Micro-level Institutions & Enterprise Productivity: Insights From Kenya's Small Business Sector

Abstract

This paper explores the impact of micro-level institutions on enterprise performance by applying descriptive and econometric analysis on data extracted from a baseline survey of micro and small-scale enterprises in Kenya. The results show that female ownership, informality and sole proprietorship have negative effects on enterprise productivity. Such productivity, however, increases with the entrepreneurs' age, educational achievement and membership in business support groups. Rural-based enterprises and those that are irregularly operated are less productive than those that are urban based and regularly operated. Traders do not produce as much as entrepreneurs involved in other business activities and productivity generally increases with the age of an enterprise. Policy will need to redress gender imbalances and seek to mainstream informal enterprises. Intervention that improve the environment for rural commerce and increase the educational status of the general population would promote enterprise productivity as would interventions for increasing the life expectancy of enterprises.