Competitive strategies, Business Environment, corporate image and performance of large Manufacturing Firms in Kenya

Abstract

Understanding of how firms can attain improved organization performance has been empirically researched but has not yet to be settled. While strategy is seen to influence performance, other factors seem to influence this relationship which could have either a direct or indirect influence. Empirical research indicates that organizations exist in a dynamic environment. Another factor which has received little attention is corporate image. Many firms today spend large amounts of significant resources in an endeavor to create a good image. Firm’s stakeholders are sensitive to corporate image and they are the ones that influence performance. Literature is not clear on corporate image influence to the performance of firms. This study sought to determine the influence of competitive strategies, business environment, and corporate image on the performance of large manufacturing firms in Kenya. The study used Porter’s (1980) competitive strategies framework and was founded on Dynamic Capability, Stakeholders theories and goal setting theory. The study used positivist philosophy while adopting a cross-sectional descriptive survey. The population of the study was all the large manufacturing in Kenya. Sample selection was through simple random sampling from each stratum of the manufacturing sector. Collection of data was done through a structured questionnaire. Descriptive statistics was done through the use of percentages, mean scores and standard deviations. Through regression analysis results indicated that manufacturing firms in Kenya adopted competitive strategies in response to business environment, cost strategy particularly had a higher influence on the performance of manufacturing firms in Kenya. These strategies significantly improved the performance of large manufacturing firms in Kenya. Additionally, results indicated that manufacturing firms have been trying to maintain a good corporate image leading to reinforcement of the view of dynamic capability theory stakeholder’s theory and goal setting theory that firms should set goals, and then build a good corporate image as a firm’s intangible resource toward the stakeholders, which can lead to improved performance. The findings for competitive strategies had a significant influence in predicting performance of the firms. The moderating role of both corporate image and business environment on the relationship between competitive strategies and performance of the firms was found to be statistically significant. Additionally, the joint influence of competitive strategies, business environment and corporate image on the performance of firms was significant. Corporate Image is a function of organization signal which determines perception of the stakeholders especially the key stakeholders who are the customers. The proximate basis for differences in firms’ performance is mostly found within the capabilities and resources of the firm. Each firm can endeavor to set challenging goals to differentiate from rivals by creating value profitably in the eyes of the stakeholders to gain support. Large manufacturing firms in Kenya should emphasize cost leadership strategies especially consistently seeking to lower the costs of production, cutting down operating costs and putting more emphasis on tight control on expenses. This can enable the firms achieve a sustained performance. The study recommends further that manufacturing firms should craft competitive strategies to mitigate the influence of business environment as firms enhance corporate image. The study recommends that firms have a strategic view of corporate image since it can significantly influence performance of firms. The study recommends inclusion of other sectors like service industry and medium and small firms in future research to be able to further generalize the findings.