EFFECT OF CREATIVITY ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KENYA

Abstract

SMEs play a crucial role in Kenya because they control above 80% of all jobs in the country and contribute to over 30% of the Gross domestic product (GDP) in Kenya in 2019. However, some of the SME’s do not survive past their first year, others do not grow beyond the initial status, while others fail to perform as well as they were projected to perform. Entrepreneurial mindset is one possible strategy for enhancing the performance of SMEs. This study, therefore, sought to fill this gap by investigating the effect of creativity aspect of Entrepreneurial mindset on the performance of small and medium enterprises in Kenya. The study adopted survey research design focusing on a population of 268,100 licensed small and medium enterprises in Nairobi County in Kenya, from which a sample of 400 SMEs were selected through a multi-stage probability sampling method where stratified sampling method was used first to select firms under the sector strata’s (manufacturing, services, wholesale and retail trade and real estate activities) and then simple random sampling was used to select representative samples from each sector. Quantitative data was collected using questionnaires and analyzed using Statistical Package for Social Science (SPSS) and Microsoft Excel. The study results established that creativity had positive and significant effect on performance of small and medium size enterprises in Kenya. The study concluded that creativity influenced performance of small and medium enterprises in Kenya. Small and medium enterprises with more creative owners/managers outperformed those with less creativity. The study further concluded that creativity leads business enterprises into high returns investments which improves performance and sustainability of the small and medium enterprises.

Keywords: Creativity, SMEs, Performance, Kenya