Association Between Market Penetration Strategy by Rural Electrification Authority and Performance of Small and Medium Enterprises: A Case of Siaya County, KenyA

Abstract

Market penetration is the activity or fact of increasing the market share of an existing product. The market penetration strategy by Rural Electrification Authority (REA) is an enhanced electricity connectivity programme in rural Kenya. Literature presents theoretical proposals and empirical results on electrification, its effects and impact on diverse contexts. However they examine general effects yet others only investigate microenterprises. Moreover the results of the studies are inconsistent. No study has examined the association between market penetration strategy by an electrification entity and performance of small and medium enterprises (SI\1Es).Therefore this information is lacking. Specifically, it is not known what the association between electricity market penetration strategy and SME's growth is. Information on association between the strategy and SME's efficiency is also not known as is the information on the association between the strategy and SME's customers' satisfaction. The purpose of the study was to investigate association between REA's market penetration strategy and performance of SMEs in Siaya County where strategy was implemented earliest. Specific objectives were to establish the association between REA's market penetration strategy and the SMEs growth, SMEs' efficiency and SMEs customer satisfaction. Structuration theory guided the study. A correlation survey design was used. Population consisted of 1740 SMEs owners or managers. Stratified sampling approach was used to pick the sample of 325. Both primary and secondary data were used. Pilot test was conducted on 10 respondents within the population. This data was used to test the questionnaire. Market penetration strategy and performance registered reliability at Cronbach's 0.=0.78 and 0.71 respectively. Validity test was conducted by exposing the questionnaire to experts. Correlation results were from r=0.164, p =.000 to r= 0.427, p =.006 for SME growth; from r=0.195, p =.000 to r=0.439, p =.001 for SME efficiency; and from r= 0.140, p =.000 to r=0.770, p =.006 for customer satisfaction. For all the three areas of performance, there was significant positive correlation with REA's market penetration strategy although weak in some cases but stronger in others. Conclusion is there is association between the strategy by REA and each of the three aspects of SME performance in Siaya as specified by the three objectives. It is recommended REA emphasizes the strategy and the SMEs emphasize uptake to improve their growth, efficiency and customer satisfaction. The study findings will help the government formulate policies on electrification, SMEs make energy consumption related decisions and researchers conduct further studies.