Influence of Subcontract Offering on the Performance of Manufacturing Micro and Small Enterprises in Kenya

Abstract

This study set out to investigate the influence of intensity of participation in subcontract offering on the performance of manufacturing micro and small enterprises (MSEs) in Kenya.The study used an exploratory research design targeting a population of 2450 MSEs from Kamukunji 'JuaKali' Association, Nairobi Kenya.A random sample of 180 firms returned 175 (97.2%) valid responses.Survey data was collected with a semistructured questionnaire through face-to-face interviews.A pilot test on 20 firms helped to improve the instrument while the Principal Component Analysis (PCA) method extracted the factors with reliability cut-off value of 0.70.Factors loadings that were less than 0.40 were discarded.Descriptive statistics presented the responses in means and standard deviations.To sharpen inferences, ordinal regression analysis was performed using the Polytomous Universal Model (PLUM) of SPSS for Windows 19 location-scale model.Response frequencies of firm performance, ordered in 5-part Likert-type categories, were positively skewed, thus,the negative log-log link function was used.Model fitting information provided log likelihood ratio tests for the null hypothesis that the independent variable was statistically equal to zero.The study found that the intensity of participation in subcontract offering influences firm performance, positively and significantly.

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