Analysis of business growth strategies on performance of small medium enterprises in Kiambu County, Kenya

Abstract

Performance of small and medium-sized businesses (SMEs) in Kiambu County, Kenya, was investigated in this study in relation to business growth methods. SMEs are well known for their role in generating jobs and advancing the economy as a whole. The study focused on four key growth strategies commonly used by SMEs: market penetration, market development, product development, and diversification. The objective was to determine how each of these strategies influenced SME performance, assessed through indicators such as profitability, market share, customer satisfaction, and business growth. A descriptive research design was adopted for the study. Data were collected from a sample of 370 SMEs through structured questionnaires administered to business owners and senior managers responsible for key functional areas including marketing, operations, finance, and strategic planning. Stratified random sampling was used to ensure fair representation across different sectors. In addition to examining the internal strategies, the study explored the role of external environmental factors such as county government policies, access to financing, and infrastructure in shaping the effectiveness of business growth strategies. The data collected was analyzed using both descriptive and inferential statistical methods. The reliability of the research instrument was confirmed with a Cronbach’s Alpha value of 0.8. Regression analysis revealed that the four business growth strategies collectively explained 61 percent of the variation in SME performance (R² = 0.61). Market development, with a coefficient of 0.071 and a t-value of 2.087, showed the strongest positive influence on SME performance. Product development had a coefficient of 0.062 and a t-value of 2.152, while market penetration had a coefficient of 0.044 and a t-value of 2.925. Diversification demonstrated a modest but statistically significant influence with a coefficient of 0.023 and a t-value of 2.000. Descriptive findings indicated that a majority of SMEs in Kiambu County actively apply business growth strategies to improve performance and competitiveness. Many respondents highlighted the importance of innovation, customer loyalty programs, strategic pricing, and exploring new market segments as essential elements for success. Firms that consistently launched new or enhanced products and engaged in targeted marketing campaigns reported stronger customer retention and increased brand visibility. SMEs that expanded into related markets or adjusted their offerings based on local demand were better positioned to cope with competition and changing customer needs. The study was conducted in compliance with ethical research standards, with approvals obtained from the Ethics Review Committee of Mount Kenya University and the National Commission for Science, Technology and Innovation (NACOSTI). The findings offer valuable insights for SME owners, policymakers, and support institutions seeking to strengthen the sustainability and performance of SMEs. The study provides evidence-based recommendations to support strategic decision-making, guide policy development, and promote long-term SME growth in Kiambu County and other similar regions.