European Journal of Business and Strategic Management

ISSN 2518-265X (Online)

Vol.9, Issue 2, No.4. pp 44 - 55, 2024

www.iprjb.org

Entrepreneurial Motivation Competence and Growth of Micro and Small Enterprise in

Nairobi County

Justus Mungiria Thaimuta, Prof. Patrick Karanja Ngugi (PhD) and Dr. Samson Nyang’au
(PhD)

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European Journal of Business and Strategic Management
ISSN 2518-265X (Online)
Vol.9, Issue 2, No.4. pp 44 - 55, 2024

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Entrepreneurial Motivation Competence and Growth Abstract

of Micro and Small Enterprise in Nairobi County
Purpose: The purpose of the study was to establish how
entrepreneurial motivation competence influences the
1*Justus 2Prof.
Mungiria Thaimuta, Patrick growth of micro and small enterprise in Nairobi County.
Micro and Small Enterprises (MSEs) are important drivers
3Dr. Samson Nyang’au
Karanja Ngugi (PhD) & of economic growth and development in Kenya. These
(PhD) enterprises create employment, facilitate wealth creation
1,2,3 Department of Entrepreneurship, Technology,
and form the backbone for private sector growth and
Leadership and Management, School of Business, Jomo expansion. The numerous challenges facing MSEs in
Kenyatta University of Agriculture and Technology Kenya are both internal and external to their operations.
Many businesses are characterized by entrepreneurs’ lack
of proper entrepreneurial training, lack of marketing
Article History capacity and broad operational capacity, lack of business
innovation, inadequate business training, lack of
Received 20th March 2024 motivation for business and pro-activeness.
Received in Revised Form 17th April 2024 Methodology: The study adopted a descriptive survey
design. There were 1,236,907 operating businesses
Accepted 23th May 2024
categorized as MSEs in Nairobi County by the year 2020.
To select the MSE in all the regions in Nairobi County,
cluster sampling techniques was employed, first to
identify the various MSEs and clusters relevant to this
study. Seventeen clusters were identified according to
where they are located. 384 respondents formed the study
sample. The selection of the sample from each cluster of
How to cite in APA format: the study was through simple random sampling. The study
Thaimuta, J., Ngugi, P., & Nyang’au, S. (2024). used a questionnaire to collect primary data, which was
Entrepreneurial Motivation Competence and Growth of then analyzed using Statistical Package for Social
Micro and Small Enterprise in Nairobi County. European Sciences (SPSS version 23). Data analysis was done using
Journal of Business and Strategic Management, 9(2), 44– descriptive statistics, Pearson correlation coefficient and
55. https://doi.org/10.47604/ejbsm.2573 regression analysis.
Findings: The findings showed that an increase in
Innovation competence would result to increase in growth
of micro and small enterprise in Nairobi County. The
findings showed that a unit increase in Entrepreneurial
Motivation competence would result to an increase of
0.639 units in growth of micro and small enterprise in
Nairobi County. The univariate analysis fitted to test the
relationship between motivation competence and growth
of micro and small enterprises in Nairobi County show
that entrepreneurial motivation competence explained
29.9% of the variation in growth of micro and small
enterprises in Nairobi County other factors held constant.
Unique Contribution to Theory, Practice and Policy:
The Theory that underpinned the study was
entrepreneurial competency theory. This study
recommended that micro and small enterprises should
have a strong mission and vision that is shared with all
employees. This will help to create a shared sense of
purpose and ensure that everyone is working towards the
same goal. Investing in training and development will help
to increase employee motivation.
Keywords: Entrepreneurial, Motivation, Competence,
Growth of MSEs, Nairobi County
©2024 by the Authors. This Article is an open access
article distributed under the terms and conditions of the
Creative Commons Attribution (CC BY) license
(http://creativecommons.org/licenses/by/4.0

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Vol.9, Issue 2, No.4. pp 44 - 55, 2024

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INTRODUCTION
During the second half of the 20th century, the micro and small enterprise (MSE) played an
increasingly important role in the implementation of technological innovations (Muturi, 2015).
Globally, half of the world’s workforce and over half the world’s Gross Domestic Product
(GDP) are contributed by MSEs.
According to Buckley & Casson, (2017) entrepreneurial management competency is an
effective approach towards solving the problems of decreased productivity, labour cost and
consequent rise in unit costs. Entrepreneurial management provides opportunities to achieve
competitive advantage in an intermediate to long-term time frame.
The component of entrepreneurial management in this study is entrepreneurial motivation
competence. Entrepreneurial innovation competence describes the characteristic of
entrepreneurial actions to anticipate future opportunities, both in terms of products and in terms
of markets and consumer demand (Ferreira, Coelho & Moutinho, 2020).
Entrepreneurial motivation competence refers to the management adopted ways of engaging
with its employees or competitors. Entrepreneurial training competence refers to the impacted
ideas or skills for independent action of an individual or a team in achieving the set goals
(Christopher, 2015). On the other hand, entrepreneurial marketing competence relates to the
types of marketing strategies for products or services a company has introduced to the market
(Greiling, 2015). Entrepreneurial marketing leads to change in marketing strategies to
maximize on untapped markets. Despite numerous methodologies having been proposed,
MSEs in Kenya still fail to effectively adopt entrepreneurial management competencies and
skills in order to enhance their business growth (Ndururi, Mukulu & Omwenga, 2019).
Globally all firms, including microenterprises, are established to achieve certain goals.
Enterprise growth is therefore defined as a firm’s ability to achieve planned goals as measured
against its intended outputs and encompasses outcomes related to financial growth, market
growth and shareholder return (Taouab & Issor, 2019). MSE growth may be measured using
objective, subjective, or operational measures (Wach, Stephan & Gorgievski, 2016). Pilat and
Wolf (2015) suggest the goal approach as a composite measure of Enterprise growth. The goal
approach measures growth using financial (objective) and non-financial (subjective) measures.
Financial indicators include profitability indicators such as return on asset (ROA), return on
investment (ROI), return on equity (ROE), return on sales (ROS), market share, and operational
efficiency. Non-financial measures include job satisfaction, organizational commitment,
employee turnover and entrepreneur satisfaction (Khalaf, Hmoud & Obeidat, 2019).
Measuring the growth of microenterprises in developing countries in Africa is challenging
because small firms often consider financial growth measures to be confidential, and guard
them from public scrutiny (Greiling, 2015). Collecting growth information from privately
owned MSEs is often difficult due to a lack of historical information and accessibility and even
when it is obtained it is often imperfect (Siebert, 2013). Due to these challenges, researchers
often evaluate business enterprise growth of MSEs using general subjective measures that can
reflect more-specific objective measures (Sabana, 2014). Therefore, most research studies such
as Christopher (2015) and Greiling (2015) have developed the use of a five-point Likert scale
which measures sales growth and profitability growth as financial growth measures. A similar
technique is used by Polit and Beck (2014). This approach is implemented as it avoids the

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direct approach of asking for sales or profitability figures but infers the growth indirectly,
through the responses on the level of satisfaction with sales and profitability growth of the firm.
Many scholars and policy makers agree on the important role of MSEs in economic growth.
However, in Kenya MSEs face high mortality rate. KNBS, (2020) reported that 2.2 million
businesses majority of them being MSEs have closed down. The reports further indicated that
75% of the MSEs do not live past their third birthday which imply that many enterprises
collapse in their first three years of operation. Mukulu & Marima, (2017), in their study
reported that MSEs have not been able to become competitive over the past 15 years and their
contribution to the economy has stagnated at 17%. This poor growth of MSEs denies the
government necessary revenue through lost taxes, results to loss of capital of the owners and
also kills job opportunities amidst increasing joblessness among young people in Kenya. For
Kenya to achieve the much anticipated economic prosperity, the challenges of growth of the
MSEs must be addressed.
The mechanism of the business management is inter-linked and all crucial to dynamics of MSE
business venture (Florida, Mellander & King, 2015). Big businesses rely on specialists’
knowledge which small businesses, usually cannot afford. As a result, small business owners
perform most of these functions. MSEs do not have all the necessary competencies to carry out
the wide range of activities and the situation becomes worse in a globalized context, where
most businesses have to internationalize their business operations and have to deal with
intensified competition (Greiling, 2015). On the other hand, the internal factors that inhibit the
growth of MSEs include inadequate managerial and technical skills to influence their
innovative capacity, lack of proper entrepreneurial training, lack of motivation and poor
marketing strategies.
However, little has been done on influence of entrepreneurial management competencies, that
is Motivation, on growth of micro and small enterprise in Nairobi County hence there is a
conceptual gap the current study intends to address.
Elena, (2012) posits that performance is a subjective and multifaceted phenomenon. Quoting
Bourguignon (1997) who defined performance as reflecting the accomplishment of
organizational objectives which represents what contributes to optimizing the value-cost
couple and not only what contributes to diminishing the cost or raising the value which on the
long run keeps the competition at a distance through a strong motivation of all the members of
the organization. Performance can also be defined as a state of competitiveness of the economic
entity, reached through an efficiency and productivity level, which ensures its durability on the
market (Elena, 2012).

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Conceptual Framework

Entrepreneurial Motivation
Growth of MSEs
Competence
 Profits Margin
 Job satisfaction
 Productivity
 Number of Achievements
 Market Share
 Competitive salary
 Number of Employees
 Working conditions

Independent variable Dependent Variable

LITERATURE REVIEW
Theoretical Review
Fredrick Herzberg performed studies to determine which factors in an employees work
environment caused satisfaction or dissatisfaction. This was for him to better understand
employee attitudes and motivation. He published his findings in his 1959 book - “The
motivation to work”. The studies included interview in which employees were asked what
pleased and did not please them about their work. He found that the factors causing job
satisfaction are different from those causing dissatisfaction. He developed “motivation-
hygiene” theory to explain these results.
Herzberg further argued that there are two distinct human need portrayed, first there are
physiological needs that are accomplished by money such as food, shelter and clothing.
Second, there is the psychological need to achieve and grow. This need is fulfilled by the
activities that cause one to grow. When employees are happy and satisfied and their needs and
desires are met, it is very likely that all the organization goals will be met. Employee
satisfaction is a factor in employee motivation and positive employee confidence in the
workplace. Motivation of employees offers many benefits to the organization and also to the
employees themselves. Motivation acts as a technique for improving the performance of
employees working at different levels (Herzburg, 1968).
Generally, firms that have adopted this mode of motivation have achieved high levels of
efficiency and effectiveness in their day-to-day business operations hence improving their
growth by gaining a competitive advantage, increased profitability and increased market share
over their competitors. Motivation of employees is one function which every MSE manager
has to perform along with other managerial functions if the sector has to grow.
Empirical Review
Motivation is the word derived from the word ‘motive’ which means needs, desires, wants or
drives within the persons. It is the process of inspiring people to actions to achieve the set goals
(Sabir, 2017). In the goal background, the psychological factors motivating the people’s
behavior can be: Job-Satisfaction, Achievement, Team Work, Need for Money and Respect.
The entrepreneurial motivation is the process that activates and motivates the entrepreneur to
exert a higher level of efforts for the achievement of his/her entrepreneurial goals. In other
words, entrepreneurial motivation refers to the forces or drive within an entrepreneur that affect

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the direction, intensity and persistence of his/her voluntary behaviour as an entrepreneur. So,
to say, a motivational entrepreneur will be willing to exert a particular level of effort (intensity)
for a certain period of time (persistence) towards a particular goal (direction). Motivation is
also a process that starts with a physiological or psychological deficiency or need that activates
behaviour or a drive that is aimed at a goal or an incentive.
To survive and be profitable in the highly challenging and competitive global market economy,
all the factors of Production, that is, machines, materials and labour, – should be managed in
the best way possible. Among the factors of production, the human resource constitutes the
biggest challenge because unlike other inputs employee management calls for skillful handling
of thoughts, feelings and emotions to achieve highest productivity (Sabir, 2017). High
productivity is a long-term benefit of employee motivation. Motivation occupies an important
place and position in the whole management process. This technique can be used fruitfully for
encouraging workers to make positive contribution for achieving organizational objectives.
One of the most important functions of management is to create enthusiasm amongst the
employees to execute in the best of their abilities. The process of motivation consists of 3
stages: a) A felt need or obligation, b) An incentive in which needs have to be aroused and c)
When needs are satisfied, the goals are achieved.
Sometimes employers fail to understand the importance of motivation in accomplishing their
mission and vision. Even when they understand the significance of motivation, they lack the
skill, knowledge and competence to provide a work environment that fosters employee
motivation. Motivation is useful in all aspects of life and even in our family life. The same is
the case with business. This clearly suggests that motivation is extremely important and it is an
integral part of management process itself (Sabir, 2017).
METHODOLOGY
The study adopted a descriptive survey design. There were 1,236,907 operating businesses
categorized as MSEs in Nairobi County by the year 2020 (KNBS, 2020). To select the MSE in
all the regions in Nairobi County, cluster sampling techniques was employed, first to identify
the various MSEs and clusters relevant to this study. Seventeen clusters have been identified
according to where they are located. 384 respondents formed the study sample. The selection
of the sample from each cluster of the study was through simple random sampling. The study
used a questionnaire to collect primary data, which was then analysed using Statistical Package
for Social Sciences (SPSS version 23). Data analysis was done using descriptive statistics,
Pearson correlation coefficient and multiple regression analysis.
FINDINGS
The results presented in Table 1 show that the study had a response rate of 77% (296 out of
384) which was considered to be high according to Shelley & Horner, (2021). Response rate is
a key indicator of the quality of a study. It measures the proportion of individuals who respond
to a survey or other research study, and it is an important measure of the reliability and validity
of the results. A low response rate can lead to a biased sample and inaccurate results, while a
high response rate ensures that the sample is representative of the population and that the results
are more likely to be accurate. Thus, response rate is an important measure of the quality of a
study and should be taken into consideration when evaluating the results of a study.

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Vol.9, Issue 2, No.4. pp 44 - 55, 2024

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Table 1: Response Rate

Frequency Percent (%)
Returned Questionnaires 296 77%
Unreturned Questionnaires 88 23%
Total 384 100
Descriptive Results for Entrepreneurial Motivation Competence
The study further assesses how respondents responded to statements used to measure
Entrepreneurial motivation competence. The study used percentage, means and standard
deviation in analysis of descriptive analysis.
Table 2: Descriptive Results for Entrepreneurial Motivation Competence
Std
Statement SD D N A SA Mean Dev
Motivation is a needs-satisfying process and as
needs are satisfied, the person will put more
effort in attaining organizational goals 2.2% 4.4% 1.9% 46.7% 44.8% 4.27 0.88
Responsibility of workers produces job
satisfaction, hence more production 2.2% 2.2% 3.5% 40.0% 52.1% 4.37 0.84
Advancement of employees produces more job
satisfaction, hence more production 2.9% 4.1% 3.2% 42.2% 47.6% 4.28 0.93
Employee satisfaction is a factor in employee
motivation and achievement and are associated
with high production 3.8% 3.2% 2.9% 46.7% 43.5% 4.23 0.94
Respect and recognition are associated with high
production 3.8% 3.5% 4.4% 43.5% 44.8% 4.22 0.96
Growth achievement and positive employee
confidence are important if organisational goals
are to be met 4.4% 3.8% 4.1% 48.6% 39.0% 4.14 0.98
Improved performance is associated with
satisfaction of ‘need for money’ factor in the
organization 3.8% 3.8% 2.2% 43.5% 46.7% 4.25 0.96
The employee’s efforts which lead to better
performance lead to more personal rewards 4.1% 3.8% 4.1% 42.2% 45.7% 4.22 0.99
Achievements of organization goals are
dependent on incentives in which employee
needs are satisfied 3.8% 2.5% 6.7% 46.3% 40.6% 4.17 0.94
When the work is properly designed and the
worker properly recognized and rewarded for his
accomplishments, self-esteem and self-
actualization are met 4.1% 3.8% 2.2% 45.7% 44.1% 4.22 0.97
Team work and collaboration are part of
measures to achieve organizational goals 3.5% 5.1% 4.1% 39.0% 48.3% 4.23 0.99
Motivated employee under good working
conditions is a productive employee 3.5% 2.5% 5.4% 45.4% 43.2% 4.22 0.92
Aggregate Mean score 4.24 0.94
SD-Strongly Disagree, D-Disagree, N-Neutral, A-Agree and SA-Strongly Agree
The results presented in Table 2 indicates that respondents agreed and strongly agreed with
statement used in measuring entrepreneurial motivation competence. The findings implied that
entrepreneurial motivation competence is critical in enhancing growth of micro and small

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enterprises. Motivation and competence can have a significant impact on the growth of micro
and small enterprises. Motivation is a powerful tool to help entrepreneurs take action and make
progress towards their goals. It enables entrepreneurs to focus on their goals and take steps to
achieve them. When motivation is combined with competence, it can help entrepreneurs to
make informed decisions and take informed steps in order to reach their goals.
The study finding agreed with the findings of Porter and Miller (2013) that found that
motivation of MSEs is the single most important factor that affects the increase of productivity
because motivation has a significant impact on business growth. The other two factors that
closely impact growth gains are investments on both physical and intellectual capital of MSE.
Motivation of employees increases total productivity in MSE firms as well as implementation
of new working methods that enhance growth.
Similarly, Greif, (2017) noted that motivated employees ensure effective planning functionality
that is engraved in teamwork shared with the various players involved in the business
operations. This increases accountability and transparency in operations. The planning
functionality is required to plan on why, when and where resources will be required and how
they will be availed where they will be required. The study further agreed with Varma, (2017)
who found that motivation of employees should be oriented as a growth concept. MSEs have
adopted motivational factors that are most widely used methodologies for developing a stable
framework to support organization’s business process in order to enhance any business
production and operations.
Correlation Analysis
The results of correlation analysis presented in Table 3 further show that entrepreneurial
motivation competence and growth of micro and small enterprises in Nairobi County had a
Pearson’s correlation of r=0.649 (p=0.000) which was strong, positive and significant. The
correlation results implied that entrepreneurial motivation competence had a strong, positive
and significant association with growth of micro and small enterprises in Nairobi County.
According to these findings enhancing entrepreneurial motivation competence would result to
an increase in growth of micro and small enterprises in Nairobi County.
Table 3: Pearson’s Correlation Matrix
Entrepreneurial
Motivation
Competence
Entrepreneurial Motivation Competence Pearson Correlation 1
Sig. (2-tailed)
N 296
Growth of MSEs Pearson Correlation 0.649**
Sig. (2-tailed) 0.000
N 296
** Correlation is significant at the 0.01 level (2-tailed).
Regression Analysis Results
The results presented in Table 4 show the univariate analysis fitted to test the relationship
between entrepreneurial motivation competence and growth of micro and small enterprises in

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Nairobi County. The results show that entrepreneurial motivation competence explained 29.9%
(R-square=0.299) of the variation in growth of micro and small enterprises in Nairobi County.
The results implied that 29.9% variations in growth of micro and small enterprises in Nairobi
County could be explained by entrepreneurial motivation competence other factors held
constant. The Results of ANOVA (f-statistics=133.743, p=0.000) show that univariate model
fitted to test whether entrepreneurial motivation competence significance predicted growth of
micro and small enterprises, found it was statistically significant. This further implies that the
model had a goodness of fit.
The coefficient of entrepreneurial motivation competence was β=0.639, with p-value= 0.000.
These findings also implied that entrepreneurial motivation competence positively and
significantly predicted growth of micro and small enterprises in Nairobi County. The finding
confirmed that increasing entrepreneurial motivation competence would result to 0.639 units
increase in growth of micro and small enterprises in Nairobi County. According to these
findings enhancing entrepreneurial motivation competence would result to an increase in
growth of micro and small enterprises in Nairobi County. The study finding agreed with the
findings of Porter and Miller (2013) that found that motivation of MSEs is the single most
important factor that affects the increase of productivity because motivation has a significant
impact on business growth. The other two factors that closely impact growth gains are
investments on both physical and intellectual capital of MSE. Motivation of employees
increases total productivity in MSE firms as well as implementation of new working methods
that enhances growth.
Table 4: Regression for Entrepreneurial Motivation Competence and Growth of MSEs
B Std. Error Beta t Sig.
Coefficients (Constant) 0.606 0.236 2.566 0.011
Entrepreneurial
Motivation
Competence 0.639 0.055 0.547 11.565 0.000
Sum of Mean
ANOVA Squares df Square F Sig.
Regression 47.138 1 47.138 133.743 .000b
Residual 110.317 294 0.352
Total 157.454 295
Adjusted
Model Summary R R Square R Square Std. Error of the Estimate
.547a 0.299 0.297 0.59367
a. Dependent Variable: Growth of MSEs
b. Predictors: (Constant), Entrepreneurial Motivation Competence
Test of Hypothesis
The study relied on the results of univariate regression analysis presented in Table 4 above to
carry out hypothesis testing. The hypothesis was tested at the level of significance of 0.05,
where the null hypotheses was rejected when the coefficient had a p-value of less than 0.05.
HA2: Entrepreneurial motivation competence influences growth of micro and small
enterprise in Nairobi County

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The study sought to test whether entrepreneurial motivation competence positively influences
the growth of micro and small enterprise in Nairobi County. Regression results show that
entrepreneurial motivation competence had a coefficient of β=0.639, p=0.000 which revealed
a positive and significant relationship between entrepreneurial motivation competence and
growth of micro and small enterprise in Nairobi County. The findings showed that a unit
increase in entrepreneurial motivation competence would result to an increase of 0.639 units
in growth of micro and small enterprise in Nairobi County. The study accepted alternate
hypothesis that entrepreneurial motivation competence positively influences the growth of
micro and small enterprise in Nairobi County.
The study finding agreed with the findings of Lencho, (2019) that found that motivation of
MSEs is the single most important factor that affects the increase of productivity because
motivation has a significant impact on business growth. The other two factors that closely
impact growth gains are investments on both physical and intellectual capital of MSE.
Motivation of employees increases total productivity in MSE firms as well as implementation
of new working methods that enhance growth.
Similarly, Nisar, Kumar & Prabhakar, (2019) noted that motivated employees ensure effective
planning functionality that is engraved in teamwork shared with the various players involved
in the business operations. This increases accountability and transparency in operations. The
planning functionality is required to plan on why, when and where resources will be required
and how they will be availed where they will be required. The study further agreed with
Stephen, Ireneus & Moses, (2019) who found that motivation of employees should be oriented
as a growth concept. MSEs have adopted motivational factors that are most widely used
methodologies for developing a stable framework to support organization’s business process
in order to enhance any business production and operations.
Munene (2020) also found that motivation has a major impact on the growth of micro and small
enterprises in Kenya. It is a key factor in the success of any business, as motivated individuals
are more likely to be productive and strive to reach their goals. Motivated employees are more
likely to be creative, productive, and innovative, which can help a small business become more
successful. Additionally, motivation can help to reduce staff turnover, increase morale, and
improve overall job satisfaction, which can lead to improved customer service and increased
profits. With proper motivation, micro and small enterprises in Kenya can reach their full
potential and help to drive the country's economy forward.
Table 5: Summary of Hypothesis Testing

Hypothesis Results Remarks

HA2: Entrepreneurial Motivation competence β=0.639, p=0.000 Accept HA2
has a positive influence on the growth of
micro and small enterprise in Nairobi County
CONCLUSIONS, RESEARCH GAPS AND RECOMMENDATIONS
Conclusions
The positive influence of motivation competence on the growth of micro and small enterprises
cannot be overemphasized. Motivation acts as a source of inspiration to entrepreneurs,
providing the ambition to strive for success and reach their goals, while competence lets them

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know how to go about achieving those goals. With the right combination of both, entrepreneurs
can use their skills, abilities, and resources to create new opportunities and tap into markets
that were previously inaccessible. As a result, the growth of micro and small enterprises is
likely to be accelerated, leading to increased economic activity, job creation, and general
prosperity.
Research Gap
The results of positive influence of motivation competence on the growth of micro and small
enterprises acts as a source of inspiration to entrepreneurs that provide the ambition to strive
for success and reach their goals. These results fill in the missing link between motivation and
business.
Recommendations
This study recommended that every micro and small enterprise should have a strong mission
and vision that is shared with all employees. This will help to create a shared sense of purpose
and ensure that everyone is working towards the same goal. Micro and small enterprises should
invest in employee development as it is essential for any micro or small enterprise. Investing
in training and development will help to increase motivation. Finally, MSEs should create an
open and collaborative culture where employees feel comfortable expressing their ideas and
opinions.

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