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.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1411]
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