Influence of globalization on performance of small and medium sized enterprises in the ICT sector in Kenya

Abstract

Globalization in a broader sense refers to the widening set of interdependent relationships among people from different parts of the world that happens to be divided into nations in order to facilitate the flow of goods, capital, services and labour. Globalization has had influence on the small and medium enterprises but more so the information and communications technology firms. The information and communications technology sector is lately receiving a lot of attention due to its contribution to the economic growth in terms of employment, wealth creation, and youth empowerment. This research study focused on the influence of globalization on performance of small and medium enterprises in the information and communications technology sector in Kenya. The study employed a cross sectional research design to achieve the objectives. The target population under study was registered ICT companies in Kenya. Of the registered companies 81% were based in Nairobi of which at least 42 Small and medium sized ICT firms were randomly selected as the sample size. Secondary data was gathered from Journal Publications, Articles, Government and Non-governmental bodies statistics on effect of globalization, library material, ICT journals and reports, media publications and various Internet search engines covering the influence of globalization to SMEs in ICT sector. Primary data was collected from respondents by the use of a questionnaire. The main focus of this study was qualitative research in order to provide holistic understanding of the objective. Descriptive analysis and interpretive approach was used to analyze the data. This made the data more meaningful and illustrative in the process of establishing the influence of globalization on SMEs in ICT sector In Kenya. The study concluded that globalization contributed both positively and negatively on the performance of SMEs in the ICT sector In Kenya. Particularly globalization had increased efficiency and effectiveness of service delivery in ICT sector, promoted growth and resulted in more markets for the products and services. It had provided immense opportunities for profitability and establishment of new enterprises, job creation and more revenue for the firms and government. On the other hand it lead to stiffer competition which was difficult to define, sophisticated customer demands, rapid development of technology and employee turnover as a result of competitive poaching. The study recommends for the development of mechanisms for internal capabilities to counter competition and employee turnover, government support sector through enactment of enabling legislations, providing proper infrastructure, cutting down on set up costs and taxes and facilitate training of the professionals. Further, small and medium enterprises can utilize electronic commerce in their global operations to enable them reach a higher number of customers through the internet resource.