Effects of Trade Liberalization on Small and Medium Enterprises (SMEs) in Kenya

Abstract

Purpose: The aim of the study was to assess the effects of trade liberalization on small and medium enterprises (SMEs) in Kenya.

Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.

Findings: Trade liberalization often has a mixed impact on small and medium enterprises (SMEs). On one hand, it can lead to increased market access, opportunities for growth, and access to cheaper inputs and technologies. This can result in enhanced competitiveness and expansion for SMEs, particularly those with export-oriented strategies. However, there are also challenges associated with trade liberalization, such as increased competition from larger firms or foreign competitors, potential displacement of local industries, and difficulties in meeting stringent quality and regulatory standards for exports. Additionally, SMEs may face barriers such as limited access to finance, information asymmetry, and inadequate infrastructure, which can hinder their ability to fully benefit from trade liberalization. Therefore, while trade liberalization can offer significant benefits to SMEs, it is essential to address these challenges through targeted policies and support mechanisms to ensure inclusive growth and sustainability in the SME sector.

Implications to Theory, Practice and Policy: Internationalization theory, resource-based view theory and institutional theory may be used to anchor future studies on assessing the effects of trade liberalization on small and medium enterprises (SMEs) in Kenya. Encourage SMEs to prioritize investments in innovation, research, and technology adoption to enhance their competitiveness in liberalized trade environments. Develop policy frameworks and support programs specifically tailored to address the challenges and opportunities faced by SMEs in different sectors and regions within liberalized trade environments.