THE EFFECTS OF FINANCIAL PERSPECTIVE AS A DETERMINANT OF PERFORMANCE IN SMALL AND MEDIUM ENTERPRISES. A CASE OF ELGEYO MARAKWET COUNTY, KENYA

Abstract

Purpose: This study effect of financial perspective as a determinant of Performance in Small and Medium Enterprises. The objectives of the study are; to determine the effects of financial perspective on performance, to evaluate the effects of customer perspective on performance and to assess the contribution of the internal business perspective on performance. The study was informed by Balance Score Card theory and a survey research design was used.

Methodology: A population of two thousand small and medium enterprise business persons in Elgeyo Marakwet County was assessed. A sample size of 95 from the target population was used. The study employed a stratified sampling technique for the sub-county and then simple random sampling. Data was analyzed by multiple regressions.

Results: The study found out that the County Government did not support to SMEs in giving loans and these retarded their sales growth in my SME continuously. This was therefore an implication that there was no revenue growth, no increased market share in my SME and little increased return on investment in my SME. Correlation results revealed a significant and positive relationship. However much that financial perspective was a problem , the SMEs in Elgeyo Marakwet County  had tied to increased product quality ,customers  were satisfied on how staff  respond to their grievances in  my SME .Finding from objective three found to be less significant to the performance SMEs, as the county working environment was not aware of their conducive for SME, it was found out that Electronic commerce system were not used by SME  in the County and neither did achieve any social economic goals and that  SME did not increased process capacity. It was found out that HO₁: on relationship between financial perspective and performance. The results rejected the null hypothesis. (β = 0.017, p < 0.847).HO₂: on relationship between customer perspective and performance and the hypothesis was therefore not supported, therefore the hypothesis result was rejected (β = 0.299, p< 0.009).HO₃: There is no significant relationship between internal business perspective and performance. The results accepted the null hypothesis. (β = -0.076, p< 0.500).

Contributions to theory, policy and practice: The study made the following recommendations: - There need for the county government and microfinance institutions to support SMEs financial, that is by offering them cheap, affordable and low interest loan to the resident. There is need for increased product quality in my SME, maintain customer loyalty, increased customer satisfaction pertaining to staff-: customer relationship in my SME and on time deliveries to customers are valued by my enterprise. On internal business perspective on performance in Small and Medium Enterprises. County government should improve good working environment which conducive for SME, there is need for adoption. The study suggests that other study be done to analyze, future research could verify the dimensions developed in this study and to enhance the generalizability of the research findings, future inquiries could employee more diversified samples across genders and diverse international customer environments.