The effects of benchmarking practices on financial performance of small and medium enterprises in Kenya

Abstract

The purpose of the study was to establish the effects of benchmarking practices on the financial performance of SME‟s in Kenya, the study was also done to find out the new business practices adopted by the SME‟s as a result of benchmarking practices to improve their financial performance. A sample size of 56 SME‟s was used in the study which was collected using a random sampling method, there were 31 respondents whose data was analyzed to come up with the findings. The research used a casual research design collecting both Primary and Secondary data. The data was collected using selfadministered questionnaires issued to the respondents which was dropped and picked later at the selected employees` desks and was analyzed with the help of SPSS. The study findings reveal a positive and significant relationship between benchmarking practices adopted by SME‟s and the financial performance. The study further shows that benchmarking enhance the overall business performance realized by the SME‟s by helping to change business and management practices which were not value adding. Two questions were tested as determine the level of significance which are whether there exists a relationship between benchmarking practices adopted by SME‟s and financial performance improvement and how strong the relationship is, the study found out that there exists a relationship and most of the SME‟s that carry out benchmarking practices and adopt the practices had a positive change in their financial performance. The SME‟s should have their own policy which facilitates a body which allows access to finances to SME‟s only to facilitate training on better business practices to improve financial performance.