Influence of Strategic Human Capital on the Relationship Between Dynamic Capabilities, Firm Innovation and Competitive Advantage of Restaurants in Nairobi City County

Abstract

Businesses face a number of challenges in maintaining their dynamic capabilities up to date and applicable in the ever-changing business environment. Therefore, strategic management experts have emphasized the significance of dynamic capabilities, strategic human capital, and firm innovation in achieving a company's competitive edge. Companies are then faced with dilemma of competencies to develop, which strategic human capital traits and practices to prioritize, and which firm innovation outputs to provide to gain a competitive advantage. This study sought to determine the influence of strategic human capital and firm innovation on dynamic capabilities-competitive advantage relationship in restaurants in Nairobi City County. In Kenya, restaurants play a key role in reducing poverty, creating jobs and economic development. However, it is also vulnerable to highly turbulent environments which threatens its long-term survival. Hence, determining how its competitive advantage can be achieved is critical for its success and long-term survival. The study objectives included the establishment of the dynamic capabilities’ outcome on firm innovation and on competitive advantage, determining the influence of strategic human capital on the dynamic capabilities- firm innovation relationship and on the firm innovation- competitive advantage relationship, the effect of firm innovation on competitive advantage and the intervening effect of firm innovation on the dynamic capabilities-competitive advantage relationship. The study used a descriptive cross-sectional design and a stratified random sample size of 263 restaurants. A total of 191 restaurants responded to the study questionnaire. Descriptive statistics and simple regression were used to analyse the collected data. From the results, firm innovation, dynamic capabilities were found to be positively correlated with strategic human capital (employees) moderating their relationship. Further findings showed that firm innovation, competitive advantage were positively correlated, and that strategic human capital (practices) had no moderating influence on this relationship. The findings revealed a favourable connection on dynamic capabilities -competitive advantage relationship and that firm innovation somewhat affected a dynamic capability-competitive advantage link. The study comes to the conclusion that human resources, firm innovation impacts the capability - competitive advantage link. The study's findings advance knowledge and strengthen accepted theories in the sphere of strategic management. According to the study's theoretical conclusions, achieving competitive advantage by restaurants can be more effectively done by building innovation, capabilities that are dynamic and human resources. Implications of the study to theory indicate that in dynamic contexts, restaurants need to configure capabilities to foster innovativeness through strategic human capital. Restaurant managers need to identify human resource methods that affect their capabilities to attain firm innovation and competitive advantage. Policy makers need to get involved in crafting of policies that support building of capabilities that are dynamic, innovative efforts, and human resources to achieve competitive advantage. The study limitations include change of research focus on restaurants after the invasion of COVID- 19 pandemic hence new dimensions of the study variables are being considered for future research. Areas of further research include, use of other variables, other context and use of other methodologies not considered in the investigation.