Moderating Influence of Competition on the Relationship between Generic Strategies and Performance of Hospitals in Kenya

Abstract

The purpose of the study was to ascertain the role of competition on the relationship between generic strategies and performance of Hospitals in Kenya. Specifically, the study sought to find out the relationship between cost leadership strategy and performance of Hospitals; to assess the relationship between differentiation strategy and the performance of Hospitals; to evaluate the relationship between focus strategy and performance of Hospitals and to establish the role of competition in moderating the relationship between generic strategies and the performance of Hospitals. The study focused on the NHIF accredited Hospitals with a bed capacity of one Hundred (100) and above. The study was anchored on Porters Typology of competitive strategies, Resource based view theory; competitive advantage theory and the game theory. The study adopted the cross-sectional mixed methods design guided by the pragmatic research philosophy. The target population was the NHIF accredited Hospital with a bed capacity of one Hundred (100) and above which stood at 150 Hospitals as at July 2016. Stratified and convenient sampling Techniques were used to select the sample of 109 Hospitals, obtained from the target population by the use of Israel Fortina (2002). Primary data was collected by the use of semi-structured questionnaires for the 109 administrators and the in-depth interview schedules for the 109 CEOs. These research instruments were successfully subjected to content validity and reliability tests. Quantitative data was analyzed by the help of SPSS for descriptive and statistical modeling of test hypothesis and drew conclusions on the study objectives. The qualitative interviews yielded information that were analyzed using thematic content analysis. The study findings (both quantitative and qualitative) revealed that all generic strategies (cost leadership, differentiation and focus strategies) posted positive and significant relationship with the performance of hospitals with differentiation strategy, posting greater significance as compared to the other strategies. The study further concluded competition significantly influenced the relationship between generic strategies and performance of Hospitals, specifically the differentiation strategy was moderated by competition, by causing a buffering effect. It therefore recommended that Hospitals be encouraged to adopt differentiation strategy in their strategy orientation, with a view to realize competitive advantage at the market place. However, it was also noted that differentiation strategy be used with caution in the face of cut-throat competition in the market, since there was a tendency for the impact of differentiation strategy to be reduced under fierce competition.