Effect of Managers Emotional Intelligence on Performance of Small and Micro - Enterprises in Nakuru East Sub-County, Kenya

Abstract

Small and micro enterprises (SMEs) have strong influence on the economies of many countries. In Kenya, SMEs play a key role in economic development including job creation. In 2014, eighty percent (80%) of jobs created were dominated by these enterprises. SMEs are the core business units in Kenya, however many of them do not progress to maturity implying poor performance. Performance of any organization is dependent on the competence of its leaders or managers. Studies that have sought to investigate the link between managerial capacities and performance have largely focused on their knowledge and technical skills and the impact of emotional intelligence on the performance of managers with regard to SME’s in Kenya has remained unknown. This study thus sought to investigate effects of emotional intelligence of managers on performance of SMEs in Nakuru East Sub-County, Kenya. This study was anchored on the Mixed Model Approach of Emotional Intelligence which is pegged on five dimensions: Self-Awareness, Self-Regulation, Self-Motivation, Social Awareness and Social Skills. The researcher used descriptive design to carry out the study. This study targeted SME’s conducting their businesses in Nakuru, East Sub-County, Kenya. The target population was 800 small and micro-sized enterprises’ in Nakuru East Sub-County, Systematic random sampling technique was used to obtain a representative sample of 131 managers of SME’s. A structured questionnaire was used to obtain primary data from the respondents. A pilot study of twelve SMEs in Free Area, in Nakuru East Sub-County, was carried out to determinereliability of the instrument and Cronbach Alpha was computed. Statistical Package for Social Science (SPSS) was used to aid in the data analysis process. Frequencies and percentages were used to describe characteristics of the sample while the chi-square test of association and goodness of fit were used to establish associations and differences respectively. A multiple linear regression analysis between the five dimensions of entrepreneurs’ emotional intelligence and SME performance was carried out. The computed Cronbach‟s alpha coefficient was found to be 0.799 for self-awareness, 0.776 for self-regulation, 0.813 for self-motivation, 0.756 for social awareness, 0.844 for social skills, 0.787 for SMEs performance and 0.814 for the overall questionnaire. The results show that managers of SMEs have high levels of emotional intelligence and that emotional intelligence has a significant impact on SME performance. The findings of the revealed that 15.8% of variation in SMEs performance was explained by Self-Awareness score showing that there is a significant effect of self-awareness on SMEs performance. The study also found Penina Mwikali Muthembwa, Candidate - Master of Science in Human Resource Management Dr. Maina Waiganjo, Senior Lecturer, School of Business and Economics - Kabarak, University. Dr. Njenga Gitahi, Lecturer, School of Business and Economics - Kabarak, University. that 17.5% of variation in SMEs performance was explained by Self-Regulation score and thus there is a significant effect of Self-Regulation on SMEs performance. About 11.9% of variation in SMEs performance was explained by Self-Motivation score suggesting that there is a significant effect of Self-Motivation on SMEs performance. Further, 12.8% of the variation in SMEs performance was explained by Social Awareness and thus there is a significant effect of Social Awareness on SMEs performance. Finally, the study found that 20% variation in SMEs performance was explained by Social Skills score. Thus there is significant effect of Social Skills on SMEs performance. The main conclusions of the study are that self-awareness, self-regulation, self-motivation, social awareness and social skills have a significant impact on the performance of SME. The study recommends that efforts be made to increase managers’ levels of emotional intelligence, in particular with a focus on social skills. This can be through sensitization campaigns and encouragement to join groups/association.