Influence of Risk Taking on Performance of Small and Medium Scale Enterprises in Githurai Market, Kenya
DOI:
https://doi.org/10.53819/81018102t5362Abstract
The purpose of this study was to examine the influence of risk-taking on performance of Small and Medium Enterprises (SMEs) in Kenya. The study was guided by specific objectives, with a primary focus on determining how risk-taking behavior affects SME performance. A descriptive research design was adopted, targeting 429 registered SMEs operating within Githurai Market, Kiambu County. The units of analysis were SME managers and senior managers, who were considered knowledgeable about the operations and strategic decisions of their businesses. A sample size of 128 SMEs was selected using stratified random sampling to ensure representation across different business categories. Data was collected through structured questionnaires and analyzed using both descriptive and inferential statistics in SPSS (version 20). Pearson’s correlation and regression analysis were employed to test the relationship between risk-taking and SME performance. The findings revealed that risk-taking had a significant positive influence on key performance indicators, including sales growth, market share, profitability, and customer satisfaction. The study concluded that SMEs in Githurai Market frequently engage in risk-oriented entrepreneurial activities, which substantially contribute to their business success. The study recommends that SME management should prioritize the development and enhancement of structured risk identification mechanisms, as this can strengthen risk management practices and improve overall business performance. Specifically, SMEs should be encouraged to adopt a portfolio approach to risk, where ventures are evaluated and balanced based on their expected return and associated uncertainty. Additionally, capacity-building programs should be implemented to train SME owners and managers on financial risk analysis and decision-making under uncertainty. Policymakers and development agencies should also support SMEs by offering advisory services and incentives that promote strategic risk-taking, ensuring that entrepreneurs are not only bold but also well-informed in their pursuit of growth and competitiveness.
Keywords: Risk Taking, Performance, SMEs, Githurai Market, Kenya
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