Organisational Factors and Uptake of Venture Capital by Small and Medium Enterprises: A Case of Selected Venture Capital Beneficiaries of Kenya Commercial Bank
Abstract
Venture capital is a recent source of capital for businesses in Kenya. Most businesses tend to look internally for primary funding before considering finances from banks and cooperative societies. Venture capitalists are important source of equity that can invest in any form of business, regardless of size, depending on their assessment and postulation of the success of the business. The main objective of this research study was to establish the influence of organisational factors and uptake of venture capital by small and medium enterprises: a case of selected venture capital beneficiaries of Kenya Commercial Bank. Specific objectives were to determine how organisational innovativeness affects uptake of venture capital by SMEs and to establish how ownership structure of business affects uptake of venture capital by SMEs. The study was anchored on resource view-based, institution and pecking order theory. The study employed descriptive research design with a target population of 300 SMEs who had benefited from venture capital in Kenya through KCB Lions Den and KCB 2Jiajiri. The researcher sampled 90 respondents, randomly selected and gathered primary data by use of questionnaires in a Likert scale. However, the researcher conducted a piloting exercise to build up reliability and validity of the instrument before data collection. Data gathered from correctly filled questionnaires was coded, tabulated and analysed using Statistical Package for Social Sciences (SPSS) Version 24. The study adopted descriptive and inferential statistics to capture the characteristics of variables under study and analyse the relationship between dependent and independent variables. The researcher conducted this study within the set ethical standards. The study established that organisational innovativeness had a positive and significant effect on uptake of venture capital with B=0.586, t=5.228 and R2 of 0.259, hence influence uptake of venture capital by SMEs to a great extent and a fundamental pillar to growth and entry to a new market place. Ownership structure had a positive and significant effect on uptake of venture capital (B=0.685, t=5.747) and R2 of 0.297, thus, determines uptake of venture capital by SMEs to a great extent and primary driving factor for investor and creditors decision. The study recommends that SMEs should invest in research to create innovative products and least cost processes thus continuously enhancing organisational innovativeness. Owners/managers should strive to take up more venture capital since the venture capitalists do not only assist in provision of funds but can also contribute to the internal operations of the businesses, especially policy formulation.
Keywords: Organisational Factors; Organisational Innovativeness; Ownership Structure; Venture Capital; Venture Capital Beneficiaries; Kenya Commercial Bank
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