An exploratory study of critical success factors for SMEs in Kenya

Jacqueline Douglas, Alexander Douglas, David Muturi, Jackie Ochieng


Purpose: 70% of Small-to-Medium sized enterprises (SMEs) in Kenya fail within their first three years of existence. This paper reports the findings of a study of Kenya SMEs aimed at identifying critical success factors and barriers to their success.

Methodology:A comprehensive literature review identified variables previously identified from international research and a questionnaire was designed to survey a sample of Kenya SME owner / senior managers, selected from the Kenya Institute of Management (KIM) SME membership database, to determine their views on which factors were critical to their success.

Findings: Respondents identified maintaining good relationships with customers, having a good product or service, having good marketing skills and creating a brand customers can associate with as the critical success factors. The main barriers to success were identified as high taxes, too much government regulation and corruption in municipal government.

Practical implications: From an owner/ manager perspective there is a need for them to have good marketing skills and to use them to market their goods and services. Customer relationship management (CRM) is also important for repeat purchases. Government has also an important part to play in tackling corruption and ensuring that policies and regulations are in place to create a business climate favourable to SMEs success.

Originality/value: There are many research papers that examine the impact of one or several variables that impact the success or otherwise of SMEs. However, this is one of the few surveys that has examined so many variables simultaneously and within a Kenya context.


SMEs; survival; sustainability; Kenya; success factors

Full Text:



Akinboade, O.A. (2015). “Determinants of SMEs growth and performance in Cameroon’s central and littoral provinces’ manufacturing and retail sectors”. African Journal of Economic and Management Studies, 6(2): 183-196.

Asah, F., Fatoki, O.O., Rungani, E. (2015). “The impact of motivations, personal values and management skills on the performance of SMEs in South Africa”. African Journal of Economic and Management Studies, 6(3): 308-322.

Asamoah, E.S. (2014). “Customer based brand equity (CBBE) and the competitive performance of SMEs in Ghana”. Journal of Small Business and Enterprise Development, 21(1): 117-131.

Berry, A.J., Sweeting, R., Goto, J. (2006). “The effect of business advisers on the performance of SMEs”. Journal of Small Business and Enterprise Development, 13(1): 33-47.

Chu, H.M., Benzing, C., McGee, C. (2007). “Ghanain and Kenyan Entrepreneurs: A comparative analysis of their motivations, success characteristics and problems”. Journal of Developmental Entrepreneurship, 12(3): 295-322.

Fatoki, O., Garwe, D. (2010). “Obstacles to the growth of new SMEs in South Africa: A principal component analysis approach”. African Journal of Business Management, 4(5): 729-738.

Heskett, J.L., Jones, T.O., Loveman, G.W., Sasser, Jr, W.E., Schlesinger, L.A. (1994) “Putting the service-profit chain to work”. Harvard Business Review, 72(2): 164-174.

Ibrahim, M.A., Shariff, M.N.M. (2016). “Mediating role of access to finance on the relationship between strategic orientation attributes and SMEs performance in Nigeria”. International Journal of Business and Society, 17(3): 473-496.

Kakuru, J. (2008). “The supply-demand factors interface and credit flow to small and micro enterprises (SMEs) in Uganda”. PhD thesis, Stirling University, Scotland.

Kenya Institute for Public Policy Research and Analysis. (2014). Kenya Economic Report 2014, KIPPRA, Nairobi, Kenya.

Kenya National Bureau of Statistics. (2013). Economic Survey, KNBS, Nairobi, Kenya.

Kesper, A.P. (2001). “Making a living in the city, success and failure of small enterprise in the Johannesburg Inner City”. Africa Insight, Special Issue: 50-58.

Lau, G.T., Lim, J.W.B. (1996). “An exploratory study of factors affecting the failure of local small and medium enterprises”. Asia Pacific Journal of Management, 13(2): 47-61.

Matalemwa, D.K. (2015). “Does globalization impact SME development in Africa?”. African Journal of Economic and Management Studies, 6(2): 164-182.

Mutandwa, E., Taremwa, N.K., Tubanambazi, T. (2015). “Determinants of Business Performance of Small and Medium Size Enterprises in Rwanda”. Journal of Developmental Entrepreneurship, 20(1): 1550001-1–1550001-12.

Neshamba, F. (2000). Growth and transformation in small business in Kenya. Nottinham, Nottingham Trent University, UK.

Nieman, G., Hough, J., Nieuwenhuizen, C. (2003). Entrepreneurship: A South African Perspective, Van Schaik, Pretoria, South Africa.

Nuwagaba, A. (2012). The role of financial deepening in enhancing financial sector deepening and sustainability. Institute of Corporate Governance of Uganda (ICGU), Kampala, Uganda.

Odd-Helge, F., Kolstad, I., Nygaard, K. (2006). Bribes, taxes and regulations: business constraints for micro enterprises in Tanzania. Christian Michelsen Institte (CMI), Working paper, No.2.

Oertel, S., Walgenbach, P. (2012). “The effect of partner exits on survival chances of SMEs”. Journal of Organisational Change Management, 25(3): 462-482.

Orwa, B. (2007). Jua Kali Associations in Kenya: A Force for Development and Reform. Case Study No. 0701, Centre for International Private Enterprise, Washington D.C, USA, available at, accessed 03/07/2017.

Pansiri, J., Temtime, Z.T. (2010). “Linking firm and managers’ characteristics to perceived critical success factors for innovative entrepreneurial support”. Journal of Small Business and Enterprise Development, 17(1): 45-59.

Pratt, V. (2001) Sharing Business Skills in Kenya. Center for International Private Enterprise, Washington D.C., USA.

Rabie, C., Cant, M.C., Wiid, J.A. (2016). “Training and Development in SMEs: South Africa’s Key to Survival and Success?”. The Journal of Applied Business Research, 32(4): 1009-1023.

Rajan, R., Zingales, L. (1995). “What do we know about capital structure? Some evidence from international data”, Journal of Finance, 50(5): 1421-1460.

Sandberg, K.W. (2003). “An exploratory study of women in micro enterprises: gender-related differences”. Journal of Small Business and Enterprise Development, 10(4): 408-417.

Saunila, M. (2016). “Performance measurement approach for innovation capability in SMEs”. International Journal of Productivity and Performance Management, 65(2): 162-176.

Simpson, M., Padmore, J., Newman, N. (2012). “Towards a new model of success and performance in SMEs”. International Journal of Entrepreneurial Behavior & Research, 18(3): 264-285.

Simpson, M., Tuck, N. Bellamy, S. (2004) “Small business success factors: the role of education and training”. Education and Training, 46(8/9): 481-491.

Sohail, M.S. and Hoong, T.B. (2003). “TQM practices and organizational performanceof SMEs in Malaysia”. Benchmarking: An International Journal, 10(1):37-53.

Svensson, J. (2003). “Who must pay bribes and how much? Evidence from a cross-section of firms”. Quarterly Journal of Economics, 118(1): 207-230.

Teng, H.S.S., Bhatia, G.S., Anwar, S. (2011). “A success versus failure prediction model for small businesses in Singapore”. American Journal of Business, 25(1): 50-64.

Tumwine, S., Akismire, R., Kamukama, N., Mutaremwa, G. (2015). “A borrowing cost model for effective performance of SMEs in Uganda”. World Journal of Entrepreneurship, Management and Sustainable Development, 11(2): 74-89.

Urban, B., Naidoo, R. (2012). “Business sustainability: empirical evidence on operational skills in SMEs in South Africa”. Journal of Small Business and Enterprise Development, 19(1): 146-163.

World Bank. (2017) Doing Business. Available at, accessed 02/07/2017.

Yazdanfar, D., Öhman, P. (2014). “Life cycle and performance among SMEs: Swedish empirical evidence”. The Journal of Risk Finance, 15(5): 555-571.


  • There are currently no refbacks.