Influence of Strategic Contingency Factors on Performance of Large Manufacturing Firms in Kenya

Abstract

Even though Kenya has been praised for its robust economy and that is set to become one of the top five fastest-growing in sub-Saharan Africa, manufacturing output remains low compared to other sectors. Kenyan manufacturers have registered stagnation and declining profits of over $330 million annually. It is estimated that manufacturing firms have lost 70 per cent of their market share in East Africa and this has resulted in some firms announcing plans to shut down their plants and shift operations to Egypt. The general objective of the study was to establish the influence of strategic contingency factors on performance of large manufacturing firms in Kenya by reviewing organizational structure, information technology, dynamic capabilities and leadership characteristics as the study variables with legal and regulatory environment as the moderating variable. The study adopted a cross-sectional research design and descriptive survey design and the research philosophy was positivism. The study population study was 499 large scale manufacturing firms where a sample size of 217 firms was selected. Data was collected through the administration of questionnaires to operations managers. The study findings revealed that organization structure has a significant influence on performance of large manufacturing firms in Kenya. Organization structure was found to be positively related to performance of large manufacturing firms in Kenya. Dynamic Capabilities was also found have a positive and significant influence on performance of large manufacturing firms in Kenya. On the relationship between leadership characteristics and organization performance, the study findings revealed that leadership characteristics have a positive and significant influence on performance of large manufacturing firms in Kenya. Based on these findings and conclusions the study recommended that large manufacturing firms in Kenya should put in place better organizational structure strategies as it leads to high performance. Furthermore, the study recommended that the firms should ensure they have a specialized organization structure, high nature of the span of control, centralized structure and have departmentalization. On the importance of IT, the study recommended that large manufacturing firms in Kenya should have an improved information technology system in terms of having written down IT policy, high rate of both IT software and hardware adoption and frequently sharpen IT skills of the employees through training. The study further recommended that large manufacturing firms should also invest more in research and development, training, networking and innovation. On the leadership characteristics, the study recommended that large manufacturing should put in place strategies that encourage their leaders to have leadership characteristics as it has a positive influence on performance. To do that, the firms should encourage and put in place measures that promote idealized influence, intellectual stimulation, inspiration motivation and individualized consideration as they influence performance positively. The study established an optimal model which indicated that organization structure, information technology; dynamic capability and leadership characteristics have a significant influence on firm performance.