The Impact of Business Development Services on Entrepreneurial Orientation and Performance of Small and Medium Enterprises in Kenya


  • Washington Oduor Okeyo University of Nairobi, Kenya



Key words, Business Development Services, Entrepreneurial Orientation, Mediation, Small and Medium Enterprises, Performance


This study examined the influence of business development services on entrepreneurial orientation and performance. The study analyzed a total of 97 small and medium enterprises in Kenya out of a sample of 150 organizations. Data was collected in Nairobi county through a combination of drop and pick methods. Cronbach’s alpha was used to measure reliability of the instrument during a pilot phase of the study. The collected data was analyzed in Statistical Package for Social Sciences using descriptive, correlation and multiple linear regressions techniques. The results show that there is a positive relationship between business development services and performance. They also demonstrate that business development services affect entrepreneurial orientation of the studied firms. However, the results indicate that entrepreneurial orientation does not mediate the relationship between business development services and performance. In conclusion, the firms studied and their similar counterparts should strive to access and use business development services. They should also adopt entrepreneurial inclination to improve how business development services may assist them achieve better performance. Recommendations and areas for further studies are also suggested.   

Author Biography

Washington Oduor Okeyo, University of Nairobi, Kenya

Department of Business Administration,School of Business



Achcaoucaou, F., Bernardo, M., and Castan, J.M. (2009). Determinants of Organizational Structures: An Empirical Study. Review of International Management. Vol. 10 (3) pp. 566-577.

Atieno, R. (2012). Gender, Institutions, Access to Finance and Development of Small and Medium Enterprises in Kenya. A Draft Paper submitted to the 2012 CSAE conference on economic development, Oxford, March 18-20.

Ayyagari, M., Beck, T., and Demirgüç-Kunt, A. (2003). Small and Medium Enterprises Across the Globe: A New Database. World Bank Policy Research Working Paper 3127. Retrieved from : http://www. New Ventures, Second edition. Prentice Hall, Pearson International Edition.

Baron, M. R. and Kenny, D. A. (1986). The Moderator-Mediator variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social Psychology. Vol. 51(6) 1173-1182.

Beck, T., Demirguc-Kunt, A. and Levine, R. (2005). SMEs, Growth, and Poverty: Cross-Country Evidence. Journal of Economic Growth. 10, 199-229.

Bisbe, J. and Oakley, D. (2004). The Effects of the Interactive use of Management Control Systems on Product Innovation. Accounting, Organizations & Society Journal 29, 709-737.

Burns, T., and Stalker, G. (1961). The Management of Innovation. London: Tavistock.

Brijlal, P. (2008). Business Development Service: Addressing the Gap in the Western Cape, South Africa. International Business and Economics Research Journal, 7(9), 49-56.

Caniels, M.C.J., Romijn, H. A., and De-Wilt, M.R (2003). Can Business Development Services Practitioners Learn from Theories on Innovation and Services Marketing? Working Paper 03.07. Technische Universiteit Eindhoven, The Netherlands

Cochran, W. G. (1977). Sampling Techniques. (3rd ed.). New York: John Wiley & Sons.

Covin, J. G. and Slevin, D.P. (1989). Strategic Management of Small Firms in Hostile and Benign Business Environments. Strategic Management Journal. 10(1), 75-87.

Edgecomb, E., and Thetford, T. (2010). Focused Growth on Scaling Business Development Services in the United States. Findings Report from Field. Aspen Institute, USA. ISBN: 0-89843-523-5

Esim, S. (2000). International Center for Research on Women: See how they Grow – Business Development Services for Women’s Business Growth, International Center for Research on Women. Washington DC 20036, USA.

Fatoki, O. (2012). Entrepreneurial Orientation, Debt Finance and Performance of Small and Medium Enterprises in South Africa. Journal of Social Science. 32(2) 121-131.

Frank, H., Kessler, A., and Fink, M. (2010). Entrepreneurial Orientation and Business Performance – A Replications Study. Small Business Review. (6) 175 -198.

Gathenya, J. W., Bwisa, H. M. and Kihoro, J. M. (2011). Interaction between Women Entrepreneurs Age and Education on Business Dynamics in Small and Medium Enterprises in Kenya. International Business Journal of Business and Social Science. Vol. 2, No. 15, 265-272.

Hughes, M., and Morgan, R. E. (2007). Deconstructing the relationship between entrepreneurial orientation and business performance at the embryonic stage of firm growth. Industrial Marketing Management, 36(5): 651–661.

Jensen, M. and Mecking, W. (1976). The Theory of the Firm: Managerial Behaviour, Agency Costs, and Ownership Structure. Journal of Economics. Vol. 3: 305-360.

Kenny, D. A. (2014). Mediation. From < http: // > (Retrieved June 22, 2014).

Kenya Association of Manufaturers (2012). Kenya Manufacturers and Exporters Directory. Nairobi: Kenya Association of Manufacturers.

Kimando, L.N., Sakwa, M and Njogu, G.W (2012). Impact of Business Development Services on Enterprises in Kenya. A Case Study of Micro Small and Medium Enterprises in Muranga, Town. International Journal of Business and Commerce. Vol 1. (9) pp 149-165.

Lawrence, P., and Lorsch, J. (1967). Organization and Business Environment. Boston: MA.: Harvard Business Press.

Lumpkin, G.T., and Dess, G.G. (1996). Clarifying the Entrepreneurial Orientation Construct and Linking it to Performance. Academy of Management Review. 21, 135-172.

Machuki, V. N. (2011). External Business Environment Strategy Co Alignment, Firm Level Institutions and Performance of Publicly Quoted Companies in Kenya. (Unpublished PhD Thesis) University of Nairobi, Kenya.

McCormick, D. (1999). Africa Enterprise Clusters and Industrialization: Theory and Reality. World Development. 27( 9), 1531-1551.

McVay, M. and Miehlbradt A.O. (2002). ‘Background reader, Business Development Services’, 3rd annual BDS Seminar, Turin, Italy, 9-13 September 2002.

Mehta, M., Virjee, K., Evans, B. and Wathobio, K. (2007). Business Development Services for Community Managed Small Water Enterprises. Water Sanitation Program: Nairobi Kenya.

Miehlbradt, A. O and McVay, M (2003). Small Enterprise Development Programme of the International Labour Organization. International Training Center of ILO, Turin, Italy

Miller, D. (1983). The Correlates of Entrepreneurship in Three Types of Firms. Management Science. 29, 770–791.

Moreno, A. M. and Casillas. J.C. (2008). Entrepreneurial Orientation and Growth of SMEs: A Causal Model. Entrepreneurship Theory and Practice. 33(3): 507-528.

Nelson, C. (1997). Training Goes to Market: A Comparative Study of Two Kenyan Training Programs. MBP Publications, Bethesda, Maryland: DAI.

Nunnally, J.C. and Bernstein, I.H. 1994. Psychometric Theory, 3rd edition, McGraw-Hill, New York, New York.

Omar, S. S., Arokiasamy, L. and Ismail, M. (2009). The Background and Challenges Faced by Small and Medium Enterprises: A Human Resource Development Perspective. International Journal of Business Development and Management. Vol. 4, No. 10.

Otenyo-Matanda, M. (2008). Entrepreneurial Orientation and Access to New Markets by Small Scale Earthenware Manufacturers in Kenya. A Research Report Funded by Investment Climate and Business Environment Research Fund. TrustAfrica, Kenya.

Penrose, E. T. (1959). The Theory of the Growth of the Firm. New York: John Wiley.

Parker, S. K. (2007). `That is my job': How Employees' Role Orientation Affects their Job Performance. Human Relations. 60(3): 403-434.

Pett, T. L. and Wolff, J.A. (2010). SME Performance: The Role of Learning Orientation and Its Relationship to Market Orientation and Entrepreneurial Orientation. Journal of Small Business Management, Retrieved from http://www.icsb.oro on May 25, 2012.

Pfeffer, J. and Salancik, G. R. (1978). The External Control of Organizations. New York: Happer and Row.

Raymond, L., Bergeron, F., and Blili, S. (2005). The Assimilation of E-Business in Manufacturing SMEs: Determinants and Effects on Growth and Internalization. Journal of Electronic Markets Vol. 5(2) pp 106 – 118. Retrieved from DOI 10.1080/10196780500083761

SEEP (2000). SEEP Guide to Business Development Services and Resources. Retrieved from on 2nd September 2012.

Thompson, J. D. (1967). Organizations in Action. New York: McGraw-Hill.

Ulrich, D (1984). Specifying External Relations: Definition of and Actors in an Organization’s Environment. Journal of Human Relations. Vol. 37 (3) 245-262

UNCTAD (2005) United Nations Conference on Trade and Development. Improving the Competitiveness of SMEs through enhancing productive capacity. World Investment Reports - Proceedings of four expert meetings, New York and Geneva.

Van der Ree, K (2003). The role of Small Business Associations in Business Development Services Provision in Ghana. Background paper for presentation to IFP/SEED, ILO.

Venkatraman, N. and Ramanujam, V. (1986). “Measurement of Business Performance in Strategy Research: A Comparison of Approaches”. Academy of Management Review. 1(4): 801-814.

Wanjau, K., Macharia, R.N. and Ayodo, E.M.A. (2007). Factors Affecting Adoption of Electronic Commerce among Small and Medium Enterprises in Kenya: A Survey of our and Travel firms in Nairobi. International Journal of Business, Humanities and Technology. Vol. 2(4) pp 71-91.

Wiklund, J. and Shepherd, D. (2003). Knowledge-Based Resources, Entrepreneurial Orientation, and the Performance of Small and Medium-Sized Businesses. Strategic Management Journal. 24, 1307- 1314.

World Bank. (2004). Review of Small Business Activities. Washington DC: USA.

Yusof, M., Sandhu, M.S. and Jani, K. K. (2007). Relationship between Psychological Characteristics and Entrepreneurial Inclination: A Case Study of Students at University Tun Abdul Razak. Journal of Asia Entrepreneurship and Sustainability. Vol. III (2).

Zainol, F. A. and Ayadurai, S. (2011). Entrepreneurial Orientation and Firm Performance: The Role of Personality Traits in Malay Family Firms in Malaysia. International Journal of Business and Social Science. 2 (1), 59-71.