RISK AVOIDANCE STRATEGY AND COMPETITIVENESS OF SMALL AND MEDIUM ENTERPRISES IN KENYA
Janet Mumassabba - PhD (Strategic Management) Student, Jomo Kenyatta University of Agriculture and Technology, Kenya
Prof Elegwa Mukulu - Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Rukia Atikiya - Lecturer, Kenya School of Governance, Kenya
ABSTRACT
The purpose of the study was to evaluate the influence of risk avoidance strategies and competitiveness of small and medium enterprises in Kenya. Specifically, the study sought; to determine the influence of delayed entry into geographical markets; working with suppliers and work with legally acceptable contractors. Risk avoidance is when a company takes steps to remove a hazard, engage in different activities to ensure end to a certain exposure to risk. The existing literature showed that research has been done on risk management. However, very few studies were done on risk management and competitiveness of SMEs in Kenya having in mind the scope of Kisumu County and specifically the risk avoidance strategy. Therefore, the study sought to address this gap. The success of an organization depends upon the risk management strategies put in place. The strategies adopted can reduce earnings volatility, maximizes value for shareholders and promotes job security and financial security in the SMEs. This study adopted a descriptive research design. The target population was SMEs registered by the County Government City of Kisumu, with the category permit fee of between Ksh 5000 and Ksh 200,000 as of December 2018 and employing between 10-49 and 50- to 99 employees. Stratified random sampling was used then simple random sampling was used to pick a total sample of 375 respondents from each stratum. The study used linear regression model to establish the relationship between risk transfer strategy and competitiveness of SMEs in Kenya. The strata representation was selected using the proportional allocation method for each one in the target population to have an equal chance of participation. Tool for data collection was a standardized questionnaire. The study established that risk retention has a significant influence on SMEs competitiveness.