The Moderation Effect of Adoption of Green Environment on the Relationship between Organizational Characteristics and Performance of Manufacturing Firms in Kenya

Abstract

For the manufacturing sector in Kenya to thrive, innovative strategies making use of the current important human concerns must be used. Strategic theory has for a long time shown that high performing organizations (HPOs) strategize along four traditional organizational characteristics; customer orientation, quality emphasis, innovation and leadership effectiveness. Keen analysis of most organizational strategies will reveal that the four characteristics are central to their strategies. To be leaders in the sub-sector, manufacturers will have to innovatively include emerging issues and concerns in their strategies. Due to the costs involved in adoption of environmental conservation measures in a firm’s value creation chain, many firms are only willing to do the minimum they can get away with. Studies have shown that significant action by organizations on any issue arise if the issue is captured in the strategies. To most managers, the issues central to strategy are the four organizational characteristics which are; customer focus, product quality, innovativeness and leadership effectiveness. This study aimed at establishing whether adoption of green environment has a moderating effect on relationship between the four organizational characteristics and performance of manufacturing firms in Kenya. A descriptive research design was employed with the target population being the 642 manufacturing firms, members of the Kenya Association of Manufacturers as of December 2012. A sample of 177 firms distributed among the sub-sectors was randomly selected. A semi structured, self administered questionnaire was used to collect data. The target respondents were to be the Chief Operation Officers or other senior level managers with access to information. A pilot study was done to test the questionnaires validity and reliability. After data collection, qualitative and quantitative techniques were used to analyze primary data. Data analysis revealed that the organizational characteristics were strong predictors of firm performance. Further, it was established that adoption of green environment did moderate that relationship. However, the moderation was inverse for the relationship between organizational characteristics and performance where a unit rise in moderated organizational characteristics reduced firm performance. This was explained by the motives for the adoption. Results indicated that firms adopted green to sooth external expectations and not to improve efficiency and hence performance. Researchers have shown that internal motives encourage firms to exploit a management practice as an “organizational resource” to improve operations due to the precise application of explicit, rational, and proven rules. In contrast, external motives drive firms to seek legitimacy. Another reason for this is that most firms had adopted green for a relatively short time. In the short term, adoption of green increases cost of production lowering the effect of the organizational characteristics on the firm performance. Performance rises slowly over time and becomes evident in the long term. Based on the findings, it is recommended that manufacturing firms should align adoption of green environment with internal motives like lowering cost of production, improving product quality among others, for it to improve their performance. Membership associations such as Kenya Association of Manufacturers should engage their members on the benefits of adopting green with internal motives. This study concentrated on the manufacturing sector. Other similar studies should be carried out in other sectors of the economy.