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393
Advances in Social Sciences Research Journal – Vol.8, No.1
Publication Date: January 25, 2021
DOI:10.14738/assrj.81.9414.
Njue, N. G., Mulwa, A. S., Kyalo, D. N., & Mbugua, J. M. (2021). Influence Of Risk Management Practice On Performance Of Micro Small
Entrepreneurial Projects In Nairobi City County, Kenya Advances in Social Sciences Research Journal, 8 (1) 392-402.
Influence Of Risk Management Practice On Performance Of Micro
Small Entrepreneurial Projects In Nairobi City County, Kenya
Njue, Nicasio Gicovi
Ph.D. Candidate (Project Planning and Management)
Department of Open Learning,
School of Open and Distance Learning,
University of Nairobi, Kenya
Dr. Mulwa, Angeline Sabina
Department of Open Learning,
School of Open and Distance Learning,
University of Nairobi. Kenya
Prof. Kyalo, Dorothy Ndunge
Department of Open Learning,
School of Open and Distance Learning,
University of Nairobi. Kenya
Dr. Mbugua, John Mwaura
Department of Open Learning,
School of Open and Distance Learning,
University of Nairobi.
ABSTRACT
This study aimed at assessing the influence of risk management
practice on the performance of Micro Small Entrepreneurial Projects in
Nairobi County Kenya. Pragmatic paradigm guided the study.
Correlational survey and cross-sectional survey designs were used.
Target population was 350 consisting of 327 entrepreneurs and 23
project managers. Using Krejcie and Morgan table of sample
determination, a sample of 186 was reached. Proportionate stratified
random sampling was used to select 174 entrepreneurs and 12 project
managers. Structured questionnaires and key informant interview
guide were use in data collection. The split-half method was used to
test the internal stability of the questionnaire and the resultant 0.730
(scale reliability) was tested using Cronbach's Coefficient Alpha
method at the widely-accepted social science cut-off of at least α =0.70.
Both descriptive and inferential statistics were used in the data
analysis. Hypothesis was tested using F-test at 95% confidence
interval. At 5% level of significance, the correlation coefficient between
risk management practice and performance of Micro Small
Entrepreneurial Projects was r=0.014 for p=0.047<0.05, R
square=0.00. This implied that there is no significant relationship
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Advances in Social Sciences Research Journal (ASSRJ) Vol.8, Issue 1, January-2021
between risk management practice and performance of Micro Small
Entrepreneurial Project and that risk management practice was a poor
predictor of the performance of Micro Small Entrepreneurial Projects.
Nonetheless, there is need to integrate risk management practice into
the other practices of project management so as to safeguard
performance of Micro Small Entrepreneurial Projects.
Key words: Performance, Micro Small Entrepreneurial Project, Risk
Management Practice, Jua-kali entrepreneurs,
INTRODUCTION
In modern times, project managers try as much as possible to make informed project decisions
based on risk awareness so as to increase the chances of project success. Whereas risk
management contributes to the effectiveness and better decisions, risk management is one of the
project knowledge management areas that is claimed to influence project stability [15]. Since
project managers are continuously involved in making critical project decisions, decisions which
are informed by risk awareness may strengthen decision outcome and increase the chances of
project success [22]. Thus appropriate risk management practice ensures that there is efficient
scheduling and utilization of project resources in the strive towards meeting the expectations and
stated requirements of the clients. Similar arguments are advanced by [17] that assessment of the
performance of risk management practice is a critical step towards efficient and effective
utilization of resources and guarantees project success. It follows that management of risks is
claimed to be an effective and responsive technique that connects risk data with project schedules
for enhanced project success. This is because untreated risks may have adverse effects to the
project health. Hence risk management can be enhanced by robust practices of identification,
analyzing, treating and controlling process.
Risks as factors or events of uncertainties with likelihood of occurring. When risk occur they may have
potential threats to the project stability. The likelihood of risk occurrence together with the
consequences of risk is what matters in project well-being. Whereas risks can be classified by the
likelihood of occurrence and similarities in the mitigation strategy [29], risks can cause multiple
negative consequences to project performance depending on the frequency of occurrence and
significance of the impacts [13]. Consequently, it is important to constitute appropriate risk management
approaches so as to safeguard project performance.
Risk management is the administration policies, practices and procedures for identifying risk, analyzing
risk, evaluating risk, treating risk, monitoring and reviewing risk [27]. While studying the effects of risk
management on construction projects in Jordan, [30] concluded that effective risk management
approaches reduces adverse effects of risks which intern improves performance of projects [23]. Thus
appropriate risk management ensures efficient scheduling and utilization of project resources in the
strive towards meeting the expectations and requirements of the clients. [17] support that assessment of
the performance of risk management is a critical step towards efficient and effective use of resources
that guarantee project success. Thus risk management is claimed to be an effective and responsive
technique that connects risk data with project schedules for enhanced project success. This is because
untreated risks have adverse effects to the project health. Hence risk management can be enhanced by
robust practice of identification, analyzing, treating and controlling process.
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URL: http://dx.doi.org/10.14738/assrj.81.9414. 395
Njue, N. G., Mulwa, A. S., Kyalo, D. N., & Mbugua, J. M. (2021). Influence Of Risk Management Practice On Performance Of Micro Small Entrepreneurial
Projects In Nairobi City County, Kenya Advances in Social Sciences Research Journal, 8 (1) 392-402.
Entrepreneurial projects also face daily challenges that continue to pose potential risks to their
performance and success. In broad, these challenges relate to production, management and even
market access. Whereas entrepreneurial projects are innovative stimulants to vibrant economic
development of nations [25], the dynamic nature of risks has limited the ability of entrepreneurs
to optimize factors of production for greater productivity and performance [21]. This despite the
numerous empowerment interventions aiming at minimizing the challenges associated with risks
[12]. Questions arise on the effectiveness of risk management practice among the entrepreneurial
projects. Given huge time and resource expenditures on entrepreneurial projects, it raises
questions as to why entrepreneurial projects fail to meet the performance expectations in terms of
resource utilization, product development, skill development, increase in sales and income and
even graduation to larger enterprises. In order to fill the knowledge gap, this study sought to
examine how risk management practice influences performance of Micro Small Entrepreneurial
Projects in Nairobi County in Kenya.
Performance of Micro Small Entrepreneurial Projects cannot be evaluated without considering the
stimulus of productivity. Evidence from empirical literature portray productivity in terms of resource
utilization, volume of production, volume of sales and market access as critical determinant of
performance of entrepreneurial projects [2, 8, 20, 24]. In this study, entrepreneurial projects are profit
oriented. Thus performance of Micro Small Entrepreneurial Projects from the aspects of product quality,
skill acquisition, skill application, access to new markets, sales, income and customer relation.
Jua-kali means micro small enterprises involved in commercial production and sale of commodities
using local resources at the local level (Nairobi County). In addition, micro small entrepreneurs are the
entrepreneurs whose capital does not exceed 50,000 USD and level of employment don’t exceed 50
employees. Micro Small Entrepreneurial Projects are the commercial endeavors ran by micro and small
entrepreneurs involved in the production of commercial commodities like metal products, textile
products, wood products and automobile work.
STATEMENT OF THE PROBLEM
When supported, Micro Small Entrepreneurial Projects have the potential to contribute to over
45% of Gross Domestic Product (GDP), 80% of total employment and double wealth accumulation
[19] However, entrepreneurs continue to face risks related to poor production sites, lack of
capital, inadequate skills, use of redundant technologies, poor product qualities, lack of market
and stiff completion with large firms that continued to hinder their potentials to perform better.
As a result, many enterprises (75%) have died within their third year of startup [5]. In Kenya,
three out of five (60%) of Micro Small Entrepreneurial Projects break by the third year of
operation [17,18,19]. Further, about 1.5Million Micro Small Entrepreneurial Projects could not
transit into larger entrepreneurial projects due to production risks. Appropriate risk management
decisions determine the stability and progress of entrepreneurial project [1].
There is growing concern on why Micro Small Entrepreneurial Projects are not productive and
performing to the expectations yet they are heavily invested. While entrepreneurs are perceived
to have negative perception to risk management, this may be attributed to ignorance of the
consequences at the excuse of cost implication and technical inadequacies in risk management
plan. This may be perceived as a contributor towards poor performance of the Micro Small
Entrepreneurial Projects. In order to fill the knowledge gap with empirical support, this study