ORGANIZATIONAL ALIGNMENT AND PERFORMANCE OF MICRO, SMALL, AND MEDIUM ENTERPRISES IN AN EMERGING URBAN ECONOMY

Organizational performance among Micro, Small, and Medium Enterprises (MSMEs) remains uneven in emerging urban economies despite their central role in employment creation and economic growth. While prior research has emphasized external constraints and broad strategic orientations, limited empirical attention has been devoted to the role of internal strategic coherence. Grounded in Strategic Fit Theory, this study examines the effect of organizational alignment on MSME performance in Nairobi City County, Kenya. Using a cross-sectional survey design, data were collected from 324 owner-managers across retail, manufacturing, services, and technology sectors. Organizational alignment was operationalized through goal clarity, strategy–operations integration, market responsiveness, and performance benchmarking mechanisms. Pearson correlation and regression analyses were employed to test the proposed relationship. The findings reveal a strong and statistically significant positive relationship between organizational alignment and enterprise performance (r = 0.794, p < 0.001). Regression results indicate that alignment explains approximately 63% of the variance in performance outcomes (R² = 0.630), underscoring its substantial predictive power. The study extends Strategic Fit Theory to the MSME context by demonstrating that internal coherence between strategic intent and operational execution constitutes a dominant performance driver in resource-constrained urban enterprises. Practically, the findings suggest that strengthening alignment mechanisms may offer MSMEs a cost-effective pathway to improved competitiveness and sustainability in dynamic emerging market environments.