THE INFLUENCE OF RISK-TAKING PROPENSITY AND PERFORMANCE OF SMEs IN NAIROBI COUNTY, KENYA

Small and medium-sized enterprises (SMEs) drive Kenya's economic growth and development by producing jobs. However, they confront a number of problems that may hamper their growth and longevity. These include limited financial resources, strong market competition, and poor management abilities. These issues limit revenues and competitive advantage for many SMEs. These enterprises are motivated by survival or necessity. A previous study found that 60% of Kenyan small businesses fail during the first six months (RoK, 2020), and more than 60% fail annually (Ngugi, 2020). As a result, SMEs have adopted a variety of SME risk-taking propensity initiatives to improve their business performance. Risk taking relates to a business readiness to pursue opportunities despite uncertainty around the eventual success. The general objective was to examine the relationship between proactiveness and the Performance of SMEs in Nairobi County. Therefore, the specific objectives that guided the study was to examine the relationship between innovativeness and the Performance of SMEs in Nairobi County. Chi-square analysis was done to find out the relationship between risk-taking propensity and SME performance. Binary logistic regression analysis was done to gain greater insights on the relationship between the variables. According to the results, there is a strong statistical relationship between risk-taking propensity and SME performance in Nairobi. This led to the rejection of null hypothesis. It was recommended that SME managers and owners use SWOT analysis to develop effective strategies for SME innovativeness. From the research findings and conclusion, the researcher recommends Small and Medium Enterprises to embrace the innovativeness so as to strengthen business performance. Further studies can also be conducted in other locations and incorporate other independent variables. KEYWORDS: risk-taking propensity, SME performance, Technology, SMEs