The mediating role of entrepreneurial orientation on the relationship between organization capacity and performance of manufacturing small and medium enterprises

• Author: Mwamisha Mkala - Kenneth Wanjau - Teresia N. Kyalo
• Position: Department of Business and Entrepreneurship, School of Business, Karatina University, Kenya
• Pages: 32-45

Vo

l. 4 N

o

.

3

N

ovem

b

er

,

2018

A

cademic Journal o

f

Business,

A

dministration, Law and Social Science

s

II

PCCL Publishin

g

, Graz-

A

ustri

a

I

SSN 2410-391

8

A

cces online at www.ii

p

ccl.or

g

32

The mediatin

g

role of entrepreneurial orientation on the relationship be

-

t

ween organization capacit

y

and performance of manufacturing small and

me

d

ium enterprises

D. Mw

a

m

i

s

ha

M

kala

Department o

f

Business and

E

ntrepreneurship, School o

f

Business, Karatina

U

niversity,

K

en

y

a

Kennet

h

Wan

j

au

Department o

f

Business and

E

ntrepreneurship, School o

f

Business, Karatina

U

niversity,

K

enya

Teresia N. K

y

a

l

o

Department o

f

Business and

E

ntrepreneurship, School o

f

Business, Karatina

U

niversity,

K

enya

Ab

str

a

c

t

This cross-sectional study was carried out to establish the e



ect o

f

organization capacity

a

nd entrepreneurial orientation (

EO

) on performance of manufacturing SM

E

s in Kenya. The

s

mall and medium enterprise (SM

E

) manufacturing segment is integral to the economies

of developing countries because it breeds growth, innovation and prosperity.

I

n Kenya,

manu

f

acturing dominates SM

E

s’ contribution to gross domestic product (GDP) and stimulates

i

nvestment in all economic sectors. However, Kenya’s growth in manufacturing capacity and

c

ompetitiveness is dismal when compared with similar global competitors. Developing an

e

 ective organisation capacity and engaging

EO

obligates manufacturing SM

E

s to create

p

roduction processes that can enhance performance outcomes and achieve competitive

a

dvantage.

A

structured self-administered questionnaire was used to gather quantitative data

from all food and beverage SM

E

s registered with Kenya

A

ssociation of Manufacturers. Data

were analysed using inferential statistics and structural equation modelling was used to test

the relationships among the study variables. The study found that organisation capacity has

a

positive infl uence on performance of manufacturing SM

E

s, and that

EO

fully mediates the

relationship between them. The study recommends that

f

or manu

f

acturing SM

E

s to maximise

the performance capabilities of their resources, they have to establish a norm of entrepreneurial

b

ehaviours in all their operations

.

K

e

y

words:

s

ense-makin

g,

d

ecision-makin

g

,

a

sset availability

,

o

perat

i

ons management,

manufacturin

g

SM

E

s

.

Bac

k

groun

d

M

anu

f

acturing small and medium enter

p

rises (SM

E

s) anchor world economic

d

evelo

p

ment through

f

omenting growth, innovation and

p

ros

p

erit

y

. Besides

d

evelo

p

ing human ca

p

ital through work

f

orce training and em

p

lo

y

ment, the

y

also

d

rive innovation,

f

acilitate develo

p

ment o

f

p

h

y

sical and institutional in

f

rastructure,

a

 ract

f

oreign exchange earnings, and stimulate investment in other su

pp

ort industries.