Strategic Capabilities and Performance of Pharmaceutical Companies in Kenya

Abstract

The pharmaceutical industry in Kenya operates in an environment characterized by rising competition, regulatory pressure, and rapid market changes, all of which require firms to develop capabilities that support sustained performance. This study examined the influence of strategic capabilities on the performance of pharmaceutical companies in Kenya, with firm characteristics considered as a moderating variable. The study was informed by the Innovation Diffusion Theory, Knowledge-Based Theory, Porter’s Competitive Theory, and Dynamic Capabilities Theory. Specifically, the study assessed the influence of technological capability, marketing capability, dynamic capability, and human resource capability on firm performance. The study adopted a descriptive research design. The target population comprised 415 pharmaceutical companies operating in Kenya, including manufacturers and distributors. A stratified random sample of 103 respondents was selected. Primary and secondary data were collected using a structured questionnaire, and the data were analyzed using SPSS version 24. Descriptive and inferential statistics were used to examine the relationship between strategic capabilities and firm performance. The findings revealed that technological capability had a positive and significant association with firm performance (r = 0.685, p = 0.000). Marketing capability was also positively and significantly associated with firm performance (r = 0.608, p = 0.000). In addition, dynamic capability showed a positive and significant association with firm performance (r = 0.653, p = 0.000), while human resource capability was positively and significantly associated with firm performance (r = 0.624, p = 0.000). The four strategic capabilities jointly explained 53.4% of the variation in firm performance. After introducing firm characteristics as a moderating variable, the coefficient of determination increased from 53.4% to 56.0%, indicating that firm characteristics strengthened the relationship between strategic capabilities and performance. The study concludes that strategic capabilities are important drivers of the performance of pharmaceutical companies in Kenya and that firm characteristics play a meaningful moderating role in this relationship. The findings provide useful evidence for managers, policy makers, and scholars seeking to strengthen organizational performance in the Kenyan pharmaceutical sector.