Entrepreneur's Innovativeness on Access to Venture Capital by Small and Medium Enterprises in Nairobi City County, Kenya


  • Bancy Wawira Muchira Kenyatta University
  • Ambrose Jagongo Kenyatta University
  • Dr. Eddie Simiyu Kenyatta University


Despite the effort made by the government of Kenya to support the growth of SME sector by creating enabling environment through appropriate legal and regulatory procedures, and in spite the fact that banks have recently made micro-credit accessible to MSEs, there is no indication that the sector is growing. Empirical evidence shows that most of these enterprises fail due to poor/lack of access to finance. Access to venture capital by the small and medium enterprises could be a plausible alternative but unfortunately research has pointed out that majority of the enterprises do not access venture capital financing, which is considered an important option for small and medium enterprises trying to grow. This study therefore sought to investigate the effect of entrepreneur's innovativeness on access to venture capital by small and medium enterprises in Kenya. The study adopted the explanatory non-experimental research design and positivism philosophy guided the study. Target population of the study was 334 Small and medium size enterprises ranked by KPMG between 2008 and 2017 in their annual survey. Proportionate random sampling technique was used to select the firms. Data was collected by use of questionnaire, using drop and pick method. Both descriptive statistics and inferential statistics were used to analyze the data. Nested multinomial logit model was used. The results reveal that the influence of an entrepreneur's innovativeness on access to venture capital financing is statistically significant. From the findings, it is recommended that SMEs should continue investing in enhancing entrepreneurial innovativeness as it increases the propensity of their enterprises from accessing venture capital financing.

Keywords: Entrepreneurs, Innovativeness, Access, Venture Capital, Financing, SMEs, KPMG

Author Biographies

Bancy Wawira Muchira, Kenyatta University

PhD Candidate

Ambrose Jagongo, Kenyatta University


Dr. Eddie Simiyu, Kenyatta University



Abdullah, M. A., Khadijah, S., & Manan, A. (2010). Adequacy of Financial Facilities for Abdulsaleh, A. M., & Worthington, A. C. (2013). Small and Medium-Sized Enterprises

Adejimi, A., & Ogunsanmi. (2010). Employing Qualitatively Enriched Semi Structured Ahwireng-Obeng, F., & Mwebi, J. (2012). An Inquiry into the Venture Capitalists’

Andersen, K. V., Elliot, S., Swatman, P. M., Trauth, E. M., & Bjørn-Andersen, N. (Eds.). Ang, J. S. (1992). On the Theory of Finance for Privately held firms. Journal of Small

Astell-Burt, T., Feng, X., Mavoa, S., Badland, H. M., & Giles-Corti, B. (2014). Do low-income neighborhoods have the least green space? A cross-sectional study of Australia’s most populous cities. BMC Public Health, 14(1), 292.

Ayyagari, M., Demirguc-Kunt, A., & Maksimovic, V. (2011). Small vs. young firms across the world: contribution to employment, job creation, and growth.

Balios, D., Daskalakis, N., Eriotis, N., & Vasiliou, D. (2016). SMEs capital structure determinants during severe economic crisis: The case of Greece. Cogent Economics & Finance, 4(1), 1145535.

Bammi, R., & Verma, A. (2014). Venture Philanthropy: An Emerging Paradigm of Venture Capital. Vilakshan: The XIMB Journal of Management, 11(2).

Beck, T., Degryse, H., & Kneer, C. (2014). Is more finance better? Disentangling intermediation and size effects of financial systems. Journal of Business Finance, 3(1), 185–203.

Berger, A. N., & Schaeck, K. (2011). Small and Medium-Sized Enterprises, Bank Relationship Strength, and the Use of Venture Capital. Journal of Money, Credit and Banking, 43(2– 3), 461–490.

Boso, N., Story, V. M., & Cadogan, J. W. (2013). Entrepreneurial orientation, market orientation, network ties, and performance: Study of entrepreneurial firms in a developing economy. Journal of Business Venturing, 28(6), 708-727.

Brush, C., Ali, A., Kelley, D., & Greene, P. (2017). The influence of human capital factors and context on women's entrepreneurship: Which matters more?. Journal of Business Venturing Insights, 8, 105-113.

Burżacka, M., & Gąsiorowska, E. (2016). The importance of venture capital financing of start-up companies. In Forum Scientiae Oeconomia (Vol. 4, No. 3, pp. 141-150).

Calice, P., Chando, V. M., & Sekioua, S. (2012). Bank Financing to Small and Medium Enterprises in East Africa: Findings of a Survey in Kenya, Tanzania, Uganda and

Saunders, M. N. (2011). Research methods for business students, 5/e. Pearson Education India. Sichelman, T., & Graham, S. J. (2010). Patenting by entrepreneurs: an empirical study. Mich. Telecomm. & Tech. L. Rev., 17, 111.

Small-Medium Businesses: Empirical Findings from Malaysia. International Review of Business Research Papers, 6(4), 535–548.

Smolarski, J., & Kut, C. (2011). The impact of venture capital financing method on SME performance and internationalization. International Entrepreneurship and Management Journal, 7(1), 39-55. Stability, 10, 50-64.

Steier, L., & Greenwood, R. (2000). Entrepreneurship and the evolution of angel financial networks. Organization Studies, 21(1), 163-192.

Wang, X. (2013). The impact of microfinance on the development of small and medium enterprises: The case of Taizhou, China. The Johns Hopkins University, Baltimore, MD, USA.

Xiang, D., Worthington, A. C., & Higgs, H. (2011). Firm-level determinants and impacts of finance-seeking behaviour and outcomes for small and medium-sized enterprises

Xiang, D., Worthington, A. C., & Higgs, H. (2014). Family ownership, altruism and agency costs in Australian small- and medium-sized enterprises. Applied Economics, 46(32), 3907–3921.Technology




How to Cite

Muchira, B. W., Jagongo, A., & Simiyu, D. E. (2019). Entrepreneur’s Innovativeness on Access to Venture Capital by Small and Medium Enterprises in Nairobi City County, Kenya. Journal of Finance and Accounting, 3(4), 1–20. Retrieved from https://stratfordjournals.org/journals/index.php/journal-of-accounting/article/view/376