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THE ROLE OF THE FAMILY COUNSEL BOARD ON THE GROWTH OF SMALL AND MEDIUM ENTERPRISES IN KENYA AFTER EXIT OF THE FOUNDER: A CASE OF NAIROBI CBD FAMILY SMALL SMES

Milka Wangombe
MBA Student, Jomo Kenyatta University of Agriculture and Technology

 

ABSTRACT

Family firms’ growth plays a crucial role in the growth of the economy as a whole, due to the prominence of family firms in the economy, especially in Kenya. SMEs account for around two-thirds of total employment, and half of the turnover in the Kenyan business sector. Given this prominent place of SMEs, macroeconomic growth depends necessarily on the management of these SMEs. It is also estimated that approximately 20% small business enterprises exit from the business as a result of various reasons in Kenya poor corporate governance being one of them. To the best of the researcher’s knowledge, no study has ever concentrated on detailing the relationship between the role of family counsel and financial performance of SMEs in Kenya. The general objective of this study was to establish the role of the family counsel on the financial performance of family small and medium enterprises in Kenya. The study also sought to determine whether family counsel, family counsel skills, family counsel composition and family counsel leadership structure on the financial performance of family small and medium enterprises in Kenya. This study used a descriptive research design. The target population for this study was all the counsel members in family SMEs located in Nairobi Central Business District. There are 120 SMEs in Nairobi Central Business District. Each of the SMEs has 6 family counsel members. The target population for this study was therefore being 720. The sample size of this study will therefore be 72 respondents. Primary data was collected using a questionnaire. The data collected was mainly quantitative, however some qualitative data was collected from the open ended questions to enhance uncover any convergent and divergent views. Descriptive statistics was used to summarize the data. This included percentages and frequencies. All quantitative data on the role of the family counsel on the financial performance of family small and medium enterprises in Kenya was measured in real values by normalizing.  The study found that the size of the family counsel board affects the growth of SMEs to a great extent. The study concludes that the size of the family counsel board affects the growth of SMEs to a great extent. The study also found that family counsel board skills affect the growth of SMEs to a great extent. The main skills needed by family counsel board in order to ensure the growth of a family SME  were human resource management skills, creativity and innovation, marketing skills, interpersonal skills, communication, entrepreneurial skills, customer relation skills, risk management skills and planning.


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