Determinants of SMEs growth (wood enterprises): Infrastructure, technology and collective efficiency

Abstract

Economic development is said to be dependent on industrial development. Industrialization is seen as key in the promotion of sustainable development since it creates productive employment, generates value added capital and makes a significant contribution to economic and social development. However, the trend in the performance of the manufacturing sector in Kenya raises questions on the effectiveness of the strategy used in planning for sustainable industrial development. This paper explores the factors essential for the active participation of small manufacturing enterprises in contributing towards sustainable industrial development. Data was obtained from wood based enterprises owner/managers (284) who were sampled from three Districts; Kericho, Nakuru and Uasin Gishu all in the Rift valley province of Kenya using multistage sampling strategy. Data was collected by use of questionnaires, observation and documentary analysis. The study found that the infrastructure accessed by wood industries in Western Kenya is poor, the technology employed low, the wood enterprise growth poor and collective efficiency also poor. The relationship between infrastructure and technology development is significantly linear, between infrastructure development and wood enterprise growth and between technology development and wood enterprise growth is also linear. However, the relationship between collective efficiency and wood enterprises growth is logarithmic. It has also emerged that the relationships between collective efficiency and technological development is also logarithmic. Using multiple regression analysis, it was shown that technological development is a very important determinant of the growth of small wood enterprises compared to the others. The study reveals the need for industrial development paradigm shift to a focus on small manufacturing enterprise’s infrastructure and technological development planning based on the collective efficiency paradigm that should anchor sustainable industrial development.