize networks and community support -The literature does not examine the customer attrition rate

– The attrition rate is actually compensated by improving the general customer care

Competition effect

Wiklund et al. 2007 -Human capital and financial resources are the most important components for growth of small entrepreneurial ventures -The Literature does not fully expound on human capital attributes necessary for growth of business

Firm specific characteristics

Coad 2007 -Firms with superior capital structure and investment in Research and design have better growth prospects -Literature does not explain why some enterprises despite having good capital structure stagnate but good investment in R&D improves growth of enterprises

2.6 Summary of the Chapter

This chapter of study has had an in-depth view of entrepreneurship and entrepreneurship growth among business ventures. The factors affecting entrepreneurship growth have been summarized into four major categories of: owner-manager determinants, competition effect, customer availability and firm specific characteristics. The four categories are also the independent variables that have been adopted for study. Lest it is forgotten, the moderating variables: government policy and demographics have an indirect hand in controlling the growth of entrepreneurial firms. This chapter winds up by examining the knowledge gap and linking it to subsequent authors.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This section examined the research design, target population, sampling population, validity and reliability of the research instruments, methods of data collection procedures, methods of data analysis and ethical issues.

3.2 Research Design

Burns and Grove (2003) describe research design as a systematic way of carrying out research so conceive so as to obtain answers to research questions. In this study, a descriptive survey design was used as it provided an accurate portrayal or account of the characteristics, for the example behaviour, opinions, abilities, beliefs and knowledge of a particular individual, situation or group. Information that describes existing phenomenon is obtain by asking individuals about their perspectives, attitude, behaviour or values and it meet the objectives of the study in regards to entrepreneurship.

3.3 Target Population

Target population is defined by (Gubbins, 2008) as the totality of objects or individuals under consideration of which the statistical attributes may be estimated by the study of a sample or samples drawn from it. In this study the researcher targeted registered entrepreneurial venture in Mombasa County that were Somali owned. The number of Somali owned entrepreneurial ventures registered as per 2017 records were 476 (Mombasa County, 2017). The large number of owners led to the researcher using sampling method to be able to cover the organization owned by Somalis.

 

 

 

 

 

Table 3.1: Population Matrix

Area

No. of Enterprises

Kisauni

101

Mvita

181

Changamwe

127

Likoni

67

Total

476

3.4 Sampling Size and Procedure

The study adopted a stratified random sampling technique to select a suitable sample size to ensure all units in the population have an equal chance of being selected, thereby allowing for the generalization of the finding, this is made possible by dividing the population into homogenous subgroups and then taking samples in each subgroup.

The researcher used the Slovenes Formula of the target Population. This is because at least 30% of target population is enough for the study that has a population less than 500 (Cooper, 2000).

The researcher adopted a Slovene’s formula to arrive at the sample size to be used in the study;

n = N / (1 + Ne^2)

Whereas n=Sample size and N=target population e = error tolerance

n=? N=476 e=0.071

n=476/ (1+476(0.071) ^2)

n=142

This gave us 142 respondents as the sample. Whilst people are known to be different, the difference is assumed to be probabilistic (Castillo, 2009).

The target population was divided into various structure levels where three strata’s were obtained. The population of this study is 476 SMEs of which a 0.071 tolerance error of sample size was drawn from. This gave us 142 respondents as the sample. Whilst people are known to be different, the difference is assumed to be probabilistic (Castillo, 2009).

Table 3.2: Sample Size Matrix

Area

No. of Enterprises

Sample size

Kisauni

101

30

Mvita

181

54

Changamwe

127

38

Likoni

67

20

Total

476

142

3.5 Data Collection Instruments and Procedures

The study used both primary and secondary data. Collection of primary data involved the use of questionnaires that were administered to the identified participants. Questionnaires are commonly used to obtain important information about the population. Each item in the questionnaire was developed to address a specific objective, research questions or hypothesis of the study (Mugenda and Mugenda, 2003). The questionnaire included both closed and open ended questions. The questionnaires had Likert scale in nature which was self-administered to the participants. According to William (2006), a Likert scale is commonly use in a questionnaire and is the most widely used scale in a survey research, such that the term is often used interchangeably with rating scale even though the two are not synonymous. When responding to a Likert questionnaire item, respondents specify their level of agreement to a statement; the researcher distributed the questionnaires and collected them after sufficient time had been allocated to respondents to fill them. Secondary data was obtained from published journals, newsletters, corporate websites and government records.

3.5.1 Pilot Study

A pilot study was carried out in the Kwale County and in the Town of Mtwapa which is adjacent to Mombasa County and has similar economic setting. A sample of 10 entrepreneurs of Somali Origin were used for the study for the full test of the data collection instruments.

3.5.2 Validity of the Research Instruments

According to Joppe (2002) validity determines whether the research truly measures that which it was intended to measure or how truthful the research results are. The instruments used are acceptable by the standards of ethics review board. Content validity was used to ascertain whether the degree to which data is collected using the questionnaire represents contents of the factors that influence the growth of entrepreneurial ventures.

3.5.3 Reliability of the Research Instruments

This method provides a good measure of reliability because holding other factors constant, the more similar the test content and conditions of administrations are, the greater the internal consistence reliability. Joppe (2002) defines reliability as the extent to which results are consistent over time and can be reproduced under similar methodology.

After piloting the data was analyzed and the results subjected to a statistical test for reliability. The Pearson rank correlation test for reliability was applied. A coefficient of more than 0.5 meant that the instruments are reliable and therefore can be used for the study.

3.6 Data Presentation and Analysis

Data analysis method refers to examining what has been collected in a survey or experiment and making deductions and inferences, it includes scrutinizing the acquired information and making inferences (Kombo & Tromp, 2006). The questionnaire content was checked to ensure completeness and accuracy. The researcher used the statistical package for social sciences (SPSS) to analyze the data. The statistical method of Pearson Product of Correlation Coefficient was used to analyze relationship between various variables. SPSS and Excel was used to establish the customer appraisal strategies on loan repayment. Pearson Product Correlation Coefficient was used to determine the magnitude and direction of the relationship between the factors (independent variables) and entrepreneurial growth (dependent variable).

The regression analysis model was:

Y= β0+ β1X1+ β2X2+ β3X3 + β4X4 +

Where;

Y= Growth of entrepreneurial ventures,

X1 = Owner-manager characteristics,

X2 = Competition Effect,

X3 = Customer Availability,

X4 = Firm Specific Determinants,

β0 β1 β2 β3 β4 are the coefficient of the variables.

= is the error term

3.7 Ethical Considerations

Ethical clearance was sought from the Ethics and Research Committee, University of Nairobi. There will also be clearance from Ministry of finance and NACOSTI. A letter from the NACOSTI was presented to the Ministry of finance, business enterprise department and authorization to carry out research in enterprises in Mombasa County. This was presented to all the enterprises ventures to be visited. Finally voluntary informed consent was obtained from all the participants.

3.8 Operation Definition of Variables

Table 1.3: Operational Definition of Variables

Research Objective

Behavioral dimensions

Source

Indicators

Measures

Data collection instruments

Measuring Scale

Analysis Technique

1)To examine the influence of Owner-manager characteristics on growth of entrepreneurial venture

Independent variable

Enterprise owners

-Attitude of Enterprise owners

Creativity and innovation

-Education and skills

-Family background

-What is the % level of attitude of entrepreneurs

-What is the % level of creativity, innovation

Questionnaire

Ordinal

Frequency and Regression Analysis

2)To investigate the effect of competition on growth of entrepreneurial ventures

Independent variable

Enterprise owners

-level of technological advancement

-Product advantage

-Price satisfaction

-Human Capital

-level of Technological advancement

-Percentage level of product advantage

– Percentage level of price satisfaction

Questionnaire

Ordinal

Frequency and Regression Analysis

3) To access the extent of customer availability effect on growth of entrepreneurial ventures.

Independent variable

Enterprise owners

-Customer acquisition

-Satisfaction

-Loyalty

-Retention capacity

-Complaint Management

-Level of Customer satisfaction

-Customer acquisition level

-Retention Capacity

Questionnaire

Ordinal

Frequency and Regression Analysis

4) To analyze the firm specific characteristics effect on growth of entrepreneurial ventures

Independent variable

Enterprise owners

-Growth objectives

-Perceived growth barriers

-Capital

-Research and Devt.

– Capital Structure

-Research and Development % Level

-% of perceived growth barriers

Questionnaire

Ordinal

Frequency and Regression Analysis

CHAPTER FOUR

DATA ANALYSIS AND PRESENTATION

4.1 Introduction

The purpose of this study was to establish the determinants of growth of entrepreneurial ventures among the Somali Community in Mombasa County. Independent Variables factored for study were: owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics.

4.2 Questionnaire Response Rate

The interviewer explained the significance of the study to the respondents, administered the questionnaires and assisted the respondents understand the questions they could not easily comprehend. Out of a population of 476, 142 questionnaires were given out of which 112 were returned completely filled. This brings to the response rate being to 78% which is coherently above the stipulated 10% of accessible population enough for descriptive studies according to Mugenda (2007).

4.3 Demographic Characteristics of Respondents

The general demographic information sought in the study was: Job title, age, gender, length of service to organization, education level and place of operation of the enterprise and time of existence of the organization.

4.3.1 Job Title

The researcher sought to find out the respondents designation in their respective enterprises. The findings are presented in the Table below, Table 4.1.

Job Title

Frequency

Percent

Cumulative Percent

Valid

Owner

30

26.8

26.8

Director

47

42.0

68.8

CEO

10

8.9

77.7

Partner

13

11.6

89.3

Others

12

10.7

100.0

Total

112

100.0

Table 4.1 Frequency Table for Job title of Respondents

From the Table 4.1 above the least number of respondents interviewed were of the title of CEOs (10 respondents) followed by: others category (12 Respondents). The highest proportion of the respondents was the directors’ position which had 47 respondents and accounted for 42% of the respondents.

The figures from the table 4.1 above depict that majority of the interviewed respondents had direct influence in decision making of their respective enterprises.

4.3.2 Gender and Age Bracket of Respondents and Age

There was need for the researcher to determine the Gender distribution of the Somali owned businesses in the Mombasa County and the respective age brackets. This is presented in the table below, Table 4.2.

Table 4.2: Gender and Age Bracket of Respondents Cross Tabulation

Age bracket of respondents

Total

18-30 yrs

31-40 yrs

41-50 yrs

51-60 yrs

> 60yrs

Gender

Male

17

20

32

13

7

89

Female

2

11

8

0

2

23

Total

19

31

40

13

9

112

Table 4.2: Pie Chart of the Gender and Age of Respondents

The male gender had the highest proportion of 89 respondents which was 79% while the least was the female with 23 respondents at 21%. This difference in proportion may be attributed to the socio-cultural set up and beliefs which require the female gender to take more of household related tasks as compared to the male counterparts.

The table depicts that there were fewer women involved in entrepreneurship in the age bracket of 18-30 years and over 60 years. There was however no women captured in the age bracket of 51-60 years.

4.3.3Level of Education of the Respondents

The researcher sought to know the level of education of the respondents operating enterprises in Mombasa County. This is depicted in the frequency distribution table below, table 4.3.

Table 4.3 Level of Education

Level of Education

Frequency

Percent

Cumulative Percent

Valid

Primary

34

30.4

30.4

Secondary

12

10.7

41.1

Diploma / Certificate

23

20.5

61.6

Graduate

18

16.1

77.7

Post Graduate

9

8.0

85.7

No formal education

16

14.3

100.0

Total

112

100.0

It is evident that the majority of the business owners had the highest attained level at primary with 34 respondents (30%). This was followed by those with highest attained level of Diploma or Certificate level with 23 respondents (21 %). The least level of highest attained education level was the post graduate with 9 respondents (8%). It is worth noting that despite the quest for level of education from respondents, 16 respondents stated to not have stepped in school (14%). This is coherently true since the native land of Somalis in Northern Kenya is Hardship areas and literacy level are very low.

4.4 Length of Time of Enterprise Operation

The researcher sought to know the length of time for operation of the various enterprises in Mombasa County since their inception. This is depicted by the frequency distribution table below, Table 4.4;

Table 4.4: Period of Enterprise Operation

Period of Enterprise Operation

Frequency

Percent

Cumulative Percent

Valid

< 1 year

10

8.9

8.9

1-5 years

29

25.9

34.8

6-10 years

55

49.1

83.9

> 10 years

18

16.1

100.0

Total

112

100.0

From the Table 4.4, it is depicted that majority were aged 6-10 years with 55 respondents (49%). The second highest proportion was that of 1-5 years with 29 respondents at 26%. There was a cumulative percent of 84% of respondents who had served for less than 10 years. The least proportion was that of less than one year with 10 respondents. It is worthwhile mentioning of the number of businesses that have been in operation for more than 10 years and owned by the Somalis.

4.5 Location of the Enterprise

There was need to determine the spatial distribution of the enterprises in the County of Mombasa. This is depicted in the table below, Table 4.5;

Table 4.5: Location of Business Enterprise

Location of Business

Frequency

Percent

Cumulative Percent

Valid

Kisauni

23

20.5

20.5

Mvita

57

50.9

71.4

Changamwe

17

15.2

86.6

Likoni

15

13.4

100.0

Total

112

100.0

From the spatial distribution of regions in Mombasa County it can be seen that Mvita had the highest proportion of Somali owned enterprises with 51% (57 respondents). The second highest proportion was that of Kisauni area with 21% (23 respondents). The least proportion of respondent was from Likoni and Changamwe 15% and 17% respectively.

4.6 Owner/manager Characteristics and its Influence on Entrepreneurial Growth

There was need to establish the awareness of owner/manager characteristics in the growth of entrepreneurial ventures among the Somali Business persons. This is depicted in the following table; table 4.6;

Table 4.6: Performance of Owner Manager Characteristics

Mean

Std. Deviation

Attitude of the owner

3.46

1.215

Creativity and Innovation

2.82

1.042

Education and Skills

3.19

1.284

Family Background

2.27

.939

The table 4.6 above depicts that the attitude of the owner had the highest impact on the performance of owner manager characteristics with a mean value of 3.46. The send important aspect on owner manager characteristics was the education and skills with 3.19 mean value. The least effect on owner/manager characteristics was the family background with a mean value of 2.27 meaning it had a low extent on affecting the growth of entrepreneurial activities.

4.7 Competition Effect and its Influence on Entrepreneurial Growth

In relation to competition effect, there was need to establish its extent of effect on the growth of entrepreneurial ventures. This is shown in table 4.7 below;

Table 4.7: Competition Effect on Growth of Entrepreneurial Ventures

Mean

Std. Deviation

Level of technological advancement

3.04

1.110

Product / Service advantage

3.64

1.064

Price Satisfaction

3.35

1.088

Human Capital

3.27

1.162

The product or service advantage of the various enterprises had the highest effect on competition with a mean value of 3.64. This means its effect on product /service advantage was of great extent to the competition of various entrepreneurial ventures. Price satisfaction had also a relatively higher effect on the competition of entrepreneurial venture with a mean value of 3.35. However, it was worth noting that the level of technological advancement had the least effect on competition amongst the Somali business entrepreneurs with a mean value of 3.04.

4.8 Customer Availability and its Influence on Entrepreneurial Growth

There was need for the researcher to establish about customer availability and subsequent effect on growth of entrepreneurial ventures amongst the Somali in Mombasa County. The findings are depicted in the table 4.8 below;

Table 4.8: Customer Availability

Mean

Std. Deviation

Customer Acquisition

2.92

.931

Customer Satisfaction

3.78

.824

Customer Loyalty

3.13

1.359

Retention Capacity

3.17

1.420

Complaint management

2.51

1.238

Customer satisfaction had the highest impact on the customer availability with a mean value of 3.78. This meant that to a great extent it impacted the level of customer availability in the entrepreneurial ventures. The retention capacity strategy employed by the various entrepreneurial ventures played a great role in the customer availability. It had a mean value of 3.17 which according to the likert scale was to a moderate extent. The least factor affecting the customer availability was the complaint management which had a mean value of 2.51. The retention capacity on the other hand had a moderate effect on customer availability.

4.9 Firm Specific Determinants and its Influence on Entrepreneurial Growth

In regards to firm specific determinants, there was need to establish its level of effect on the growth of entrepreneurial ventures amongst the Somalis in Mombasa County. This is depicted in the table 4.9 below;

Table 4.9: Firm Specific Determinants

Mean

Std. Deviation

Growth Objectives

2.90

.995

Perceived Growth Barriers

2.73

1.107

Capital Availability

3.83

1.073

Research and Development

2.88

1.463

The table 4.9 shows that capital availability played a major role in the determination of firm specific determinants. It had the highest mean value of 3.83, meaning that it impacted to a large extent the growth of entrepreneurial activities amongst the Somali entrepreneurs. The other factors: growth objectives, perceived growth barriers and research and development had an impact to a moderate extent on the firm with mean values above 2.5 but less than 3.0.

4.10 Correlation Model

The researcher sought to determine the correlation among growth entrepreneurial ventures by the Somali entrepreneurs: competition effect, customers’ availability and firm specific characteristics. The model used is the Spearman’s Rank Correlation coefficient model. This is shown in the table, below table 4.10;

Table 4.10: Correlation Coefficient

Owner / manager characteristics Scale

Competition Effect Scale

Customer Availability Scale

Firm Specific Characteristics Scale

Owner / manager characteristics Scale

Correlation Coefficient

1.000

.144

.234*

.222*

Sig. (2-tailed)

.

.131

.013

.019

N

112

112

112

111

Competition Effect Scale

Correlation Coefficient

.144

1.000

.131

.011

Sig. (2-tailed)

.131

.

.167

.907

N

112

112

112

111

Customer Availabilty Scale

Correlation Coefficient

.234*

.131

1.000

-.073

Sig. (2-tailed)

.013

.167

.

.449

N

112

112

112

111

Firm Specific Characteristics Scale

Correlation Coefficient

.222*

.011

-.073

1.000

Sig. (2-tailed)

.019

.907

.449

.

N

111

111

111

111

*. Correlation is significant at the 0.05 level (2-tailed).

The correlation table above shows that there are two major sets of correlated study variables. The first set of correlation was that of firm specific characteristics and owner/managers characteristics which was at 0.222 value. This depicts that the two components were positively correlated and contributed to growth of entrepreneurial ventures among the Somali in Mombasa.

The second set of entrepreneurial venture study objectives that were correlated is that of customer availability and owner manager characteristics which is 0.234. This means the two study objectives were positively correlated and contributed immensely to growth of entrepreneurial ventures in Mombasa and more so amongst the Somalis.

4.11 Hypothesis Testing

There was great need to establish the study hypotheses as per the introduction of the study. This is depicted in the derived hypotheses test summary from the SPSS of the data template in table 4.11;

Table 4.11: Hypothesis Test Summary

Since the table states that we reject the null hypotheses and accept the alternative hypotheses then we can state using the alternative hypotheses to be:

H11: The owner-manager Characteristics has significant influence on the growth of entrepreneurial ventures.

H12: There is significant relationship of competition and growth of entrepreneurial ventures.

H13: There is significant relationship of competition and growth of entrepreneurial ventures.

H14: The firm specific characteristics significantly impacts on growth of entrepreneurial ventures.

The hypotheses were alternative since the level of significance were less than 0.005 and a one sample Chi-Square test was used for the study hence appropriate.

4.12 Regression Model

The researcher sought to determine the relationship between growth of entrepreneurial ventures to scale (1-10) and the independent variables in category of; owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics.

The researcher applied the regression model to determine the relationship between dependent variable (growth of entrepreneurial ventures) and independent variable (owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics.). The results are as presented in the following parts;

4.12.1 ANOVA Results

Analysis of variance was used to test the significance of the regression model as pertains to differences in means of the dependent and independent variables as shown on table

Table 4.12: The ANOVA Results

ANOVA

Sum of Squares

df

Mean Square

F

Sig.

Owner manager characteristics

Between Groups

18.159

7

2.594

3.853

.005

Within Groups

145.618

104

1.400

Total

163.777

111

Competition Effect

Between Groups

33.576

7

4.797

5.744

.000

Within Groups

86.852

104

.835

Total

120.429

111

Customer Availability

Between Groups

47.082

7

6.726

5.144

.000

Within Groups

135.981

104

1.308

Total

183.063

111

Firm Specific Determinants

Between Groups

9.280

7

1.326

3.555

.007

Within Groups

88.685

104

.853

Total

97.964

111

Since the p values of the four study objectives were less than 0.05, we can state with a 95% confidence level that they are significant. Thus the regression model is statistically significant in predicting how owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics, affect growth of entrepreneurial ventures among the Somali business persons.

4.12.2 The ANOVA Table

Table 4.13: The ANOVA Table

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

1

.723a

.523

.507

0.875

a. Predictors: (Constant) owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics.

The Coefficient of Determination, R square, as shown in table 4.15 above is 0.723. This means that approximately 72.3% of entrepreneurial growth factors were factored in the study which were: owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics.

The value is coherently large enough, implying that the considered aspects affecting growth of entrepreneurial ventures are significant. This further implies that 27.7% is due to factors that were not considered in this study.

4.12.3 Regression Coefficients

The findings on table 4.15 below are based on the following regression model:

Y= β0+ β1X1+ β2X2+ β3X3 + β4X4

Where;

Y= Growth of Entrepreneurial ventures,

X1= owner/manager characteristics,

X2= competition effect,

X3 = customers’ availability,

X4 = firm specific characteristics,

β0 β1β2β3β4 are the coefficient of the variables.

= is the error term

Table 4.14 Regression Coefficients

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

B

Std. Error

Beta

(Constant)

4.069

.394

10.338

.000

owner/manager characteristics

.103

.094

.091

2.087

.008

competition effect

.153

.089

.142

3.713

.009

customers’ availability

.275

.056

.288

1.698

.003

firm specific characteristics

.284

.059

.355

4.782

.000

a. Dependent Variable: Growth of Entrepreneurial ventures

The regression equation established from the data in the table 4.13 above is as follows

Y= 4.069+0.103X1 +0.153X2 + 0.275X3 + 0.284X4

The equation is relevant because all the four aspects considered (owner/manager characteristics X1, competition effect X2, customers’ availability X3 and firm specific characteristics X4) were found in determination of Growth of Entrepreneurial ventures, significant because the p values were below 0.05.

4.13: Conclusion

Therefore Table 4.16 above shows that; owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics, implying that these independent variables positively predict the growth of entrepreneurship. Therefore taking all independent variables (owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics (0)); the entrepreneurship growth will be at 4.069 units.

CHAPTER FIVE

SUMMARY OF FINDINGS, DISCUSSIONS, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter presents a summary of findings from the study; conclusions and recommendation for further study. The study aimed to examine determinants of growth of entrepreneurial ventures among the Somali Community in Mombasa County. Independent Variables factored for study were: owner/manager characteristics, competition effect, customers’ availability and firm specific characteristics.

5.2 Summary of the Findings

The summary of Findings focuses on the objectives of the study and they are in the following sub-sections;

Out of the four factors affecting owner/manager characteristics: attitude of the owner, creativity & innovation, Education and Skills and family background, it was established that attitude of the owner of entrepreneurial venture had the highest effect to a moderate extent. The findings established that out of the four factors, family background of the owner of the entrepreneurial ventures had the least effect to a low extent.

The findings from the study established that the service/product advantage had the highest impact to a great extent followed by price satisfaction level amongst the customers. The finding also depict the human capital had a moderate effect on the competition component. The technological advancement was revered by the Somali entrepreneurs to have the least impact on a moderate extent.

The findings from the study established that five factors affected customer availability: customer acquisition, customer satisfaction, customer loyalty, retention capacity and complaint management. It was further established that customer satisfaction had the highest impact to a great extent. The customer loyalty and retention capacity had to a moderate extent impacted the level of customer availability amongst the Somali business entrepreneurs. The least effect was for complaint management which had the lowest rankings.

The findings from the study established that capital availability had the highest impact to a great extent on the growth of entrepreneurial ventures amongst the Somalis. The other three factors: growth objectives, perceived growth barriers and research and Development had relatively the same effect to a moderate extent on growth of entrepreneurial ventures amongst the Somalis in Mombasa County.

5.3 Discussion

It can be discussed that the there is need for the owner/manager characteristics to be improved for they impacted greatly the direction taken by the entrepreneurial ventures amongst the Somalis. Since the literacy level amongst the Somali levels was low, the education and skills levels were of moderate levels. The mindset of the entrepreneur determines a lot in the direction and flow of the entrepreneurial ventures. The mindset is composed of the attitude which drives the growth of the enterprises managed and owned by Somalis.

From the study it can also be discussed that the product/service advantage for the enterprise had a great impact to a great extent. Another factor impacting on the competition effect is the price satisfaction level among the customers. The level of price contentment by the customers therefore played a vital role in creation of competition in Mombasa. It is worth noting that the human capital component and technological advancement had the least effect on the general growth of enterprises in Mombasa and more so among the Somali owned/managed enterprises.

5.4 Conclusion

From the study it can be concluded that the overall level of customer availability was actually affected greatly by the level of customer satisfaction. Customer satisfaction created a good rapport between the owners of enterprises and the general customers frequenting the business enterprises. Little attention was put on complaint management and the retention capacity for the customers amongst the Somali owned businesses.

It can be concluded from the study that the firm specific determinants generally had the least level of effect on the general growth of entrepreneurial ventures amongst the Somalis in Mombasa. The level of capital availability had the highest impact on the growth of entrepreneurial ventures. The level of capital availability had much more effect than the other factors like growth objectives, perceived growth barriers and research and development.

5.5 Recommendations

The researcher recommends that for effective growth of entrepreneurial ventures amongst the Somali’s, there is need to increase the level of education and skills. This is reflected by the sizeable number of Somali business owners who had no formal level of education. Education and skills related to business should be emphasized to the owners since there are changes in the business dynamics among the various enterprises. Although the human capital had the least effect on the competition component, there is need to have a well-managed and educated staff for the enterprises. In relation to customer availability, the businesses should strive to come up with better customer loyalty and customer retention strategies so as to boost the level of customers available for the enterprises. They are actually the greatest determinants in which the business and trade deliverables are attained in business. In regards to firm specific determinants, the research and development activities should be encouraged as they give the enterprises a better view and room for expansion from study findings and surveys. This is because there is daily change in business deliverables and model.

5.6 Suggestion for Further Study

The study only covered Somali owned businesses in Mombasa County. The adoption and implementation of better business growth strategy practices like research and development in all sectors of Kenyan economy that involves complaint management and customer retention will go a long way in improving the enterprises profitability and performance.

Since the explored variables were found to be significant in explaining the growth of entrepreneurial ventures, a study should be carried out among the other similar sectors in Kenya to enable investor reap from their investments.

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APPENDIX 1: QUESTIONNAIRE

Instructions: Kindly take a few minutes of your time and answer the questionnaire. Thank you and tick in the box as appropriate.

Title: DETERMINANT OF THE GROWTH OF ENTREPRENEURIAL VENTURES AMONG THE SOMALI COMMUNITY IN MOMBASA COUNTY – KENYA.

Where necessary, give a brief description in the space provided.

SECTION A: GENERAL QUESTIONS

1 Gender: Male Female

2. Title/Designation:

Manager Director Supervisor Clerk Field worker

Others

4. For how long have you worked at the organization?

Less than 1 year 1- 5 years 6-10 years More than 11 years

  1. What is your level of education:

Secondary

Diploma

Graduate

Post graduate

 

SECTION B: OWNER/MANAGER CHARACTERISTICS

The following are statements that influence owner manager characteristics in growth of entrepreneurial ventures. Please tick where appropriate.

Statement

Very low extent=(1), low Extent=(2), Moderate Extent= (3), Great Extent=(4), Very Strong Extent=(5)

1

2

3

4

5

The Attitude of the enterprise owner

The level of creativity and innovation of the enterprise owner

The Level of education and skills

The family background of the enterprise owner

SECTION C: THE COMPETITION EFFECT

Statement

Very low extent=(1), low Extent=(2), Moderate Extent= (3), Great Extent=(4), Very Strong Extent=(5)

1

2

3

4

5

The level of technological advancement

The product / service advantage

Price satisfaction

The human capital level

The following are statements that influence competition in relation to growth of entrepreneurial ventures. Please tick where appropriate

SECTION D: CUSTOMER AVAILABILITY

The following are statements that influence customer availability in relation to growth of entrepreneurial ventures. Please tick where appropriate.

Statement

Very low extent=(1), low Extent=(2), Moderate Extent= (3), Great Extent=(4), Very Strong Extent=(5)

1

2

3

4

5

The customer acquisition process

Customer satisfaction level

Customer loyalty

Customer retention capacity

The complaint handling process

SECTION D: FIRM SPECIFIC CHARACTERISTICS

The following are statements that influence firm specific objectives in relation to growth of entrepreneurial ventures. Please tick where appropriate

Statement

Very low extent=(1), low Extent=(2), Moderate Extent= (3), Great Extent=(4), Very Strong Extent=(5)

1

2

3

4

5

The firms growth objectives

The perceived growth barriers

The level of firms capital

The research and Development activities

In a scale of 1-10, where 1=least effect and 10=highest effect, please rate the following components on the growth of entrepreneurial ventures among the businesses.

Study Objective

Scale (1-10)

Owner Manager characteristics

Competition Effect

Customer Availability

Firm Specific Characteristics

Thank you very much for your Cooperation

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