Innovation Climate, Firm Profile, Founder Characteristics and Talent Sustainability Among Small and Medium Enterprises in Kenya

Abstract

Talent sustainability, defined as an organization’s ability to attract, develop and retain skilled and knowledgeable workers in the long run, remains a crucial challenge faced by most small and medium-sized enterprises (SMEs) in developed and developing countries. This can be attributed to the fact that these enterprises grapple with the challenges of liabilities of size and newness as well as limited resources making it difficult for them to create suitable development opportunities and career paths for their valuable workers. This study investigated the influence of innovation climate, firm profile, and founder characteristics on talent sustainability among SMEs in Kenya. The study was guided by four objectives and underpinned theoretically by the Contingency Theory, Upper Echelons Theory, and Schumpeterian Theory of innovation. The methodology adopted was a descriptive cross-sectional survey in which criterion sampling was used to select all the top 100 SMEs for 2019. A structured questionnaire was utilized to collect primary data from SMEs' founders/top management teams. Partial least squares structural equation modeling (PLS-SEM) was adopted to evaluate descriptive and inferential statistics. Subsequently, hypotheses were tested, and the results suggested a significant positive influence of innovation climate on talent sustainability (βeta = 0.319, t = 3.966, p < 0.05). The results also suggested a non-significant influence of firm profile on the relationship between innovation climate and talent sustainability (βeta = -0.160, t = 1.368, p = 0.171). Similarly, founder characteristics had a non-significant influence on the relationship between innovation climate and talent sustainability (βeta = 0.305, t = 1.855, p = 0.064). Additionally, the results suggested a positive and significant joint effect of firm profile and founder characteristics on the relationship between innovation climate and talent sustainability. The findings suggest that a healthy and supportive innovation climate will likely improve talent sustainability among enterprises. However, this is not likely to be influenced by firm profile or founder characteristics. The study provided empirical evidence on how innovation climate, as both competency and knowledge base of founders, impacts talent sustainability and the practice of entrepreneurship. The study recommended that enterprises need to put in place a supportive and healthy innovation climate which can boost the attraction, development and retention of skilled and knowledgeable employees. The study also contributed to the body of knowledge on the role of firm profile and founder characteristics in the relationship between innovation climate and talent sustainability.