Effect of Legal and Technological Arrangements on Performance of Micro and Small Enterprises in Kenya

Abstract

The purpose of technology is to improve productivity of enterprises and enhance the quality of goods produced by the firms to help them withstand local and international competition. When applied to micro and small enterprises, technology has proved to be the engine of economic growth amongst “Asian Tigers”. This paper aimed at investigating how legal and technological arrangements that micro and small enterprises (MSEs) have entered into enforce quality practices in their industry to improve performance of their businesses. It used training, purchase of equipment, franchising and sub-contracting as its independent variables while enterprise performance was its dependent variable. Both qualitative and quantitative research designs were used which was descriptive in nature. The target population for the study was MSEs in Embu district who received any form of technology between the years 2008 and 2010. The findings of the study revealed that dependent variables were a function of investment in technology. Consequently, these variables affect performance of MSEs which in turn influences the type of legal and technological arrangements that the MSEs adopt. At start-ups and early stages of business growth, there is very minimal investment in technology which results to adoption of lower levels of legal and technological arrangements and consequently to ineffective MSE performance. This is the situation in Kenya today and unless interventions are made to break this status quo, the study concluded that the MSEs are off the road to achievement of Kenya’s vision 2030.