Factors influencing sustainable competitive advantage of small and medium enterprises in Nairobi County

Abstract

Increased competition threatens the attractiveness of an industry and reducing the profitability of the players. It exerts pressure on firms to be proactive and to formulate successful strategies that facilitate proactive response to anticipated and actual changes in the competitive environment, (Drucker, 1969). Small and medium-sized enterprises (SMEs) in any country contribute to economic growth. In Kenya, the SMEs play an important role in employment and wealth creation, income distribution, accumulation of technological capabilities and spreading the available resources among a large number of efficient and dynamic small and medium size enterprises (IDRC, 1993).The study sought to answer the following research question; to what extent does SMEs enjoy sustainable competitive advantage in Nairobi County? What are the factors influencing sustainable competitive advantage the small and medium enterprise in Nairobi County? The study used descriptive research design in form of cross sectional survey. The population of interest of this study will be top 100 SMEs in Kenya. Since the study was census one respondent was selected from each organization forming a sample of 100 respondents. Self-administered drop and pick questionnaires were distributed to managers currently employed by Top 100 SMEs in Kenya. Descriptive analysis was employed; this included the use of weighted means, standard deviation, relative frequencies and percentages. The data was coded to enable the responses to be grouped into various categories. Descriptive statistics was used to summarize the data. The study revealed that Small and Medium Enterprise organization has capability to sustain competitive advantage. The study concludes that in order to enhance sustainable competitive advantage there is need for Small and Medium Enterprise to be innovative in creation of new product, there is need for SMEs to deliver new products in the market, there is need for SMEs to offer superior service than their competitors and there is need for SMEs to be committed in the research and development. The study found that the major factors affecting sustainable competitive advantage in SMEs, were their competition from competitors, increased number of SMEs, strategic alliance , their capabilities , customer relationship management , cost of doing the business and focus in the market