DETERMINANTS OF SMALL AND MEDIUM-SIZED ENTERPRISES ABILITY TO DO BUSINESS WITH LARGE CORPORATIONS IN NAIROBI COUNTY

Abstract

Prior studies on small and medium-sized entreprises (SMEs) have focused on a number of aspects regarding the SMEs themselves. This study shifted focus and sought to establish the determinants of (SMEs) in doing business with large corporations in Nairobi county Kenya. The determinants examined included: financial performance, capacity enhancement, access to finance and corporate governance. The study targeted 114 SMEs in Nairobi. Stratified random sampling was used to select the sample and the respondents were grouped into four strata. To achieve the objective of this study, primary data was utilised. Data was analyzed quantitatively and presented using tables and charts. In addition, the Statistical Package for Social Sciences (SPSS) software was used to generate descriptive statistics, factor analysis and inferential statistics. The study findings established that majority of SMEs transact businesses with large corporations; majority of SMEs develop relationship with large corporations through perceived financial gains, Most of the SMEs were not profitable, most SMEs are involved in tendering businesses, most SMEs are complaint with legal requirements, majority of SMEs have acces to loans facilities; most SMEs have board of directors; most SMEs have audited financial accounts.The study concludes SMEs mostly develop relationships with large corporations through perceived financial gains,most of the SMEs have been involved in tendering businesses. Most of the SMEs were compliant to legal requirements especially tax payment; the perception that the job opportunity at hand is not meant for the SME is an important factor that large corporations consider when transacting with SMEs, followed by the ability of SMEs to handle large contracts, licensing agreements and lack of access from new firm to new research and technology as large firm; start up capital is always tricky for SMEs to raise. The study recommends that all SMEs in Kenya should work on developing good working relationships with large corporations which shall enable them to do businesses; SMEs in Kenya should strive to enhance their profitability by increasing their cash flow streams; Developing a strategy to face the challenge of SMEs in doing business with large corporations is important to win contracts and, sustaininable acceptable performance levels to spur growth and development.