The mediating effect of entrepreneurial orientation on the relationship between decision-making and firm performance in Kenya

Abstract

Manufacturing firms are the single greatest contributors to industrialization and economic development. In Kenya, manufacturing firms contribute 14% of gross domestic product, train and employ 30% of the workforce, and develop the country’s industrial infrastructure. However, the sector has experienced sustained poor total factor productivity and waning competitiveness in both domestic and global markets. Manufacturing operations seem to lack the input of entrepreneurial management. The purpose of this study was to establish how entrepreneurial orientation (EO) influences the relationship between decision-making and manufacturing firm performance in Kenya. Eighty-three owners/managers of food manufacturing SMEs were surveyed using a semi-structured self-administered questionnaire, and the collected data analyzed using Statistical Package for Social Sciences (SPSS) version 20 and Smart PLS 3 software’s. The findings show that EO fully mediates the relationship between decision-making and firm performance. The paper concludes that coupling decision-making with EO forms a critical strategy for enhancing firm performance. The study recommends that manufacturing firms should develop and utilize employees’ EO capabilities through such actions as strategic delegation.