STAKEHOLDERS’ PERCEPTIONS ON THE INFLUENCE OF ENVIRONMENTAL POLICY ADOPTED ON ECONOMIC PERFORMANCE OF SMALL AND MEDIUM SIZED MANUFACTURING ENTERPRISES IN NAKURU COUNTY, KENYA

Abstract

The adoption of environmental policies by large manufacturing firms has been shown to enhance their economic performance. Small and medium-sized enterprises (SMEs) are now also adopting these policies to reduce their economic footprint. However, there is limited documentation on how these policies affect their economic performance. This study aimed to assess stakeholders' perceptions of the influence of environmental policy adopted on the economic performance of manufacturing SMEs in Nakuru County. Ecological modernization theory guided this study. The study employed an explanatory sequential mixed-method research design. The target population comprised proprietors of 400 registered manufacturing micro and SMEs in Nakuru County, while the accessible population included proprietors of 94 SMEs with 10–99 employees and at least five years of operation. The sample size was 76 SMEs proprietors, and stratified random sampling was used to select participants for the survey. Simple random and purposive sampling were used to select SME proprietors and environmental officers, respectively, for the qualitative component. Data collection tools included SMEs proprietor’s questionnaire, SMEs proprietors’ interview guide, and county environmental officer interview guide and were validated by five policy experts at Egerton University. The questionnaire was piloted, and its reliability was estimated using Cronbach's Alpha, with a coefficient of 0.870 obtained. Descriptive and inferential statistics were used to analyze quantitative data using SPSS version 26. Qualitative data was analyzed using content analysis using MaxQDA. Hypotheses were tested at a 0.05 level of significance. The study found that majority of respondents adopted environmental management practices (EMPs) to appeal to new customers, enhance their firms' image and reduce production costs. Additionally, to a larger extent SMEs adopted regular and routine maintenance of equipment, selling waste to other organizations and use of energy-efficient bulbs. The study also established that stakeholders perceive that energy efficiency practices adopted had a significant influence on the economic performance of manufacturing SMEs. However, stakeholders perceived waste management practices adopted had no significant influence on economic performance of manufacturing SMEs. Overall, it was found that stakeholders perceived that EMPs have a significant influence on the economic performance of manufacturing SMEs. The study concluded that environmental policies have an influence on the economic performance of manufacturing SMEs in Nakuru County from a stakeholder perspective. In this study, it is recommended that the government should raise awareness among SMEs about the importance of adopting EMPs in their operations.