Exploring the Effect of Corporate Entrepreneurship on Financial Performance of Firms: Evidence from Kenya’s Manufacturing Firms

Abstract

This paper presents empirical findings of the effect of Corporate Entrepreneurship (CE) on financial performance of manufacturing firms in developing countries. Using a sample of two hundred manufacturing firms (n=200) in Kenya, we hypothesize; 1) Innovativeness has positive effect on financial performance; 2) Risk taking has positive effect on financial performance; 3) Proactiveness has positive effect on financial performance; 4) Competitive aggressiveness has positive effect on financial performance; and 5) Autonomy has positive effect on financial performance. The findings of survey enable acceptance of hypotheses 1, 2, 4 and new hypothesis (Strategic Investments has positive effect on financial performance) generated from factor analysis. Hypotheses 3 and 5 are rejected since their relationships with financial performance are insignificant. These provide three implications; first, out of five CE dimensions, three and Strategic Investments have direct effect with financial performance of firms; and proactiveness and autonomy do not affect financial performance of manufacturing firms. Therefore, it is evident that CE dimensions significantly affect financial performance of firms in Kenya’s manufacturing firms. We recommend that pro-entrepreneurs in developing countries should understand the significances of CE dimensions and effect on financial performance of manufacturing firms.

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