Small and Medium Size Manufacturing Enterprises Growth and Work Ethics in Kenya

Abstract

Developing countries are facing a formidable unemployment challenge due to a combined effect of slow economic growth and rapid increase in population. In Kenya, Economic Recovery Strategy (ERS) estimates that 500,000 jobs would be created annually with 88% of these generated by small and medium size enterprises. Yet, the attrition level is alarming. It has been shown that for every 100 new enterprises started in a year, 60 percent close down within the first year, and those that survive the first year, 40% are likely to close in the second year (Kenya 1998; 1999). The question that begs answers is, why so? One untested theory has been unfair competition and unethical behavior of the small and medium enterprises. This leads to low confidence, and trust and difficulties in sustaining customers as well as establishing long lasting networks. This study explores the extent to which SME’s embrace business work ethic. It seeks to answer questions as to how much the growth of SMEs is affected by work ethics or lack of it. The study employed expost facto survey design among small manufacturing enterprises in Eldoret Municipality with respondents sampled through proportionate random sampling in clusters based on geographical location. This paper measures the perception of the entrepreneurs on the relative importance of ethical practices and social responsibility in business. It goes further to highlight core competencies that can be leveraged to prepare small and medium size manufacturing enterprises engage in ethical practices.