A survey on enterprise growth patterns in micro and small manufacturing firms in Nairobi

Abstract

This study analyzed micro and small manufacturing firms growth patterns and factors that influence entrepreneur's preference of enterprise growth patterns. The two growth patterns are horizontal and vertical growth. Vertical growth is the conventional pattern where an enterprises increase its workers, expands its markets, improves its technology and' business structure among others. Horizontal pattern is where the entrepreneurs chooses not to invest in a single enterprise but instead increases the number of enterprises and invests more in real assets like land and construction of family buildings instead of investing in the enterprise. The drive to undertake the study was mainly due to the observation that, graduation of micro and small enterprises to medium and large enterprises in Kenya has been slow since only 1% is at the medium level. This is in-spite of the government and MSE sector development agencies efforts since 1972 when the sector was formally recognized. Also the National baseline survey (CBSIICEG/KREP 1999) found out that vertical grow-th of the sector since the last baseline survey of 1993 was not significant. However, there was notable horizontal growth due to the increase in number of enterprises started. There was therefore need to identify entrepreneurs preferred pattern of enterprise growth and factors that influence their preference. This study found out that entrepreneurs pursue horizontal growth pattern in-order to reduce the perceived business risk. For the MSE sector to grow vertically, the general business environment need to be addressed so as to reduce the business risk .