Influnece Of Knowledge Management Strategy On The Financial Performance Of Small And Medium Enterprises In Wajir County, Kenya

ABSTRACT

The general objective of this study was to investigate the influence of knowledge management strategy on the financial performance of small and medium enterprises in Wajir County. Specifically, the study sought to: establish the influence knowledge creation on the financial

performance of small and medium enterprises in Wajir County, determine the influence knowledge acquisition on the financial performance of small and medium enterprises in Wajir County, assess the influence of knowledge sharing/transfer on the financial performance of small and medium enterprises in Wajir County and to investigate the influence of knowledge implementation on the financial performance of small and medium enterprises in Wajir County.

This study was guided by Resource based view theory, Organizationa learning theory and Knowledge based theory. The target population was 532 SMEs firms in Wajir County. The sample size was 223 SMEs covering different sectors. The study used questionnaires, containing

both open ended and closed ended questions to obtain primary data. The research instrument were pretested with a sample of the respondents. The reliability of the instrument was estimated using Cronbach’s Alpha coefficient. The research instrument was subjected to content validity

test and a pilot test to ensure that the questionnaire was reliable to answer the research questions. This ensured that all facets under the study were covered. For research data analysis and presentation, data was collected, edited and coded to ensure consistence. Descriptive statistics including the means and standard deviations was used to analyze the data and capture the characteristics of the variables under the study. Inferential statistics was used to test the nature

and magnitude of the relationship between dependent and independent variables. Simple regression analysis and Pearson’s correlations were computed to determine the nature and the strength of the relationship among the variables. The analyzed data was presented in form of

tables and charts. The conclusions of this study were informed by the findings based on each study objective and also findings of other similar studies. Each objective was reviewed and a conclusion provided which covers both theory and practice. The findings of the study revealed

that knowledge creation, knowledge acquisition, knowledge sharing and knowledge implementation are positively related with financial performance of SMEs in Wajir County. Knowledge creation, knowledge acquisition, knowledge sharing and knowledge implementation

were found to be satisfactory variables in explaining financial performance of SMEs in Wajir County as supported by coefficient of determination of 51.2%. This shows that knowledge

creation, knowledge acquisition, knowledge sharing and knowledge implementation explained 5.2% of the financial performance of SMEs in Wajir County. The results of ANOVA showed that the overall model was statistically significant. Further, the results imply that the independent variables are good predictors of financial performance of SMEs in Wajir County. This was supported by an F statistic of 49.522. Finally, the overall model indicated that knowledge creation, knowledge acquisition, knowledge sharing and knowledge implementation are

positively and significantly related. Based on the findings the study concluded that knowledge creation, knowledge acquisition knowledge sharing and knowledge implementation affects performance of SMEs firms. The study recommends that SMEs in Wajir County should adopt

knowledge management strategy in running their business so that they can gain improved financial performance, knowledge management strategies to be adopted are: knowledge sharing,

knowledge acquisition, knowledge creation and knowledge implementation. The study also recommends that the SMEs firms should invest on highly trained employees.