Effect of Market Orientation on Performance of Small Scale Enterprises in Kisumu City, Kenya

Abstract

Globally, organizations need marketing strategies to strive and generate superior financial performance. According to Economy survey 2016, five out of seven new small scale enterprises in Kenya do not experience growth in sales volume and profit. In Kisumu, very few small scale enterprises have grown into large formal enterprises, an adverse scenario which may or may not be attributed to market orientation. A number of studies have focused on effect of market orientation on organizational performance with contradictory results. The purpose of this study therefore was to determine the effect of market orientation on the performance of small scale enterprises in Kisumu City. The specific objectives were to: investigate the effect of customer orientation on performance, to find out the effect of competitor orientation on performance and to analyse the effect of innovation orientation on performance of small scale enterprises in Kisumu City .The study was anchored on Dynamic Capabilities theory and a correlational research design was adopted. The target population for the study was 1321 registered SSEs operating within Kisumu City, Kenya. Stratified random sampling technique was used to stratify the SSEs. Simple random sampling was then used to select a sample size of 30% from each sub set giving a sample size of 396 SSEs. Data was collected using questionnaires. A pilot study of 40 respondents and Cronbach alpha was used for reliability test .The obtained reliability co-efficient was acceptable because it was greater than the acceptable value of 0.7 .Content validity was done by exposing the instrument to experts in the field of marketing and the researcher’s supervisor to check for any error. Data was analysed objectively using SPSS. Regression Analysis was used to find the effect of customer, competitor and Innovation orientation on organizational performance of SSEs in Kisumu city. The study findings revealed that customer orientation accounted for 22.9% change in organizational performance (β=.479, p=.000), competitor orientation accounted for 35.0% change in organisation performance (β=.592, p=.000), innovation orientation accounted for 52.9% change in the organizational performance(β=.727, p=.000).All the variables had a unique strong and positive significant contribution to small scale enterprises in Kisumu city.It was therefore recommended that SSE owners be educated on the significance of market orientation strategies as a key element of enhanced SSE performance. The study will benefit the small scale business owners in Kisumu and Kenya by clarifying the significance of market orientation strategies as a key element of enhanced SSE performance.