Title: INFLUENCE OF STRUCTURAL HOLES ON FINANCIAL PERFORMANCE OF MEDIUM SIZED ENTERPRISES KENYA
Abstract: The purpose of this study was to examine the influence of structural holes on financial performance of medium sized enterprises in Kenya . This is because the Medium sized enterprises play an important economic and social role in many countries. If these firms want to remain competitive and sustainable there is need to understand the influence of entrepreneurial networks on financial performance. A descriptive survey design was adopted. The target population was drawn from 51 medium sized enterprises in Kenya which participated in the top 100 mid-sized ranking for the period 2011 to 2015 by KPMG. Multi stage, systematic and purposive sampling was used to select a sample of 255 which has the data needed in the study. Primary data was collected using questionnaires. Statistical Package for Social Sciences (SPSS) was used in the analysis of data. The study findings indicated that structural holes were a key driver of financial performance of medium sized enterprises in Kenya. This was evidenced by the responses from the respondents who agreed that members of their organization belonged to professional network, by being part of the professional network has improved the organization’s overall performance, their organization used social media personalities/ brand ambassadors to sell their brands to the general public and the internal policies and guidelines of their organization were effectively made clear to all employees. The study concluded that an individual can be constrained in a network if they have too few contacts; has contacts closely connected with one another; or shares information indirectly via a central contact therefore companies that strategically use influencers to bridge structural holes may be able to create brand equity more efficiently. The findings encourage managers to engage in active networking with different actors within and outside of existing networks and especially with those who are relevant to the business in which a manager and a firm operate. The results strongly support the necessity for managers to create new active co-operational relationships. Key Words: Structural Holes, Financial Performance, Medium Sized Enterprises, Entrepreneurial Networks