This paper sought to explore the strategic management practices and profitability of micro small and medium enterprises. The main focus of the study was to assess influence of resources allocation and innovation on the profitability of micro, small and micro enterprises. The study adopted descriptive design where the population of the study was 1123 MSMEs and stratified random sampling techniques was applied to pick a sample of 112 MSMEs operating in central district business in Nairobi. The researcher used questionnaire to collect data. Moreover, a total of 112 questionnaires were distributed to business owners and managers of MSMEs in operating in Kamukunji in Nairobi County. Data was analyzed using both inferential statistics through regression, and descriptive statistics in the form of frequencies and percentages. The study found out that resource allocation positively and significantly influenced the profitability of MSMEs, innovation was found to positively and statistically significant influence on profitability of MSMEs, the study established that strategic leadership had a positive and significant effect on profitability of MSMEs. In addition, the study also established that strategic human resource was found to be positively related and statistically significant to profitability of micro small and medium enterprises. The study concluded that resource allocation and innovation had a significant effect on profitability of MSMEs. The study recommends that MSMEs should establish effective management and optimization of resource allocation since enterprises do not have unlimited access to resources. Moreover, study recommends that MSMEs should embrace various form innovations including product innovation, marketing innovation, process innovation and organization innovation which a considered as key driver of performance of MSMEs so that they can compete effectively with larger firms.

Profitability

Resoures allocation

innovation