Department of MBA

Individual Assignment

Corse title: - Entrepreneurship

Article review on the topic of Influence of Financial Management

Practices on the Performance of Micro and Small
Enterprises in Kenya

Reviewd by Aster Asfaw

ID No 0286
 1. Introduction

The authors of this articles are Charles Waweru, and Karanja Ngugi (Ph.D). The title of this
article is Influence of Financial Management Practices on the Performance of Micro and Small
Enterprises in Kenya. This title is relevant to the course entrepreneurship. This research is
empirical research and the journal is appropriate.

2. Summary of the article

The purpose of the study is to assess and evaluate the purpose the main objective of this study
was to explore the influence of financial management practices on the performance of Micro and
Small Enterprises in Kenya. The influence of financial management practices on performance is
one significant topic in the field of entrepreneurship and MSE sector development as evidenced
by an increasing number of publications and studies on the topic. Since the MSE population is
quite high, the target population for this study was estimated at over 10000 management staff
from selected MSEs in Nairobi.. In developed and developing countries number of large
enterprises are far lesser as compared to micro, small, and medium enterprises. In developing
countries like Pakistan, the number of Micro and Small Enterprises (MSEs) is far higher. Such
kind of industrial setup is common amongst developing economies like Pakistan, where micro
and small enterprises cover major businesses in the economy and provide employment to a large
number of work force. These kinds of enterprises are common in both rural and urban areas.
MSEs are important for the provision of cheap goods and services. Because of significant
contribution in employment and provision of cheaper goods and services, their importance
cannot be ignored. MSEs are important for the indispensable growth of any developing country
by enhancing the income level of the middle and lower middle class.

In order to gain advantage study used survey research design, he MSE population is quite high,
the target population for this study was estimated at over 10000 management staff from selected
MSEs in Nairobi. Simple random sampling technique was employed to select the sample of 95
respondents. Primary data was collected using a self-administered questionnaire. The
questionnaire was semi-structured, having both open-ended and closed-ended questions. Data
was presented in tables, charts and graphs. Content analysis was used to analyze qualitative data.
A multivariate regression model was applied to determine the relative importance of each of the
four variables with respect to performance of MSEs.

The researchers dig out some finding such as According to the analysis of findings, the
respondents strongly agreed with the statement that Performance is very important in
determining the success or failure of a business in this case Micro and Small Enterprises in
Kenya. Secondly respondents agreed with the statement that the aim of a business is not only the
generation of sales, but also generation of profits which performance of Micro and Small
Enterprises in Kenya.

3. Evaluation of the article

Different issue was discussed by the researchers such as This study concludes that Investing can
be described as the redirection of resources from being consumed today to creating benefits in
the future; that It is essential to invest so that investments can grow to fight against inflation and
future uncertainties and that Development of an effective business support system is also a key
condition for the success of investment capacity building while as investing requires business
support agencies which have a demonstrated capability of penetrating the MSE sector. Further
the study concludes that Risk has become part of a strategic component of the modern
organization’s survival and development; that risk can be seen as the possibility of economic or
financial losses or gains; that MSEs require the adoption of a risk management strategy and
methodology; and that the most significant risk among small businesses involves human factor

In this study the finding were align with some theory or finding of other study. For instance the
study findings relates with literature review by Uyar (2009) who indicated that the aim of a
business is not only the generation of sales, but also generation of profits; that Profit is especially
important because it is necessary for the survival of a business and Low performance contributes
to under-capitalization problems because it leads to retained earnings and therefore to a reliance
on external capital.
 4. Contribution of the study

The title of this research is Influence of Financial Management Practices on the Performance of
Micro and Small Enterprises in Kenya. By conducting this research the researcherscontribute
many things concerning about Financial Management Practices on the Performance of Micro and
Small Enterprises. In addition to this, this research forward some recommendation to the existing
problem in related to Financial Management Practices. Last the finding of the study, the theory
and literature which is developed by the researcher is important for other researchers who have
willing to conduct a research in this area.

5. Strengths and weaknesses of the paper

The strength of the study is this study is a problem solving study. There is some problem which
is jeopardizes on Financial Management Practices. So this study forwards some recommendation
to the problem. Using old reference is weakness of the study. In the modern era everything is
change with in a second. Different existing knowledge base literature updates frequently
different theories prove or disprove in frequently, so as a researcher we should search update
information but when we see this research more than 95% the reference were published 15 years
before this study was conducted. So there is no update literature review so this is the limitation of
the study.