Relationship between Government Business Support Strategies, Entrepreneural Orientation and Performance of Small and Medium Enterprises in Kenya, Focus on the South Rift Region

Abstract

Abstract Despite continued government strategic investment and policy initiatives to promote SME growth, many enterprises in Kenya still face performance constraints, including premature closure, limited access to finance, poor market linkages, and inadequate managerial competencies. These persistent challenges have raised concerns about the effectiveness and coordination of government support mechanisms, warranting an empirical assessment of how these strategies interact with entrepreneurial characteristics to influence performance outcomes. This study investigated the relationship between government business support strategies of credit access, business advisory, market linkages, and training on the performance of Small and Medium Enterprises in Kenya’s South Rift Region, with a focus on the moderating role of entrepreneurial orientation. The study was anchored on the Resource-Based View, the Dynamic Capabilities Theory, and the Entrepreneurial Orientation theory. Guided by a positivist research philosophy and a correlational research design, the study collected data from 229 SME owners using structured questionnaires. Descriptive and inferential analyses were conducted using multiple and moderated regression models. The unmoderated regression results revealed that all four government business support strategies, credit access, business advisory services, market linkages, and training programs had significant positive effects on SME performance. Among these, credit access emerged as the strongest predictor (β = 0.298, p < 0.05), followed by market linkages (β = 0.267, p < 0.05), business advisory services (β = 0.245, p < 0.05), and training programs (β = 0.223, p < 0.005). The model explained 67.7% of the variance in SME performance (R² = 0.677), indicating strong explanatory power for these strategies collectively. The moderated regression analysis further revealed that entrepreneurial orientations significantly strengthened the relationship between government support strategies and SME performance (β = 0.118, p < 0.05). The moderated model’s explanatory power increased to 70.9% (R² = 0.709), demonstrating that entrepreneurial orientation amplifies the effectiveness of government support interventions by enhancing resource utilization, adaptability, and innovation capacity within SMEs. The study concludes that government business support strategies play a pivotal role in enhancing SME performance, particularly when implemented comprehensively and coordinately. However, their success depends on the entrepreneurial orientation of firm owners, which determines the extent to which external resources are transformed into competitive advantage. The study recommends enhancing credit access by offering favorable loan terms, expanding business advisory hubs, promoting market linkage initiatives, and implementing sector-specific training programs. Policymakers should also integrate entrepreneurial development into SME support frameworks, as entrepreneurial orientation serves as a critical enabler of performance. The study contributes to the theoretical discourse by confirming that external resource support (RBV) and internal dynamic capabilities (DCT), coupled with innovativeness and risk-taking (EO), jointly determine enterprise performance.