Influence of Strategy Implementation on the Performance of Manufacturing Small and Medium Firms in Kenya

Abstract

This study aimed at establishing the influence of strategy implementation on the performance of manufacturing SMEs moderated by age and size of the firm. Specifically, the study intended to establish whether leadership styles, structure, human resources, technology and strategic direction influences the performance of manufacturing SMEs in Kenya. The study is anchored in the Dynamic Capabilities View of the firm where successful firms master and develops unique capabilities that drive them to superior performance. Guided by the philosophy of logical positivism, a mixed design involving quantitative and qualitative designs was used to obtain information from 115 firms drawn from the total population of 593 registered SMEs in Kenya. Stratified sampling technique was used to classify these firms as small or medium, young or old. A systematic random sampling was the used to select the SMEs that participated in this study. In each firm selected, a self-administered questionnaire was then used to collect data from 115 respondents who were either the real owners or CEOs. Data was analyzed using SPSS and summary statistics such mean scores, variances, standard deviation and inferential statistics namely; correlation and regression results were used to present the data. Bivariate correlations and regression results were also used to test the hypotheses. The results provided statistical evidence that a positive and significant influence exists between strategy implementation and performance of the manufacturing SMEs. Specifically, four out of five drivers tested in this study were found to be significant and positive influence on the performance of manufacturing SMEs. These drivers are leadership styles, structural adaptations, human resources and technology embraced by the SME firm. The emphasis on the strategic direction of the firm was found to be statistically insignificant. The study also noted that the age and size of the firm does not significantly influence on the relationship between strategy implementation and performance of the SMEs in Kenya. In the practice, this study recommends that the manufacturing SMEs should build more and stronger capacities and capabilities in leadership skills by adopting more of the transformational leadership qualities, maintain flexible structures that are well matched to their goals, maintain a proper balance between strategy and human resources and pay close attention to their technology requirements. On methodology, the study recommends further studies using experimental designs since strategy implementation is a process and actual effects, influence or impact can only be well captured using a longitudinal approach. On policy, the study recommends that the Kenyan government need to assist the SMEs by setting a strong policy framework that focuses on technological needs and improvements; market and capacity building to enable these firms run and perform better.