Factors That Influence Internationalization Of Medium Sized Firms In Kenya

ABSTRACT

The aim of this thesis is to examine why majority of Medium sized firms in Kenya remain focused on the domestic market. While some firms have internationalized their operations, they only do it at a very limited scale even though they may be facing somewhat similar market conditions abroad. The specific focus of this study therefore is to examine the factors that influence internationalization of medium sized firms in Kenya. A diverse explanation to this problem exists in the literature examining the internationalization of medium sized firms. Nevertheless, the explanation to this phenomenon is inadequate and is restricted in geographic scope mainly to the studies from Europe, United Kingdom and the USA. Since geographic settings are not the same it is unclear whether or not the recommendations grounded on studies from western countries can be implemented in Kenya. An in depth survey was conducted with 73 Kenya Top 100 medium companies targeting the CEOs and/or key executives by the use of a questionnaire instrument. The data was analyzed by the use of Statistical Package for Social Scientists (SPSS) Version 21. Both descriptive and inferential statistics were used to present data. The quantitative methods used included simple regression analysis, Factor analysis, ANOVA, multiple regression, and Pearson correlation coefficient. An integrated theoretical framework has been proposed based on the literature review and synthesis of the major theories which explain internationalization of Medium firms which include; Stage theory, Network theory, Resource Based View and International Entrepreneurship. The results from the empirical analysis suggest that the firm age, firm size, firm resources, key decision maker attributes and networks (both formal and informal) are the key factors that influence internationalization of medium sized firms. The findings also indicate that while domestic, industry and global forces stimulate internationalization, the government policies, procedures and international requirements inhibit internationalization process. Based on the findings, the thesis concludes that those medium firms seeking for internationalization should invest in developing rare and unique resources which are not imitable. They should also develop both formal and informal networks as enablers of accessing international markets. From a policy perspective, it is recommended that the Government of Kenya should provide a supportive environment that would enable networking and associations which are critical for medium firms’ internationalization.