Market Orientation, Firm Characteristics,competitive Intensity And Performance Of Private Security Firms In Kenya

Abstract

Market orientation enables organizations to acquire customer information for purposes of developing innovative products capable of satisfying customer needs better than competitors. The study analyzed the influence of market orientation, firm characteristics and performance of private security firms in Kenya. The specific study objectives were to determine the influence of market orientation on firm performance, to examine the influence of firm characteristics on market orientation and firm performance, to establish the effect of competitive intensity on the relationship between market orientation and firm performance and to determine the combined effect of market orientation, firm characteristics and competitive intensity on firm performance. The study was founded on the dynamic capability theory and the market based view as its theoretical perspectives. The underlying assumption of the dynamic capability theory is that only business firms that are effective at sensing and seizing new market opportunities as well as being able to reconfigure their resources to exploit the new opportunities will be able to achieve and sustain their competitive advantage. The market based view was also used to explain how the external industry factors such as industry rivalry and bargaining power of customers influence the market orientation and firm performance relationship. The study adopted a positivist research philosophy because it involved quantitative data collection and analysis as well as the researcher being independent. A cross-sectional design was adopted and the study population were all private security firms registered under the Kenya Security Industry Association (KSIA) and they were thirty-nine (39) firms. A census was conducted since the population was relatively small and 37 firms participated in the study. Data collection was done using a structured questionnaire and Cronbach’s alpha coefficient and factor analysis confirmed the research instrument’s reliability and validity. Findings of the regression analysis indicated that market orientation positively affected non-financial performance of security firms (F = 35.618, p = 0.000, t = 5.968, p = 0.000) and this effect was significant. Similarly, market orientation positively affected financial performance of the private security firms (F = 12.859, p = 0.001, t = 3.586, p = 0.001) and this effect was significant. Firm characteristics (size, age and ownership structure) did not moderate market orientation’s effect on non-financial and financial performance. Competitive intensity moderated the effect of market orientation on non-financial performance but not with financial performance. The joint contribution of market orientation, firm characteristics and competitive intensity to non-financial and financial performance was significant. The study findings contribute to marketing theory by demonstrating that in market situations where demand for firm products is high and competitive intensity is high, market orientation has a positive effect on firm performance. Study findings will help industry stakeholders to make policy decisions especially regarding government regulation of the industry. Limitations of the study included collecting data at one point in time, study population being limited to the members of Kenya Security Industry Association only and this limited the generalizability of the study findings. However, the limitations mentioned did not negatively affect the findings of the study. The researcher proposes that a longitudinal study be done since government regulation of the industry had taken effect after the study has been concluded including studying the influence of corporate reputation on market orientation and firm performance. Future studies should also consider using Structural equation modelling in their data analysis as well as the possibility of using new measurement scales to measure the market orientation construct.