The Influence of Organizational Structure and Industry Competition on the Relationship Between Corporate Strategy and Performance of Companies Listed on the Nairobi Securities Exchange

Abstract

Business survival the world over is largely dependent upon their corporate strategies and extant structural configuration. The main purpose of a firm is to achieve sustainable competitive advantage in the industry in which it is operating. Scholars generally concur that strategic content and orientation, by and large, affect firm performance. Researchers and stakeholders have attempted to unravel how their firms can remain competitive by ensuring sustainable superior performance. Despite these efforts, it is still difficult to explain how similar firms operating in the same industry would manifest themselves differently and have variations in their performance. The broad objective of the study was to investigate the influence of organizational structure and industry competition on the relationship between corporate strategy and performance of companies listed on the Nairobi Securities Exchange. Consequently, four specific objectives were formulated with corresponding hypotheses which were statistically tested. The context of the study was publicly quoted companies in Kenya, and relied on both secondary and primary data. Anchored upon industrial organization economic theory, contingency theory and stakeholder theory, the study was an empirical investigation of the impact of industry competition and organizational structure on the strategy-performance relationship of companies listed on the publicly quoted companies. The research population comprised all the sixty three companies listed on the bourse. A descriptive census survey was conducted on the companies with a response rate of seventy three percent. The respondents comprised mainly, top management staff, of the Kenyan listed companies. Statistical tools were applied to evaluate variations in manifestations of the variables and to test the hypotheses respectively. Baron and Kenny model and hierarchical regression used to test for moderating influence of industry competition whereas the mediating role of organizational structure was tested using stepwise regression method. The key finding is that joint effect of the predictor variables was greater than the single effect of corporate strategy on performance. The overall results show that the finding was statistically significant in respect of non financial performance. This supported Industrial economic theory, contingency theory and stakeholder theory. The study makes significant contribution to strategic management theory, policy issues and managerial practice. The findings are intended to assist organizations in formulating and concretizing policies for continuity of organizational success. It offers suggestions and recommendations for policy makers that are poised to improve performance. Consequently, the study also proposes areas for further research.