Effect Of Growth Of Small And Medium Enterprises On Economic Development In Kajiado County, Kenya

Abstract

Small and Medium Enterprises (SMEs) are notably the engines that drive economic development. It is assumed that the growth of SMEs will improve the lifestyle of Kenyans, reduce unemployment and lower poverty levels yet many of them do not have longevity. SMEs contribution to economic development is considerable through avenues like cultivating innovation, improving competition, providing services and goods and economic dynamism. This study investigated the effect of growth of SMEs on economic development in Kenya as it is assumed that failure to focus on economic development is an essential reason as to why most SMEs decline and ultimately some die. The inspiration for starting an SME was worth examining. It was therefore essential to be investigate whether SMEs are established to enhance the welfare of the proprietor for the long term or whether SMEs are established to merely provide families with meagre extra incomes to enable them meet their immediate individual obligations on a day to day basis. Economic Development does not only consist of boosting the Gross National Product of a country but it also addresses a decline in individual poverty level, eradication of illiteracy and enhancing the standard of living for the individual. There are many theories on economic development but the selected theories that bear the greatest relevance to this study were the Neoclassical Theory, the Dependency Theory and the Entrepreneurship and Innovation Theory. This study adopted a descriptive survey research design. The population was updated from 134 contractors to 60 contractors. The sample size was 45 contractors giving a response rate of 75 per cent. A five-point structured Likert scale questionnaire was used to collect primary data. Qualitative analysis consisting of recombining, tabulating, categorizing and examining evidences was used to answer the research questions. The Statistics Package for Social Sciences (SPSS) Statistics version 23 was used in entry, coding and analysis of quantitative data collected through the questionnaire. Multiple linear regression analysis was used to assess the effect of the predictor variables on the dependent variable. This study sensitized the entrepreneur on the real reason as to why he or she is establishing an SME. The study findings were useful to the Kenya Government to guide in formulation of relevant policies that will ensure SMEs are created to impact economic development and not just economic growth. The study also contributed significantly to new knowledge and provoked researchers to evaluate a multidimensional theory that embraces all possible aspects of SME growth rather than focusing on individual factors. It also provoked researchers to come up with theories that effectively describe why some SMEs grow and others fail in contributing to economic development.