Strategic Collaboration and Performance of Small and Medium Enterprises in Nairobi Central Business District

Abstract

Today’s business environment is changing at a higher rate than in the past. The market competitiveness is a function of how well firms can develop and implement strategies, but competiveness also can impact the nature of chosen strategy by the firm. As a result, most of the organizations are exploring strategies to work best with competition collaboratively for the mutual benefit of the organization. As one of the strategies, most of the firms have adopted the strategic collaboration to deal with their deficiencies. Strategic collaborations have been one of the ways in which firms can overcome some or all of the difficulties and remain in business while maintaining a competitive advantage positioning the market. Therefore, companies choose to establish strategic collaborations and cooperation in order to gain clear channels through their joint market contracts. The objective of the study was to determine the effect of strategic collaboration on firm performance of Small and Medium Enterprises in Nairobi Central Business District. The study used was descriptive research design. The population of the study was 726 SMEs operating in Nairobi Central Business District. The study used systematic sampling technique in which a sample is picked after every ten from the list. The study used primary data that was collected using a questionnaire. The data was analyzed by the use of descriptive statistics. The regression analysis was used to assess the relationship between SME collaboration and performance. The findings of the study was that collaboration between the SMEs and other organizations was influenced by conflict resolution mechanisms between partners, partner resources, mutual trust, commitment of partners, effective and efficient communication, and complementarities and synergies between partners. Strategic collaborations were found to have enabled the SMEs to have strong business relationship, create efficiency, achieve economy of scale by drastically reducing the costs and establish effectiveness which results in SME access markets, enhanced uptake of SME products, increase sales, increase profits, reduce costs and development of new technologies. The study recommends that their need to be managerial as well as strategic fit evaluation of the partners before the collaboration is entered into. More involvement of top level management is required to offer leadership support to the alliance process and there is a better chance of success.