European Journals of Business Management

CHALLENGES FACING BUSINESS LINKAGES BETWEEN SMALL AND MEDIUM ENTERPRISES AND MOBILE TELEPHONE COMPANIES IN KENYA

Sony Anangasa Musundi
Jomo Kenyatta University of Agriculture and Technology
KENYA    

Dr. Kennedy Ogollah
Jomo Kenyatta University of Agriculture and Technology
KENYA

CITATION: Musundi, A. S & Ogollah, K. (2014). Challenges facing business linkages between small and medium enterprises and mobile telephone companies in kenya. European Journal of Business Management, 1 (11), 298-318.

ABSTRACT

The SME sector in Kenya is faced with many challenges and constraints including linkages with large enterprises. Business linkages give SMEs the opportunity to participate as suppliers, distributors or retailers in commercial value chains which can help increase local job and wealth creation, enhance skills and capacity, add purchasing power and generally stimulate economic activity and development-contributing in the process, to quality of life. Despite the critical roles played by the business linkages in distributor SMEs in the mobile telephone industry in Kenya, they have been experiencing challenges leading to low- performance or non-compliance with agreed terms. The study aimed to explore the challenges facing business linkages between SMEs and Mobile   telephone companies in Kenya. The study used a descriptive research design to ascertain and be able to describe the characteristics of the variables of interest in a situation. Descriptive design helped in collection of qualitative and quantitative data to determine challenges facing business linkages between SMEs and Mobile   telephone companies in Kenya. The population of this study was 164 Small and Medium enterprises. Fisher   formula and simple random sampling technique were used to select the sample size of 114 respondents. Self-administered questionnaire were used to collect primary data. Quantitative data collected was analyzed by the use of descriptive statistics means, standard deviations and frequencies. Qualitative data was analyzed using content analysis and presented in prose form. Inferential statistics correlation and regression were conducted to establish the relationship between challenges facing SMEs and business linkages between SMEs and Mobile telephone companies in Kenya. The study revealed that failure by SMEs to understand the technological market, ineffective network among the SMEs, poor intra-organizational as well as inter-organizational skills; small size of the market, low market technology and lack of knowledge on target market hinders enterprise linkage ability. Lack of information on market products, poor market accessibility and customer contacts also hinder SMEs linkages. The study concludes that business linkages between SMEs and mobile phone companies  constraints due to lack of skills, technology and finance as well as a high costs incurred. The study concludes that engagement of mobile phone with local SMEs is a salutary lesson for SMEs that there is an onus on SMEs that want the access to expertise, access to markets, especially international markets, and access to technology. Firms have to take responsibility for them to take advantage of the benefits of business linkages and aim at achieving standards. Linkages with other firms help SMEs to learn new and better production methods and can help to increase SME employment. Recommendation to management in organizations on the challenges related to the lack of accessibility of funds, market capacities, information and the cost are simplified as follows. SMEs should be encouraged to enter into closer relationships with large mobile phone companies as they can have the potential of having effective business linkages. Recognizing that access to finance is a perennial problem for SMEs business linkages, the firm’s management needs to seek out better ways to have access to fund to the existing business linkage. Developing a strategy to face the challenge of SMEs business linkages is important to win contracts and when they do have difficulties sustaining acceptable performance levels is achieved.


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