Perceived Effect of Total Quality Management on the Relationship between Generic Strategies and performance of Kenyan manufacturing firms

Abstract

The Kenya manufacturing industry contributes to 11% of the country GDP, 26% of the merchandise exported and 12 % of formal employment. The manufacturing industry in Kenya is faced with a number of challenges one of which is competition from local firms as well as well-established multinationals. This necessitates the need for the sector to implement a viable business strategy in order to improve its competitiveness. Generic strategies are widely accepted both academically and practically as sustainable competitive strategies and their influence on performance have been critically examined in a wide range of business settings in countries worldwide. TQM on the other hand establishes quality enhancement as a dominant priority and one that is vital for long-term effectiveness and survival, it focuses on increasing efficiency and improving processes, provides superior customer value and meeting customer needs. The purpose of this study was to examine the effect of TQM practices, on the relationship between generic strategies and organization performance in the Kenyan manufacturing industry. Specifically, this study focused on establishing the mediating effects of TQM practice on the relationship between cost leadership strategies; differentiation strategies; markets focus strategy and organization performance. The study adopted a descriptive research design. The target population for the study was 39 ISO certified, manufacturing firms. The target respondents were the CEO, strategic managers and Quality Assurance managers from the 39 ISO certified manufacturing firms. A pilot test was conducted to assess the questionnaire validity and reliability of the data. Structural equation modelling (SEM) and multiple Regression analysis were used to analyse the relationships between generic strategies, TQM and organization performance. The finding indicated that TQM partially mediates the relationship between cost leadership strategy and organization performance. The study established that the mediation effects of TQM on the relationship between differentiation strategy and focus strategy varied depending on the performance measure. TQM partially mediated the relationship between differentiation strategy and both financial performance and overall performance, it fully mediated the relationship between differentiation strategy and the following performance measures customer satisfaction, internal process performance and organization learning and growth. The study also established that TQM fully mediates the relationship between focus strategy and the following performance measures; financial performance; Customer satisfaction and overall performance of the organization however it partially mediates the relationship between focus strategy and internal process performance and organization learning and growth. Lastly the study established that TQM partially mediated the relationship between generic strategies and financial performance; customer satisfaction; internal process performance; organization learning and growth and the overall performance. The study is important to managers it enables them to understand the role that different TQM practices play on various generic strategies this enables them in making strategic decision concerning TQM and generic strategy implementation and choice. The study recommends that manufacturing firms should be encouraged to integrate generic strategies with TQM practice, as TQM will enable them to build processes that are responsive to the customer’s need, enable them transform existing resources in to new capabilities and integrate their processes with those of their customers and suppliers. This will make the firms more competitive hence enhancing economic development.