Organizational Capacity, Strategy Implementation, Competitive Environment and Performance of Companies Listed on the Nairobi Securities Exchange
Abstract
The purpose of this research was to contribute to the extant knowledge on the
relationship between organizational capacity, specifically leadership style and
resources and performance of companies listed at Nairobi Securities Exchange. More
specifically, it sought out to establish the mediating and moderating roles of strategy
implementation and competitive environment respectively, in the said relationship. A
review of extant conceptual and empirical literature was done and a hypothesis
formulated. A positivist paradigm relying on descriptive research design was used.
The study was a census and relied on both secondary and primary data. The
population comprised 62 companies listed at Nairobi Securities Exchange and was
active at the time of data collection in 2013. The respondents were managers in
charge of finance and business strategy. A structured Likert questionnaire anchored
on a five-point scale was used to collect primary data. Secondary data on profits,
equity, and dividends per year was collected online from the company‘s‘ annual
reports. Descriptive and inferential statistics were both used to analyze the data.
Pearson Correlation, simple linear and stepwise and multiple regression analysis were
used in hypothesis testing. The results revealed that organizational capacity
significantly affects firm performance, strategy implementation mediates the
relationship between organizational capacity and firm performance, competitive
environment is not a significant moderator of the relationship between organization
capacity and firm performance, and the joint effect of organization capacity, strategy
implementation, and competitive environment on performance is not significantly
different from their individual predictor variable effect. The study contributes to
theory building by demonstrating empirically that efficient bundling of resources
(leadership style and resources) resulting to more complex interdependencies which
are harder to imitate and contribute to firm performance, it further confirms the value
and application of resource-based theory. The study also contributes to knowledge by
empirically confirming that organizational capacity significantly influences
performance through effective strategy implementation. The results did not support
competitive environment as a significant moderator of the relationship between
organizational capacity and firm performance, implying that all the companies were
able to manage their competitive environment effectively or were equally affected by
the competitive environment. This issue, however, require further investigation. The
concept of synergy as was implied by the joint effect of all the variables was
unconfirmed, suggesting that organizations, when evaluating factors that have
influence on their performance need to avoid lamping the factors together, but rather
should evaluate their impact individually. Not all synergy is positive and not all
variables may be key contributors to performance. This study may have been
constrained by the use of one respondent per firm and combining many industries
since different industries have different challenges. Future researchers could involve
more respondents across the management hierarchy per firm to further validate their
findings and make them more useful for generalizability, focus on firms in similar
industry, replicating such a study in a bigger population longitudinally.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
The following license files are associated with this item: