RELATIONSHIP BETWEEN GOVERNMENT REGULATIONS AND ENTREPRENEURIAL ORIENTATION OF SMALL AND MEDIUM ENTERPRISES IN KENYA LAWRENCE NJOGU KIMANDO DOCTOR OF PHILOSOPHY (Entrepreneurship) JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY 2015 Relationship between Government Regulations and Entrepreneurial Orientation of Small and Medium Enterprises in Kenya Lawrence Njogu Kimando A thesis submitted in partial fulfilment for the degree of Doctor of philosophy in Entrepreneurship in the Jomo Kenyatta University of Agriculture and Technology 2015 DECLARATION This thesis is my original work and has not been presented for a degree in any other University. Signature: _____________________________ Date: ___________________ Njogu Kimando This thesis has been submitted for examination with our approval as University supervisors. Dr. Kenneth Lawrence Wanjau Karatina University, Kenya. Signature: ____________________ Date: ___________________ Dr. Maurice Sakwa JKUAT, Kenya. Signature: ______________________ Date: ___________________ Prof. John M. Kihoro The Cooperative University College of Kenya Signature: ______________________ Date: ___________________ xix DEDICATION To Grace, Jimmy, Sharon, Valentine and Shiku xx ACKNOWLEDGEMENTS I thank God for enabling me carry out this research successfully. I most sincerely thank the University, my supervisors, Dr. Kenneth Lawrence Wanjau, Dr. Maurice Sakwa and Prof. John. M. Kihoro for their patience, encouragement, guidance and positive criticism. I also wish to acknowledge Samuel Mburu, Githira, Muriu and Ephantus the research assistants who patiently worked with me during the data collection phase. Mrs. Kibuthu and Eunice thank you for your support and may God in heaven rewards you all according to His riches in glory. I salute my wife Grace for her continued encouragement and prayers during the PhD study program period; son Jimmy and daughters Sharon Wanjiru, Valentine Wanjiru and Shiku for all their understanding during this study period. May the Almighty God bless you in a unique way and surely, Lord‘s goodness and mercy shall follow you all the days of your life. xxi TABLE OF CONTENTS DECLARATION ................................................................................................... XIX DEDICATION ........................................................................................................ XX ACKNOWLEDGEMENTS .................................................................................. XXI LIST OF TABLES ........................................................................................... XXVII LIST OF FIGURES ............................................................................................ XXX LIST OF APPENDICES .................................................................................... XXXI LIST OF ABBREVIATIONS AND ACRONYMS ....................................... XXXII DEFINITION OF TERMS ............................................................................. XXXIII CHAPTER ONE ......................................................................................................... 1 INTRODUCTION ...................................................................................................... 1 1.1 BACKGROUND OF THE STUDY ......................................................................... 1 1.1.1 Global Perspective of Government Regulations ....................................... 8 1.1.2 Government Regulations in Kenya .............................................................. 9 1.1.3 Pub, Entertainment and Restaurant Association of Kenya (PERAK) .. 10 1.2 STATEMENT OF THE PROBLEM ...................................................................... 11 1.3 OBJECTIVES OF THE STUDY .......................................................................... 13 1.3.1 General Objective ................................................................................. 13 1.3.2 Specific Objectives ............................................................................... 13 1.4 HYPOTHESES OF THE STUDY ......................................................................... 13 1.5 JUSTIFICATION OF THE STUDY ...................................................................... 14 1.6 SIGNIFICANCE OF THE STUDY ...................................................................... 15 1.7 SCOPE OF THE STUDY .................................................................................. 15 1.8 LIMITATIONS OF THE STUDY ......................................................................... 16 CHAPTER TWO ...................................................................................................... 17 LITERATURE REVIEW ........................................................................................ 17 2.1 INTRODUCTION ............................................................................................. 17 xxii 2.1.1 Entrepreneurial Orientation Concept ...................................................... 17 2.1.2 Alcohol Act .......................................................................................... 18 2.2 THEORETICAL FRAMEWORK ........................................................................ 20 2.2.1 Multidimensional Model of Entrepreneurship ........................................ 21 2.2.2 Market Orientation Theory ..................................................................... 23 2.2.3 Need for Achievement ............................................................................ 24 2.2.4 Parker‘s Theory of Proactive .................................................................. 24 2.2.5 Schumpeter Theory of Innovation ............................................................ 25 2.2.6 Stage Models of Standardization (D-S-N Model) ................................ 26 2.3 CONCEPTUAL FRAMEWORK .......................................................................... 28 2.4.1 Entrepreneurial Training ..................................................................... 30 2.4.2 Marketing Activities............................................................................ 32 2.4.3 Product Standardization .......................................................................... 34 2.4.4 Entrepreneurial competencies .............................................................. 35 2.4.5 Technology Adoption ............................................................................. 36 2.5 EMPIRICAL REVIEW ..................................................................................... 39 2.6 CRITIQUE OF EXISTING LITERATURE RELEVANT TO THE STUDY ................. 41 2.7 RESEARCH GAPS .......................................................................................... 44 2.8 SUMMARY ................................................................................................... 46 CHAPTER THREE ................................................................................................. 47 RESEARCH METHODOLOGY ........................................................................... 47 3.1 INTRODUCTION ............................................................................................ 47 3.2 RESEARCH DESIGN ...................................................................................... 47 3.3 TARGET POPULATION OF THE STUDY........................................................... 47 3.4 SAMPLING FRAME ....................................................................................... 48 3.5 SAMPLE AND SAMPLING TECHNIQUE ............................................................ 49 3.6 DATA COLLECTION INSTRUMENTS .............................................................. 51 3.6.1 Instruments.............................................................................................. 51 3.6.2 Measurement of Variables ................................................................... 52 3.6.3 Operationalization and Measurement of Variables ................................ 53 xxiii 3.6.4 Marketing activities ................................................................................ 53 3.6.5 Product standardization ........................................................................ 54 3.6.6 Entrepreneurial competencies ................................................................. 54 3.6.7 Technology adoption ............................................................................ 55 3.6.8 Entrepreneurial Training ...................................................................... 55 3.6.9 Entrepreneurial Orientation .................................................................. 55 3.7 PILOT TEST .................................................................................................. 57 3.7.1 Validity of Data Collection Instruments ................................................. 57 3.7.2 Reliability of Data Collection Instruments ............................................. 59 3.8 DATA COLLECTION PROCEDURE .................................................................. 60 3.9 DATA ANALYSIS AND PRESENTATION ......................................................... 60 3.9.1 Basic Statistical Assumptions .................................................................. 62 CHAPTER FOUR .................................................................................................... 64 RESEARCH FINDINGS AND DISCUSSIONS .................................................... 64 4.1 INTRODUCTION ............................................................................................