ROLE OF INFORMATION TECHNOLOGY ON PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN NAIROBI CITY COUNTY, KENYA

Jacob Kiprotich Yego, Dr. Michael Kimwele

Abstract


SMEs are important in creating employment opportunities and adding to the GDP in most of the countries across the globe. However, the merit on SMEs is still limited because many of these SMEs have been performing poorly with many of them incurring losses and the high closure rate with over 60% of them failing within 3 years of inception.   On the other hand, all the research done across the globe has indicated that information technology plays a crucial part in how well businesses succeed more so in the 21st century through sharing of information, innovation, integration of business processes and better business processes. However, it is evident that the actual usage of IT in SMEs is lacking and far below the desired level, especially in the developing countries like Kenya. As much as there is awareness of IT among the SMEs in Kenya, it is sad that none or very few of the SMEs have implemented it as a tool in their operations. Therefore, the purpose of this study was to determine how IT affected the performance of SMEs in Kenya. To accomplish this primary goal, the following particular goals were created: how Kenyan SMEs' performance is affected by IT costs, how IT training affects their performance. When it comes to the selection of participants, the study employed the descriptive survey sampling technique. The target demographic consists of the 98,598 registered SMEs in Nairobi County. The sampling method involved the use of the sampling formula which yielded a sample of 398 SMEs which were administered questionnaires that were self-completed by the managers/owners or their representatives. In data collection, the study used structured questionnaires that were distributed using the drop-and-pick technique. In this study, mixed method analysis was used where analysis of quantitative data was conducted with the use the SPSS program and is displayed in frequency tables, bar graphs, and pie charts as standard deviation, mean, frequencies, and percentages. The qualitative data on the other hand was sorted out through content analysis. In the analysis, the explanations were provided to supplement the quantitative data. The results from the research therefore showed that the influence of the IT cost was positive and had a significant relationship with SME performance. The research also revealed that the IT training variable bore a positive and significant relationship with the performance of the SMEs. The results showed that poor management of information technology was one of the causes that led to poor performance of the SMEs in Kenya. Therefore, from the research conclusions and recommendations the management of the SMEs should encourage IT training, IT investment, for the enhancement of their competitiveness and efficiency.

Key Words: Information Technology, Performance, Small and Medium Enterprises, IT costs, IT training

 


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