INFLUENCE OF FACTORS OF PRODUCTION ON ESTABLISHMENT OF MSMES IN MTITO ANDEI TOWN COUNCIL, MAKUENI COUNTY - KENYA

Abstract

Development and incubation of MSMEs is one of the most important steps that governments should undertake to accomplish any desired economic reforms and progress, especially for emerging economies. This study deeply appreciates MSME entrepreneurship thus aims to investigate the relationship between entrepreneurial competence, accessibility to financial capital, location factors and labor availability and establishment of MSMEs in Mtito Andei Town Council, Makueni County. The target population of this study comprised of the approximately 500 MSMEs undertaking entrepreneurial functions in the town council, with a sample frame of 20 enterprises in each of food and grocery, retail shops, boutique, salon and beauty, and other quotas of MSMEs in the area of study. Descriptive research design was adopted, with an aim of filling the currently existing knowledge gap through establishment of actual trends, characteristics frequencies and categories of variables in relation to the study topic. Closed questionnaires were used to collect both demographic and study variables, and their reliability and validity was established at pilot test, and testing stages respectively. To collect data, the questionnaire was hand-delivered to the randomly selected respondents and then followed up and collected one week later. The collected data was checked for errors, completed and entered into frequency tables. Descriptive statistics was used to summarize the data collected and presented in the form of tables, frequencies and percentages for ease of understanding and interpretations. Correlation analysis was used to analyze the relationships between establishment of MSMEs and independent variables. The findings showed production factor elements; entrepreneurial competence, business location factors, accessibility to financial capital and labor had significant and positive influence on the establishment of MSMEs. In conclusion, establishment of MSMEs is significantly influenced by factors of production elements: entrepreneurial competence, networking, risk-taking, innovation, leadership, business location, business competition, accessibility to electric power, accessibility to financial capital, availability of credit and donor facilities, wealth and income levels, and labor availability. The study recommended extensive training and coaching of entrepreneurs on business entrepreneurship and boosting of MSME funding Programmes by the government. Comparative study was suggested to have this study expanded to other areas and nations. The researcher also recommends including and taking into account more variables (other components of the factors of production)