Influence Of Regional Integration And Macro-Environment On Strategic Alliances And Performance Of Kenyan Manufacturing Firms In The East African Community Market

Abstract

The study sought to establish the influence of regional integration and macro environment on the relationship between Strategic alliances and Performance of the Kenyan manufacturing firms in the East African Community Market. The specific objectives were to determine; the effect of strategic alliances on the performance of Kenyan manufacturing firms in the East African Community market; the influence of regional integration on the relationship between strategic alliances and performance of Kenyan manufacturing firms in the East African Community market; the influence of macro environment on the relationship between strategic alliance and performance of Kenyan manufacturing firms in the East African Community market; and the joint effect of strategic alliance, regional integration and macro environment on the performance of Kenyan manufacturing firms in the East African Community market. These objectives had an equal number of corresponding hypotheses that were tested to achieve the main goal of this study. The study was anchored on five theories; Resource dependency theory (main anchoring), Transaction Costs theory, Resource Based Theory, theory of integration and the Open system theory. The study was guided by the positivism philosophical paradigm and a cross sectional descriptive survey design adopted. The population of the study was 160 Kenyan manufacturing firms in the EAC market. Primary data was collected using a semi structured questionnaire. A response rate of 81.88% was realized. Secondary data was collected from financial statements of the respective firms. Data was analyzed using descriptive and inferential statistics. Hypotheses were tested using both simple and multivariate regression analysis while Baron and Kenny model of stepwise regression analysis were used to test for moderating effects. The findings indicated that strategic alliances had a strong statistically significant influence on the performance of Kenyan manufacturing firms in the EAC market. This finding supported the Resource Based View proposed by Penrose that firm specific resources explain competitive advantages. Regional integration was found to have a statistically significant moderating influence on the relationship between strategic alliance and firm performance. Similarly, the moderating role of macro environment on the relationship between strategic alliance and firm performance was found to be statistically significant: Although the strategic alliances alone are able to explain largely in the overall firm performance, when combined with the macro environment they explain a higher overall firm performance. These results are consistent with propositions in the resource dependence and open system theories. In a regional integration framework, firms depend on each other through strategic alliances to gain competitive advantages as envisaged in resource dependency theory. For open systems theory, integration and macro-economic events which are external to the firm, influences performance. The findings indicated there is a statistically significant positive joint influence of strategic alliance, regional integration and macro environment on the performance of Kenyan manufacturing firms in the East African Community market and the joint effect was greater than the influence of each variable individually. The study has made contribution to theory, policy and management in relation to how regional integration and macro-environment influences relationship between strategic alliances and firm performance. In light of these findings, managers should ensure that strategic alliances are crafted based on mutual benefit and to enable them properly interpret the environment and develop appropriate strategies for competitive advantage. The study recommends that policy makers in EAC partner states should encourage complementarity and competitive advantage approaches while promoting skills transfer and information sharing amongst the firms. The study has certain limitations; a cross-sectional survey approach method was used for the study and data was collected at only one point in time which may bias the findings; single respondent was used in data collection which may bias or determine the nature of responses. Future research directions include a replication of study in a longitudinal approach while using path analysis or structural equation models and consideration of other sectors, firm characteristics and resource constraints.”