The impact of globalization on the leading small and medium enterprises in Nairobi county in Kenya

Abstract

The effect of globalization on small and medium enterprises (SMEs) has received a lot of attention in international circles in the past few years. One of the reasons for the international focus on SMEs is that these firms make significant contributions to the economy of both developing and developed countries. The theories reviewed were; resource based theory and traditional foreign direct investment theory.The specific objectives of this study were to establish whether SMEs globalization lead to greater employment opportunities and reduce poverty level generally, identify factors that hinder the ability of small-scale business in Nairobi County to be globally integrated and determine strategies to be adopted to facilitate the quick integration of small-scale firms in Kenya into the globalized economic world. Descriptive survey design was used. The target population of the study was the heads of department working in the Micro and Small Enterprises Authority (MSEA) and the top 100 SMEs in 2012 as surveyed by Business Daily and KPMG, with owners or managers as the respondents.Primary data was be used in the study. This was carried out by use of an interview guide. The results show that SMEs globalization has led to greater employment opportunities as a result of global competition, international policies have opened a free market for operation of SMEs all over the world and maximization of the human capital within the host communities. It was found that key challenges include; poor management competence, changes in modern technology, political interference, high competition in the market especially big/ foreign organizations, government’s strict regulations and overseas trade tariffs and lack of entry of Kenyan SMEs in the Business process market hinders. To curb the challenge of access to financial resources, the study found that financial infrastructure needs to be broadened to ensure that there is inflow of credit for investments. Further, it was found that technology improvement that greatly opens opportunities to globalization should be emphasized. Another strategy found to be efficient was the development of a research and development department or campaign for SMEs.