Influence of Financing on Performance of Small and Medium Women Owned Enterprises in Kwale County, Kenya
Keywords:
Access to Capital, Asset Structure, Capital Affordability, Government Finance Programs, Financing
Abstract
Studies done by researchers around the world show women are in entrepreneurship in major towns and rural areas of Africa. Financial institutions have developed various products to boost their entrepreneurial spirit together with government support programmes with an aim to avail credit and increase the success rate of women owned businesses. The study sought to determine the influence of capital on performance of small and medium enterprises owned by women entrepreneurs. The main variables under focus included; access to capital, working capital structure, capital affordability and government finance programs. The study will fill a research gap as there is no known study to have been done in Kwale county. The theoretical framework forming the basis of the study consisted of; resource-based theory, dynamic trade off theory and access to capital theory. A comprehensive literature review was given for each variable and their relationships highlighted. The study adopted a descriptive research design, a population of 2000 and a sample of 600 SME owners. Furthermore, the study used questionnaires for data collection that were hand delivered to respondents after validity and reliability through pilot testing techniques. Data collected was coded, sorted and analyzed by use of simple regression model with the help of Statistical Package for Social Sciences application. The study was conducted in line with ethical requirements by seeking permissions from the university and government institutions before commencement of the study. Data from 501 respondents was analysed representing 83.5% of the sample. The results indicated that access to capital, capital affordability, working capital structure and government finance programs had a positive influence on performance of women owned SMES. The study concluded that for women entrepreneurs to perform well in their business, efforts should put in place to ensure capital is made accessible, affordable while enlightening them on what alternatives sources of capital are available; whether from the government or private sector, for better working capital structure. Finally, the study recommended that studies should be conducted on influence of knowledge, skills and management styles on the performance of women owned SMES in Kwale County.
References
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Mwangi, L. W., Makau, M. S., & Kosimbei, G., (2014). Relationship between capital structure and performance of non-financial companies listed in the Nairobi Securities Exchange, Kenya. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics, 1(2), 72-90.
Nobanee, H., & Abraham, J., (2015). Current assets management of small enterprises, Journal of Economic Studies, 42(4), 549-560
Ochanda, M. M. (2014). Effect of financial deepening on growth of small and medium-sized enterprises in Kenya: A case of Nairobi County. International Journal of Social Sciences and Entrepreneurship
Oluoch, J. O. (2014). An Assessment Of The Impact Of Working Capital Management Practices On The Performance Of Small And Medium Enterprises: A Survey of SMEs in Eldoret Central Business District (Doctoral dissertation, Kisii University).
Orobia, L. A., Byabashaija, W., Munene, J. C., Sejjaaka, S. K., & Musinguzi, D. (2013). How do small business owners manage working capital in an emerging economy? A qualitative inquiry, Qualitative Research in Accounting & Management, 10(2), 127-143
Pais, M. A., & Gama, P. M. (2015).Working capital management and SMEs profitability: Portuguese evidence. International Journal of Managerial Finance, 11(3), 341-358.
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Saglam, N., Kagitci, A., & Buyukipekci, S., (2016).Relationship between Working Capital Management and Profitability in Turkey Industrial Listed Companies, Journal of Modern Accounting and Auditing, 12(3), 147-155.
Saparito, Patrick, Amanda E and Candida B (2013).Bank-firm relationships: Do perceptions vary by gender? Entrepreneurship: Theory and Practice, 37(4): 837-858.
Silva, M. F. C., (2017), Working capital management, performance and financial constraints: the case of German firms (Doctoral dissertation)
Spanish, M. Hassan, I.B & Mugambi, F. (2013).Determinants of Growth for Women Owned and Operated Micro Enterprises: The Case of Garissa, Kenya, International Journal of Business and Commerce, 2(7), 45.
Stephen O. M, Lucy, G., (2013).The effects of capital budgeting techniques on the growth of micro-finance enterprises in Mombasa, International Journal of Science and Research (IJSR)
Tauringana, V., & Adjapong, G., (2013).The relative importance of working capital management and its components to SMEs' profitability, Journal of Small Business and Enterprise Development, 20(3), 453-469.
Thapa, P. D. P. (2013). How does profitability get affected by working capital management in food and beverages industry?. Journal of Advanced Research in Management, 4(2 (8)), 79
Tran, H., Abbott, M., & Jin Yap, C. (2017). How does working capital management affect the profitability of Vietnamese small-and medium-sized enterprises?. Journal of Small Business and Enterprise Development, 24(1), 2-11.
Ukaegbu, B. (2014). The significance of working capital management in determining firm profitability: Evidence from developing economies in Africa. Research in International Business and Finance, 31, 1-16.
Wasiuzzaman, S., (2015).Working capital and firm value in an emerging market. International Journal of Managerial Finance, 11(1), 60-79.
Yazdanfar, D., & Öhman, P., (2015). Debt financing and firm performance: an empirical study based on Swedish data. The Journal of Risk Finance, 16(1), 102-118.
Akindele, J., & Odusina, O., (2015). Working capital Management and firm profitability: Evidence from Nigeria Quoted companies. Journal of Finance and Accounting, 6(7), 148-153.
Aktas, N., Croci, E., & Petmezas, D., (2015). Is working capital management value-enhancing? Evidence from firm performance and investments, Journal of Corporate Finance, 30, 98-113
Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P., (2014).Working capital management, corporate performance, and financial constraints, Journal of Business Research, 67(3), 332-338.
Charitou, M. S., Elfani, M., & Lois, P., (2016).The effect of working capital management on firm's profitability: empirical evidence from an emerging market, Journal of Business & Economics Research (Online), 14(3), 111
Claudiu, B. (2013). The Effect of Working Capital on Profitability: Evidence from Romania, Ovidius University Annals, Series Economic Sciences, 13(1).
Cooper D. and Schindler, P. (2010).Business Research Methods, McGraw-Hill, United Kingdom
Drucker, P. (2014).Innovation and Entrepreneurship: Practice and Principles, Routledge Classics.
Enqvist, J., Graham, M. & Nikkinen, J., (2014).The impact of working capital management on firm profitability in different business cycles: Evidence from Finland. Research in International Business and Finance, 32, 36-49.
Gichuki, C. N., Mulu-Mutuku, M., & Kinuthia, L, N. (2014).Performance of women owned enterprises accessing credit from village credit and savings associations in Kenya. Journal of Global Entrepreneurship Research,
Gul, S., Khan, M. B., Raheman, S. U., Khan, M. T., Khan, M., & Khan, W. (2013). Working capital management and performance of SME sector, European Journal of Business and management, 5(1), 60-68.
Hailu, A. Y., & Venkateswarlu, P., (2016). Effect of working capital management on firm’s profitability evidence from manufacturing companies in Eastern, Ethiopia, Int. J. Appl. Res, 2, 643-647
Hassan, I.B., & Mugambi, F (2013).Determinants of Growth for Women Owned and Operated Micro Enterprises: The Case of Garissa, Kenya, International Journal of Business and Commerce, 2(7), 45.
Iqbal, J. (2015). Impact of working capital management on profitability of the food and personal care products sector in Pakistan (Doctoral dissertation, The Islamia University Of Bahawalpur).
Jindrichovska, I. (2013). Financial management in SMEs, European Research Studies Journal, 16(4), 79-96
JO Maengwe1 and WI Otuya (2015), A Critical Review on Micro-financing of Small Businesses in Kenya, Pyrex Journal of Business and Finance Management Research
Kamunge, M. S., Njeru, A., & Tirimba, O. I., (2014). Factors affecting the performance of small and micro enterprises in Limuru Town Market of Kiambu County, Kenya, International Journal of Scientific and Research Publications, 4(12), 1-20.
Karadag, H. (2015). Financial management challenges in small and medium-sized enterprises: A strategic management approach. EMAJ: Emerging Markets Journal, 5(1), 26-40.
Kinyua, A. N. (2014). Factors affecting the performance of Small and Medium Enterprises in the Jua kali sector in Nakuru Town, Kenya. Journal of Business and Management, 6(1), 5-10.
Kiraka, R.N., Kobia M., & Katwalo A M (2013).Micro, Small and Medium Enterprise Growth and Innovation in Kenya: A case study on the Women Enterprise Fund. Investment Climate and Business Environment Research Fund, 28-82.
Kothari (2010) Research Methodology; Methods and Techniques, 2nd Revised Edition, New Age International Publishers, New Delhi
Kothari C. R. (2004).Research methodology: methods and techniques (2nd Ed.). New Delhi: New Age International limited.
Kumar (2005), Research Methodology: A Step by Step Guide for Beginners, (2nd Ed.). New Delhi: Sage Publication.
Lusayi N, G, Simiyu N, and Robert W, W (2014).Factors Influencing Access to Debt Finance by Micro and Small Enterprises: A Case of Chwele Township, Bungoma County, Jomo Kenyatta University of Agriculture and Technology, Kenya.
Makori, D. M., & Jagongo, A., (2013).Working capital management and firm profitability: Empirical evidence from manufacturing and construction firms listed on Nairobi securities exchange, Kenya. International Journal of Accounting and Taxation, 1(1), 1-14.
García-Teruel, P. J., & Martínez-Solano, P., (2014).Trade credit and SME profitability, Small Business Economics, 42(3), 561-577
Mbiti F, M., Elegwa M, Dr. Joseph M & Dr. Dorothy K (2015), the Influence of Access to Credit on Growth of Women- Owned Micro and Small Enterprises in Kitui County, Kenya, Public Policy and Administration Review.
Mbugua S. K, Dr. Agnes N, Ondabu I. T(2014), Factors Affecting the Performance of Small and Micro Enterprises in Limuru Town Market of Kiambu County, Kenya, Mount Kenya University- Hargeisa Campus Somaliland.
Michello, F. A., & Wanorie, T. O., (2015).Analyzing the Effect of Working Capital Management on the Profitability of Small Size US Healthcare Companies, International Research Journal of Applied Finance, 6(5), 394-406.
Mugenda and Mugenda (2003) Research Methods: Quantitative and Qualitative approaches, Nairobi: Acts Press.
Mutua Mathuva, D. (2014). An empirical analysis of the determinants of the cash conversion cycle in Kenyan listed non-financial firms. Journal of Accounting in Emerging Economies, 4(2), 175-196
Mwangi, L. W., Makau, M. S., & Kosimbei, G., (2014). Relationship between capital structure and performance of non-financial companies listed in the Nairobi Securities Exchange, Kenya. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics, 1(2), 72-90.
Nobanee, H., & Abraham, J., (2015). Current assets management of small enterprises, Journal of Economic Studies, 42(4), 549-560
Ochanda, M. M. (2014). Effect of financial deepening on growth of small and medium-sized enterprises in Kenya: A case of Nairobi County. International Journal of Social Sciences and Entrepreneurship
Oluoch, J. O. (2014). An Assessment Of The Impact Of Working Capital Management Practices On The Performance Of Small And Medium Enterprises: A Survey of SMEs in Eldoret Central Business District (Doctoral dissertation, Kisii University).
Orobia, L. A., Byabashaija, W., Munene, J. C., Sejjaaka, S. K., & Musinguzi, D. (2013). How do small business owners manage working capital in an emerging economy? A qualitative inquiry, Qualitative Research in Accounting & Management, 10(2), 127-143
Pais, M. A., & Gama, P. M. (2015).Working capital management and SMEs profitability: Portuguese evidence. International Journal of Managerial Finance, 11(3), 341-358.
Penrose, E. T. (1959), the theory of the growth of the firm, New York: John Wiley
Ray, K. K. (2014). Efficiency of working capital management and profitability: A case of Hindalco, Review of Knowledge Management, 4(1/2), 19.
Saglam, N., Kagitci, A., & Buyukipekci, S., (2016).Relationship between Working Capital Management and Profitability in Turkey Industrial Listed Companies, Journal of Modern Accounting and Auditing, 12(3), 147-155.
Saparito, Patrick, Amanda E and Candida B (2013).Bank-firm relationships: Do perceptions vary by gender? Entrepreneurship: Theory and Practice, 37(4): 837-858.
Silva, M. F. C., (2017), Working capital management, performance and financial constraints: the case of German firms (Doctoral dissertation)
Spanish, M. Hassan, I.B & Mugambi, F. (2013).Determinants of Growth for Women Owned and Operated Micro Enterprises: The Case of Garissa, Kenya, International Journal of Business and Commerce, 2(7), 45.
Stephen O. M, Lucy, G., (2013).The effects of capital budgeting techniques on the growth of micro-finance enterprises in Mombasa, International Journal of Science and Research (IJSR)
Tauringana, V., & Adjapong, G., (2013).The relative importance of working capital management and its components to SMEs' profitability, Journal of Small Business and Enterprise Development, 20(3), 453-469.
Thapa, P. D. P. (2013). How does profitability get affected by working capital management in food and beverages industry?. Journal of Advanced Research in Management, 4(2 (8)), 79
Tran, H., Abbott, M., & Jin Yap, C. (2017). How does working capital management affect the profitability of Vietnamese small-and medium-sized enterprises?. Journal of Small Business and Enterprise Development, 24(1), 2-11.
Ukaegbu, B. (2014). The significance of working capital management in determining firm profitability: Evidence from developing economies in Africa. Research in International Business and Finance, 31, 1-16.
Wasiuzzaman, S., (2015).Working capital and firm value in an emerging market. International Journal of Managerial Finance, 11(1), 60-79.
Yazdanfar, D., & Öhman, P., (2015). Debt financing and firm performance: an empirical study based on Swedish data. The Journal of Risk Finance, 16(1), 102-118.
Published
2020-09-22
How to Cite
Obiria, L., & Maina, J. (2020). Influence of Financing on Performance of Small and Medium Women Owned Enterprises in Kwale County, Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 2(2), 34-45. https://doi.org/10.35942/ijcfa.v2i2.130
Section
Articles
