Knowledge Strategy, Organizational Characteristics, Innovation And Performance Of Manufacturing Firms In Kenya

Abstract

Organizational knowledge is increasingly gaining attention in strategic management and related fields. Theoretically, there is consensus that knowledge strategy is related to organizational performance. However, few empirical studies have examined the relationship between knowledge strategy and organizational performance. Further, the few empirical studies examining the link between the variables have yielded inconsistent results. Whereas some studies have reported direct positive relationship, others found no direct relationship. This calls for research adopting a contingency approach to examine the interaction effect of situational factors on the relationship between knowledge strategy and performance. While organizational characteristics and innovation are critical factors for knowledge initiatives and performance, prior studies have not focussed on their role in the linkage between knowledge strategy and organizational performance. Manufacturing firms in Kenya are operating in a competitive environment as a result of liberalization of the economy. To enhance competitiveness and performance, the firms are managing organizational knowledge as a resource. However, past studies in Kenya have not examined the relationship between knowledge strategy and performance of the firms. The objectives of this study were to: determine the effect of knowledge strategy on performance; establish whether organizational innovation mediates the relationship between knowledge strategy and performance; determine the influence of organizational characteristics on the relationship between knowledge strategy and performance; and establish whether the joint effect of knowledge strategy, organizational characteristics, and innovation on performance is greater than the effect of knowledge strategy on performance. The study was based on the resource-based theory, knowledge based view, dynamic capabilities and contingency theory. The study adopted cross-sectional survey research design. The target population comprised 655 manufacturing firms in Kenya. A stratified sample of 266 firms representing twelve sub-sectors of the manufacturing sector was used. Primary data was collected from 184 firms using structured questionnaire administered to the managers of the firms. To describe profiles of the firms and research variables, means, standard deviations and coefficient of variation were used; and Pearson’s correlation was used to examine relationships between the variables. To test hypotheses, multiple regression and hierarchical regression were used. The results revealed significant positive relationship between knowledge strategy and performance. The results also showed that organizational innovation mediated the relationship; while organizational characteristics moderated the relationship between knowledge strategy and performance. Further, the results demonstrated that the joint effect of knowledge strategy, organizational characteristics, and innovation on organizational performance was greater than the effect of knowledge strategy alone. By empirically examining the integrated model interconnecting variables, this study provides new insights into the role of organizational characteristics as a moderating variable and organizational innovation as a mediating variable in the linkage between knowledge strategy and performance. The findings support the integrated model and demonstrate that the influence of knowledge strategy on performance is contingent on interaction of organizational characteristics and innovation; hence the need to align knowledge strategy with the situational factors to enhance performance. The researcher recommends replication of the study in different sectors and countries to enhance understanding of the relationship between knowledge strategy and organizational performance.