b i research findings chapter four (pk yt2 march)

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DECLARATIONThis Research proposal is my original work and has not been presented for a degree in any other University.

Signature ..

Date

Name: Ruth Wanjiru Ruhiu

HD 413-0012/2008

This Research proposal has been submitted for examination with our approval as University supervisors.

Signature .

Date .

Name:Dr. P. Karanja Ngugi JKUAT, KenyaSignature ..

Date .

Name:Dr. Gichuhi A. Waititu

JKUAT, Kenya

ACKNOWLEDGEMENTI thank the almighty God for the far He has brought me.

Special thanks go to my research supervisors at JKUAT, Dr. Karanja Ngugi and Dr. Waititu for their constructive criticism, guidance; knowledge and understanding that equipped me with direction and motivation of this research proposal. My peer review group: Lucy, Juliet, and Bancy for advice and sharing to soldier on.

I also acknowledge the importance of the University library NCBD campus for furnishing me with the adequate reading and research materials with its State of the art computer and internet systems that was necessary for this undertaking.

DEDICATION

To

Ephraim

Denver

Jean

TABLE OF CONTENTSiDECLARATION

iiACKNOWLEDGEMENT

iiiDEDICATION

viLIST OF FIGURES

viiiLIST OF TABLES

ixACRONYMS AND ABBREVIATIONS

xABSTRACT

2CHAPTER ONE

2INTRODUCTION

21.1 Background information

81.2 Statement of the Problem

101.3 Objectives

101.3.1 General Objective of the Study

101.3.2 Specific Objectives

111.4 Research Questions

111.5 Scope of the Study

121.6 Justification of the Study

131.7 Limitations of the Study

131.8 Definition of Terms

15CHAPTER TWO

15LITERATURE REVIEW

152.1 Introduction

162.2 Theoretical Review

162.2.1 Economic Entrepreneurship Theories

182.2.2. Psychological Entrepreneurship Theories

212.2.3 Sociological Entrepreneurship Theory

222.2.4 Resource- Based Entrepreneurship Theories

252.3 Conceptual Framework

272.4 Operationalization of Variables

282.4.1 Managerial skills

302.4.2 Financial resources

312.4.3 Infrastructural Resources

312.4.4 Technological Services

332.4.5 Market Linkages

352.4.6 Individual Incubatee Characteristics

372.4.7 MSEs Growth

402.5 Empirical Review

46CHAPTER THREE

46RESEARCH METHODOLOGY

463.1 Introduction

463.2 Research Design

463.3 Population

473.4 Sampling Technique

513.5 Data Collection Methods

523.6 Pilot study

533.8 Data Analysis

56CHAPTER FOUR

56DATA ANALYSIS, FINDINGS AND DISCUSSION

564.1 Introduction

564.2 Sample Distribution

574.2.2 Response Rate

584.3 Incubatees Profile

584.3.1 Gender of incubatees

594.3.2 Age of incubatees

614.3.3 Incubatees Marital Status

4.3.4 Level of formal Education..62

4.3.5 Nature of Business..63

4.3.6 Business Ownership64

4.3.7 Age of Business654.4 Managerial Skills.68

4.5 Assess to Finance 70

4.6 Infrastructural Facilities ..73

4.7 Incubator Technological Services....75

4.8 Incubator Market Linkages 77

4.9 Incubatee Characteristics....79

4.1.0 Incubation Growth Effects..81

REFERENCES 83APPENDICES .93Appendix 1: Letter of Introduction93

Appendix 2: Questionnaire94Appendix 3: Budget estimates ..103Appendix 4: Work plan. 104LIST OF FIGURESFigure: 2.1 Conceptual Framework...22Figure: 2.2 Enterprise lifecycle model...31Figure: 4.3.2 Gender of Incubatees . 67

Figure: 4.3.5 Nature of Business .72

Figure: 4.3.6 Business Ownership .. 73

LIST OF TABLESTable 1.1 Number of persons engaged in the informal sector by Province,

2006-2010 ...........2

Table 2.1 Types of Business Development Services .25Table 3.1 Sampling Matrix .45Table 3.2 Sample of the study .45Table: 3.3 Sampling Frame . 48

Table: 4.1 Response Rate 65

Table: 4.3.3 Incubatees Marital Status 70

Table: 4.3.4 Level of Formal Education .. 71Table: 4.5 Age of Business .. 74

Table: 4.6 Managerial Skills 75

Table: 4.7 Access to Finance ... 78

Table: 4.8 Infrastructural facilities ... 80

Table: 4.9 Incubator Technological Services ... 83

Table: 4.10 Incubator Market Linkages .85

Table: 4.11 Incubatee Characteristics .. 87

Table: 4.12 Incubator Growth Effects .. 89ACRONYMS AND ABBREVIATIONSBI Business Incubators

BIAK Business Incubation Association of Kenya

DEC Department of Commerce DFID Department For International DevelopmentGoK Government of Kenya

InfoDev Information for Development programKIRDI Kenya Industrial Research Development Institute

LDCs Less Developed Countries MDGs Millennium Development Goals

MSEs Micro and Small Enterprises

NBIA National Business Incubation Association

TBIs Technology Business Incubators

SBA Small Business Administration

SEs Small Businesses

SSE Small Scale Enterprises

SPSS Statistical Package for Social Science

RoK Republic of Kenya

USA United States of America

ABSTRACTMicro and Small businesses are key players in Kenyas economy. Historically, the research focus has been on small businesses that failed rather than those which have thrived. While small businesses have been susceptible to high failure rates, there exists resurgence in the survivability of small businesses. Small businesses are now succeeding at unprecedented rates. One of the reasons for this paradigm shift can be attributed to the advent of business incubators. In Kenya business incubation is gaining prominence in Government policy, private sector and the academia. This study seeks to shed light about the effects of business incubation in Kenya specifically on the growth of the Micro and Small enterprises. Our literature search revealed that, to date, very little research has been conducted on the effects of business incubation on the growth of Small Enterprises in Kenya. The research design will be descriptive resulting in both qualitative and quantitative data. A sample of 127 incubatee businesses from the target population of 189 government, private and institutional incubator businesses in Nairobi County will be selected using systematic random sampling. For data collection, a 5 point Likert scale questionnaire will be administered to the incubatees as well as open- ended questions to incubator managers. A pilot test will also be carried out to test the validity and reliability of the research instruments. Data will be tabulated and analyzed using descriptive statistics and multiple regression analysis to show the relationship between the independent variables as well as their effects on the dependent variable. Statistical package for social science (SPSS) version 19 will be used in data analysis.CHAPTER ONEINTRODUCTION

1.1 Background informationThe study seeks to find out the effects of business incubation on the growth of micro and small enterprises. The role of micro and small enterprise (MSE) development in contributing to poverty reduction and the general achievement of Millennium Development Goals (MDGs) has widely been recognized the world over ( Beck, 2005). For example it has been argued that a dynamic and growing MSE sector can contribute to the achievement of a wide range of development objectives, including: the attainment of income distribution and poverty reduction (DFID, 2000); creation of employment (Daniels, 1994,); provision of the seedbed of industrialisation (World Bank, 2004); savings mobilisation (Beck, 2005); and production of goods and services that meet the basic needs of the poor (Cook and Nixson, 2005).

The Kenya Government has widely recognized that Micro and Small enterprises (MSEs) play a very important role in economic growth and development of a country, (RoK, 2005). In reaction to this, The Kenya Government plan of action is to develop mechanisms to promote business incubation for the small enterprise sector as a strategy to enhance skills and technological capacity (RoK, 2005). In this connection Kenyas vision 2030 flagship projects plans are ready to establish Konza city popularly referred to as silicon savannah. In addition, 47 MSE parks will be established in all counties in Kenya (RoK, 2005). The main reason for this is that in Kenya, employment within the MSEs accounted for 74.2% of total employment and contributes up to 18.4% of the countrys gross domestic product. However, in Kenya like in many developing countries, the survival rate for start-up business is only between 10-20% (Kekobi, 2005).Micro and Small Enterprises (MSEs) play an important role in the development of a country. MSEs contribute to the economic development in various ways: creating employment for the rural and urban labour force; providing desirable sustainability and innovation in the economy as a whole. MSEs have their significant effect on the social income distribution, tax revenue, and employment, efficient utilization of resources and stability of the family income (Fida, 2008). In Support of these sentiments, the table below shows MSEs sector employment levels in Kenya.Table 1.1 Number of persons engaged in the informal sector by Province, 2006-2010

000

Province20062007200820092010

NairobiCentral

Nyanza

Western

Rift Valley

E

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