International Journal of Social Science & Economic Research
Submit Paper

Title:
MICROFINANCE INSTITUTIONS AND COOPERATIVES: UNEXPLOITED BLUE OCEAN STRATEGY FOR GROWTH OF MSMES IN KENYA

Authors:
Beatrice Karitu and Stephen Muathe

|| ||

Beatrice Karitu1 and Stephen Muathe2
1,2. School of Business, Economic & Tourism Kenyatta University

MLA 8
Karitu, Beatrice, and Stephen Muathe. "MICROFINANCE INSTITUTIONS AND COOPERATIVES: UNEXPLOITED BLUE OCEAN STRATEGY FOR GROWTH OF MSMES IN KENYA." Int. j. of Social Science and Economic Research, vol. 8, no. 4, Apr. 2023, pp. 618-640, doi.org/10.46609/IJSSER.2023.v08i04.005. Accessed Apr. 2023.
APA 6
Karitu, B., & Muathe, S. (2023, April). MICROFINANCE INSTITUTIONS AND COOPERATIVES: UNEXPLOITED BLUE OCEAN STRATEGY FOR GROWTH OF MSMES IN KENYA. Int. j. of Social Science and Economic Research, 8(4), 618-640. Retrieved from https://doi.org/10.46609/IJSSER.2023.v08i04.005
Chicago
Karitu, Beatrice, and Stephen Muathe. "MICROFINANCE INSTITUTIONS AND COOPERATIVES: UNEXPLOITED BLUE OCEAN STRATEGY FOR GROWTH OF MSMES IN KENYA." Int. j. of Social Science and Economic Research 8, no. 4 (April 2023), 618-640. Accessed April, 2023. https://doi.org/10.46609/IJSSER.2023.v08i04.005.

References

[1]. Adesina, K. A., Oyedepo, A. O., Akinbami, O. O., Oyeleke, R. O., Olufowobi, T. S., & Thanni, (2021). Impact Of Microfinance Banks And Cooperative Societies In Financing Small And Medium Scale Enterprises (Evidence from Selected States in South West Nigeria).
[2]. Babajide, A. A., Taiwo, J. N., & Adetiloye, K. A. (2017). A comparative analysis of the practice
[3]. and performance of microfinance institutions in Nigeria. International Journal of Social Economics
[4]. B. Castilla-Polo, F., & Sánchez-Hernández, M. I. (2020). Cooperatives and sustainable development: A multilevel approach based on intangible assets. Sustainability, 12(10), 4099.
[5]. Bitok, S. K., Cheboi, J., & Kemboi, A. (2020). Does portfolio quality influence financial sustainability? A case of microfinance institutions in Kenya. Journal of Economics and Financial Analysis, 3(2), 23-39.
[6]. Bosire, M., Mugo, R., Owuor, G., Oluoch, W., & Kakiya, G. (2014). What are the factors that influence a wide interest rate band in microfinance institutions in Kenya?.
[7]. Brihaye, T., Pril, J. D., Labie, M., & Périlleux, A. (2019). Positive versus negative incentives for loan repayment in microfinance: A game theory approach. Review of Development Economics, 23(2), 577-597.
[8]. Darsono, D., & Darwanto, D. (2019). Strengthening the MSME through Institutional Cooperation Improvement between MSME and Sharia Microfinance Institutions (SMFI). Jurnal Ilmiah Al-Syir'ah, 17(1), 65-76.
[9]. Denning (2017). Moving To Blue Ocean Strategy: A Five-Step Process to Make the Shift. Forbes, September 24.
[10]. Cheong, C. W., Lee, M. H., & Weissmann, M. A. (2020). Credit access, tax structure and the performance of Malaysian manufacturing SMEs. International Journal of Managerial Finance, 16(4), 433-454.
[11]. Child, J. (1997). Strategic choice in the analysis of action, structure, organizations and environment: Retrospect and prospect. Organization studies, 18(1), 43-76.
[12]. Cruz, M., & Hernandez Uriz, Z. (2022). Entrepreneurship ecosystems and MSMES in Kenya.
[13]. Edelia, A., & Aslami, N. (2022). The Role of Empowerment of the Cooperative and MSME Office In The Development of Small and Medium Micro Enterprises in Medan City. Journal of Management, Accounting, General Finance and International Economic Issues (Marginal), 1(3), 31-36.
[14]. FinAccess Survey Report (2020). MSMEs Access to Bank Credit, June 2021, Kenya
[15]. Fowowe, A. S., Anifowose, O. L., Akindare, S., & Adedeji, O. A. (2022). impact of microfinance banks on business expansion capacity and performance of women food vendors in FUTA environment. KIU Interdisciplinary Journal of Humanities and Social Sciences, 3(1), 303-324.
[16]. Gerber, A., Le Roux, P., & Van der Merwe, A. (2020). Enterprise architecture as explanatory information systems theory for understanding small-and medium-sized enterprise growth. Sustainability, 12(20), 8517.
[17]. Gutiérrez-Nieto, B., & Serrano-Cinca, C. (2019). 20?years of research in microfinance: An information management approach. International Journal of Information Management, 47, 183–197.
[18]. Gikabu, L. M. (2020). Influence of Accelerator Programs to the Growth of Micro, Small and Medium Enterprises (Msmes) Supported by Tony Elumelu Foundation-Kenya (Doctoral dissertation, University of Nairobi).
[19]. Hameed, W. U., Haseeb, M., Iqbal, J., Mihardjo, L. W. W., & Jermsittiparsert, K. (2020). Environmental disaster and women self-sustainability—A survey study on microfinance female clientele in Pakistan. International Journal of Finance & Economics, 1–24 (In Press).
[20]. Joseph, O. O., & Kibera, F. (2019). Organizational culture and performance: Evidence from microfinance institutions in Kenya. SAGE open, 9(1), 2158244019835934.
[21]. Intan, Q.,A., & Harsono M. (2022). The Role of Financial Availability and Entrepreneurship Education in Starting Startup Business Vol. 5(11), 3128-3137.
[22]. Kanini, K. S., Bula, H. O., & Muathe, S. M. (2022). Social Capital and Performance of Manufacturing MSMEs in Kenya. developing economies, 7, 1. DOI: 10.13189/aeb.2022.100401.
[23]. Kamau, C. G. (2021). Availability of Finance, Finance Costs, and Business Success in Kenya: Focus on the Small and Micro Enterprises. EPRA International Journal of Economics, Business and Management Studies, 8(8), 26-30.
[24]. Kang, K., Zhao, Y., Ma, Y., & Li, Z. (2019). Green supply chain poverty alleviation through microfinance game model and cooperative analysis. Journal of Cleaner Production, 226, 1022-1041.
[25]. KBA. (2019, November 6). Banking sector unveils credit platform for small and medium enterprises. Kenya Bankers Association.
[26]. Kim, W. C., & Mauborgne, R. (2005). How to create uncontested market space and make the competition irrelevant. Harvard Business Review, 4(13), 1-2.
[27]. Leavy, B. (2018). Value innovation and how to successfully incubate "Blue Ocean" initiatives. Strategy & Leadership.
[28]. Li, Zhicheng & Diao, Zhaofeng. (2003). On Business Growth Force and Its Generating Mechanism. Journal of Wuhan University of Technology (Information & Management Engineering). No.25 (5), P. 86-89.
[29]. Mao, H. (2009). Review on enterprise growth theories. International Journal of business and management, 4(8), 20.
[30]. Mazidah, N., & Hidayatin, D. A. (2023). Analysis of the Health of Sharia Cooperatives as an Effort for Creative Economy Development in Bojonegoro Regency, Indonesia. Assets: Jurnal Ilmiah Ilmu Akuntansi, Keuangan dan Pajak, 7(1), 45-51.
[31]. Mersland, R. (2009). The cost of ownership in microfinance organisations. World Development, 37(2), 469- 478.
[32]. Mohan, V., & Ali, S. (2019). Challenges faced by Indian MSMEs in adoption of internet marketing and e-commerce. Academy of Marketing Studies Journal, 23(1), 1-9.
[33]. Moon, S., & Lee, S. H. (2020). A strategy for sustainable development of cooperatives in developing countries: The success and failure case of agricultural cooperatives in musambira sector, Rwanda. Sustainability, 12(20), 8632.
[34]. Muathe, S., & Otieno, V. (2022). Startup Incubation and Accelerators in Africa; Are Startups Scaling Up in Kenya? American International Journal of Social Science Research, 11(1), 23-28.
[35]. Muithya, V., & Muathe, S. (2020). Dynamic capabilities and performance in the context of microfinance institutions in Kenya: An exploratory study. Journal of Business, Economics and Management Works, 7(08), 15-29.
[36]. Muathe, SMA., & Muraguri-Makau C.W. (2020). Entrepreneurial Spirit: Acceptance and Adoption of E-Commerce in the Health Sector in Kenya. International Journal of Business, Economics and Management Works. Vol. 7. No. 8 pp.08-14
[37]. Muathe, S.M.A. (2010). The Determinants of Adoption of Information and Communication Technology by Small and Medium Enterprises within the Health Sector in Nairobi, Kenya.
[38]. Unpublished PhD Thesis, Kenyatta University
[39]. Nufus, K., Supratikta, H., Muchtar, A., & Sunarsi, D. (2020). Analysis of Financial Performance:
[40]. Case Study of PT. X Employee Cooperative. Utopía y praxis latinoamericana: revista internacional de filosofía iberoamericana y teoría social, (10), 429-444.
[41]. Njue, A. (2020). Liquidity Management and Financial Performance of Microfinance Institutions in Kenya (Doctoral dissertation, University of Embu).
[42]. Nkwabi, J., & Mboya, L. (2019). A review of factors affecting the growth of small and medium enterprises (SMEs) in Tanzania. European Journal of Business and Management, 11(33), 1-8. PWC (2020). Nigeria MSME Survey: Assessing current market conditions and business growth prospects.Availableat:https://www.pwc.com/ng/en/events/nigeria-sme-survey.
[43]. Normark, P. (1996). A role for cooperatives in the market economy. Annals of Public and Cooperative Economics, 67(3), 429-439.
[44]. Omwanza, C. O., & Jagongo, A. (2019). Financial innovations and financial performance of microfinance institutions in Kenya: A theoretical review. International Academic Journal of Economics and Finance, 3(4), 32-46.
[45]. Organization for Economic Co-operation and Development (2017). Small, Medium, Strong. Trends in SME Performance and Business Conditions, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264275683-en.
[46]. Pitman, L. (2018). History of cooperatives in the United States: An overview. Center for Cooperatives, University of Wisconsin. Accessible at https://resources. uwcc. wisc. edu/History_of_Cooperatives. pdf.
[47]. Tamanni, L., & Haji Besar, M. H. A. (2019). Profitability vs Poverty alleviation: has banking logic influences Islamic microfinance institutions?. Asian Journal of Accounting Research, 4(2), 260-279.
[48]. Seibel, H. D. (2005). Does history matter? The old and the new world of microfinance in Europe and Asia (No. 2005, 10).Working paper.
[49]. Sumner, A., Hoy, C., & Ortiz-Juarez, E. (2020). Estimates of the Impact of COVID-19 on Global Poverty (No. 2020/43). WIDER working paper.
[50]. Velmonte, G. L. (2020). Contributions of Cooperatives to the Economic Development. An International Multidisciplinary Double-Blind Peer-Reviewed Research Journal, December.
[51]. Wanyama, F. O. (2016). Surviving liberalization: the cooperative movement in Kenya.
[52]. Xu, W., Fu, H., & Liu, H. (2019). Evaluating the sustainability of microfinance institutions considering Macro-environmental factors: A cross-country study. Sustainability, 11(21), 5947.
[53]. Yuan, J., Teoh, A., & Chen, W. (2022, July). An empirical study on the impact of technological innovation on enterprise performance based on IT value-added theory. In 2022 European Conference on Natural Language Processing and Information Retrieval (ECNLPIR) (pp. 28-35). IEEE.

ABSTRACT:
In Kenya MSMEs employ over 15 million people and contribute about 30% to the national value-added. However, it has been established that on average Kenyan establishments have an average age of 3.8 years at closure with about 80 percent of them shutting down before their 5th year of operation and 46.3 percent closing during their first year of establishment. Mostly this can be attributed to lack of access to finances. However, Microfinance institutions and can be critical to MSMES scale up, since they provide financial services to low cadre people in Kenya. The purpose of this study was to analyze the effect of Microfinance Institutions and Cooperatives as an unexploited Blue Ocean Strategy for growth of Micro and Small Medium Enterprise in Kenya. The study was anchored on; Enterprise Theory, Resource Based Theory, Credit Theory, Game Theory and Value-Added Theory. The study based on literature analysis of the available documents. The study found that microfinance and cooperatives affect the MSEMEs development. It also found that microfinance and cooperatives have the friendliest policies in the financial sector for the MSMEs. However, these two institutions remain unexploited blue ocean strategy which can provide the necessary needed finance to foster growth of MSMEs in Kenya. The study recommends that given Microfinance institutions and cooperatives have the friendliest policies in the financial sector MSMEs should take advantage of these and try to access the needed finances for their scaling up. Government should support or guarantee these institutions to increase their capital base from donors and other organizations in order to have more money to advance to the MSMEs.

IJSSER is Member of