Strategic choices and performance of small and medium enterprises in Uganda: a case of Nakawa division

Abstract

This study sought to examine the relationship between strategic choices and the performance of Small and medium enterprises in the Ugandan. The study focus was on manufacturing SMEs of Nakawa Division. The study was guided by the Resource Based Theory and focused on addressing four objectives which included; to examine the relationship between innovation strategy and performance of SMEs, to establish the relationship between strategic alliance and performance of SMEs, to examine the relationship between market positioning and performance of SMEs and to examine the role of business environment on the relationship between strategic choice and performance of SMEs. The study adopted a cross sectional survey design and a sample of 166 manufacturing SMEs was considered for survey. The study was based on both quantitative and qualitative data collections. Qualitative data was analyzed using descriptive analysis and inferential statistics. Descriptive statistics were used to describe the response rate, respondent’s characteristics and characteristics of firm. Inferential statistics based on Pearson’s correlation was used to determine the relationships between variables while multiple regression analysis was used to determine the effect of business environment on the relationships of study variables. The study found out that strategic choices on innovation had a positive significant relationship with performance of SMEs. Relatedly, the study found out that strategic choice on market positioning also had a positive significant relationship with performance. However, strategic choice on alliance was found to have no significant relationship with performance. Furthermore, the study also established that business environment positively effects the relationship between strategic choices and performance of SMEs. The study therefore concluded innovation strategy and marketing positioning strategy both had a significant relationship with performance while no relationship was found between strategic alliance and performance. The study further concluded that business environment positive affects the relationship between strategic choice and performance of SMEs. The study recommended that SMEs should adopt innovation strategy to expand product base and modify existing products. It further recommended that SMEs should embrace their marketing capabilities by especially focusing on their pricing mechanism and enhance their product features to suit the market. Lastly the study recommended that SMEs actively engage in business environment oriented planning so as to understand factors driving changes that may affect the performance.