13th Annual International Management Conference Proceeding

DEVELOPING INTRAPRENEURSHIP IN SMALL BUSINESSES
Esther Njiru,
M.Ed, PhD Candidate (Entrepreneurship Development)
ABSTRACT
The performance of small businesses has come to the forefront with the realisation that a vast majority of business
start-ups do not survive beyond the second year. Various reasons have been levelled to this problem of business
closures: the main problem is the lack of demand for individual enterprise products and services resulting from stiff
competition. This is closely related to the lack of markets access. There is also reportedly a lack of credit, lack of
security and poor cooperation from public authorities, lack of raw materials and problems related to the worksite.
The need to be self-sustaining demands the continuous improvement of service and/or product provision and
marketing the products or services in a liberalised market. In the context of increasing market globalization and free
trade, firms must innovate constantly to improve their flexibility, competitiveness, and reactivity. As Stevenson and
Jarillo (1990) pointed out, intrapreneurship has grown in importance over recent years because large firms wishing to
compete have sought out the characteristics of flexibility, growth, and innovation more generally associated with
entrepreneurship. Many authors have highlighted the importance of intrapreneurship as a stimulus to innovation in
organizations. This paper posits that many businesses that start with high notch do not survive because the
entrepreneurial spirit is not sustained since they have not become intrapreneurial. In a review of literature, this paper
explores the concept of intrapreneurship and describes how small businesses organisations can survive through
developing intrapreneurship.
1.0 INTRODUCTION
There has been a great deal of attention paid to the subject of entrepreneurship over the past few years,
stemming primarily from the discovery by economic analysts that small firms contribute considerably to
economic growth and vitality. Moreover, many people have chosen entrepreneurial careers because doing so
seems to offer greater economic and psychological rewards as well as some level of independence than does
the large company route.
In Kenya, a mushrooming informal sector has been the response to stagnating employment growth in the
formal economy and the downsizing of parastatals and of private companies as they reduce costs in a
liberalizing environment. These causal factors are combined with one of the fastest population growth rates
in the world, requiring the economy to absorb annually about 500,000 new labour market entrants. Micro
and small enterprises (MSEs) account for more than 90% of businesses worldwide and create 50 to 60
percent of employment (Kangari, 2006). It is estimated that today, Kenya’s informal sector constitutes 98
percent of all businesses in the country, absorbs annually up to 50 per cent of new non-farm employment
seekers, has an employment growth rate of 12-14 percent, contributes 30 percent of total employment and 3
percent of Gross Domestic Product (GDP) ( Riley and Steel, 2000).
1.1 Challenges facing small businesses
For the purposes of the paper, small businesses will be defined as organization with less than 50 employees.
Small businesses have a long-term vision to grow into big enterprises. To this end the small businesses
attempt to overcome any obstacles to expand. They tend to be very robust with high growth rate. Numerous
challenges hinder growth and hence a high rate of collapse. The Small Business Administration website
shows that "two-thirds of new employer establishments survive at least two years, and 44 percent survive at
least four years." In Kenya, 50 percent of businesses fail in the first year and 95 percent fail within five years
(Central Bureu of Statistics, et al, 1999).
Opinions abound about what a business owner should and shouldn't do to keep a new business afloat in the
perilous waters of the entrepreneurial sea. Below is a list of some reasons why businesses fail from a variety of
writers: starting the business for the wrong reasons e.g. to get rich quickly; Poor Management; Lack of
Planning so the business has grown too fast; Over expansion; the business doesn't make profits; the owner
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