It-enabled Dynamic Capabilities and Their Influence on Organizational Agility; Case for Nairobi’s Medium-sized Manufacturing Firms

Abstract

Globalization, fueled by the progressive rate of technological advancement, has exerted profound changes in the way individuals, businesses or society in general operate. Disruptors are fundamentally changing business models across the world and no business, either big or small, can claim to be immune. As such, organizational agility has lately become a predictor of a firm’s performance. It represents the capability of a business to rapidly change or adapt itself in response to uncertainty or rapidly changing markets. This study aimed to determine IT-enabled dynamic capabilities implemented in Nairobi’s medium-sized manufacturing firms and their influence on organizational agility. The researcher discussed organizational agility from an innovation and operational adjustment perspective. The theories selected to support the study were the Dynamic Capability View Theory, the Core IS Capabilities for Exploiting Information Technology and the IT-Capability Maturity Framework. The measurement model followed the recommendations of ‘construct measurement in organizational strategy research’ outlined by Venkatraman et al., (1986). It involved operationalization of the study variables through conducting literature review. The study used a descriptive, cross-sectional survey design targeting respondents working within IT, Operations and Business Development functions of 180 medium-sized manufacturing firms head-quarted in Nairobi County. From a sample size calculated as having 229 respondents, a response rate of 77.29 % was achieved. Data collected was then analyzed using Statistical Package for the Social Sciences (SPSS) version 22 as the main analysis tool. Pearson correlation analysis was applied to examine the relationship between the independent variables and the dependent variable. The three independent variables i.e., IT- enabled sensing capabilities, IT- enabled seizing capabilities and IT- enabled reconfiguration capabilities were all found to have a positive and significant correlation to the dependent variable (i.e., organizational agility within Nairobi’s medium-sized manufacturing firms). Multiple regression analysis was then used to show the association between the independent variables and the dependent variable above. Again, results show that all the three independent variables have a positive and significant influence on the dependent variable. Using stepwise regression analysis, the moderating variable, environmental uncertainty was found to have a significant moderating effect on the relationship between IT-enabled sensing capabilities and organizational agility. Through the results presented, Government and policy makers will have awareness on how to foster IT based strategies designed to aid medium-sized manufacturing firms adapt to the uncertain and highly competitive environment. To the management of medium-sized manufacturing firms, the findings of this study will act as a guide as they seek adaptation and greater business opportunities in this digital era. Finally, the findings of the research contribute to a growing body of knowledge that will provide academicians and researchers with literature for future studies on related topics.