INFLUENCE OF REWARD PHILOSOPHY ON THE GROWTH OF MICRO AND SMALL FURNITURE MANUFACTURING ENTERPRISES IN KENYA
Grace Adhiambo Okello - Doctor of Philosophy in Entrepreneurship, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Micro and Small Enterprises (MSEs) is an important segment of Kenya’s economy. The enterprises contribute about 70% to the country’s Gross Domestic Product (GDP) and over 80% of the countries employment opportunities. Therefore, promotion of MSEs and, especially of those in the informal sector is viewed as a viable approach to sustainable development because it suits the resources in Africa. However, reports indicate that MSEs are ranked highest to risk exposure related to management. The higher exposure to risk for the MSEs leads to high collapse rate that contributes to loss of job and hence low economic development to the country. Reward philosophy is acknowledged as valuable mechanism to transform entrepreneurial resources into firm performance and therefore the growth. Compensation and incentive system are the most under-researched area in human resource, especially in the context of small business (Gupta & Shaw, 2014). In the context of entrepreneur approach, reward philosophy allows employee compensation to lay emphasis on innovation (Bradley, Wiklund, & Shepherd, 2011). However, there is a strong tendency that MSEs suffer from poor labor productivity even after raising wage. Therefore, this study sought to establish the influence of reward philosophy on growth of MSE in furniture manufacturing industry in Kenya. To achieve the objective of this study, the study was guided by Herzberg Hygiene Theory, Contingency Theory and Resource Based View Theory. The research design adopted in this study was the mixed method. The target population of study was the 10,345 owner managers of furniture manufacturing MSEs in Kenya. A sample of 393 owner managers of furniture business in Nairobi were selected using stratified random sampling. Questionnaires were used as data collection tool. The researcher administered the questionnaires personally and also employed drop and pick later method in cases where it was not possible for respondents to complete the questionnaires the same day. The study generated both qualitative and quantitative data. The study used correlation analysis to establish the degree of association between the independent and dependent variables. Multiple linear regression model was also used to establish the relationship between dependent and independent variables. The study established that reward philosophy influenced growth of micro and small furniture manufacturing enterprises. The key recommendations are that entrepreneurs should be given adequate access to credit in order to realize growth in their businesses and that policies regarding training and research and development (R&D) should be put in place in order to help the entrepreneurs to innovate and to be successful in their businesses. The main limitation of the study was the unwillingness of some respondents to complete the questionnaires. However, this was mitigated by assuring the respondents that utmost confidentiality was guaranteed.
