Organizational Resources, Dynamic Capabilities, Evironmental Dynamism and Organizational Performance of Large Manufacturing Companies in Kenya
Strategic management is concerned with how firms develop and sustain competitive advantage. Performance being the ultimate goal depends on the sustenance of the competitive advantage in the end. Several theories have been brought forth to try to explain this phenomenon, but currently there still exist inconsistencies and studies done have been inconclusive. Since large manufacturing companies in Kenya have the same motivation of optimizing performance, they may use their varied dynamic capabilities to alter existing resource base to counter the ever-changing effects of environmental dynamism in order to achieve sustainable competitive advantage. This study conceptualized the relationship between organizational resources, environmental dynamism, dynamic capabilities and organizational performance of large manufacturing companies in Kenya. The study used a structured questionnaire to obtain data from managers of 56 large manufacturing companies listed in the Kenya Association of Manufacturers database of 2014, which were analyzed using descriptive and inferential statistics. It was observed that several factors influence performance, key among them being organizational resources. The study revealed that organizational resources have significant influence on organizational performance; organizational resources has significant influence on dynamic capabilities; the external dynamism has no significant moderating influence on the relationship between organization resources and dynamic capabilities. Dynamic capabilities have no significant intervening influence on the relationships between organizational resources and financial performance but have a significant intervening effect on the relationship between organizational resources and non-financial performance; the joint effect of organizational resources, dynamic capabilities and environmental dynamism on organizational performance is significantly different from the independent effect of each study variables. Theoretical implications of the study illustrate full support of the resource-based theory from dynamic capabilities, evolutionary theory from dynamic capabilities, stakeholders’ theory from organizational performance, open system theory and contingency theory from environmental dynamism. Methodological implication show operationalization of the organizational resources as an independent variable, environmental dynamism as a moderating variable, dynamic capabilities as the mediating variable and organizational performance as the dependent variable. All the indicators were measured using Likert type scale. Managerial implication illustrate that organizations embrace the sustainable balanced scorecard performance measurement, employ organizational resources through altering the same using dynamic capabilities regardless of the degree of environmental dynamism. This study was able to confirm that the resource based theory; evolutionary economic theory and stakeholders’ theory are relevant. It was also able to provide a link between the resources based view theory and the stakeholders’ theory. However, the open system theory was not supported by the study. This study confirmed the relevance of using a cross sectional survey and regression analysis. Regression analysis was used to provide inferential statistics, while Pearson’s correlation was found relevant in correlation of the variables. In terms of policy the study confirmed that resources could enhance the efficiency and effectiveness of the organizations to enhance performance by using dynamic capabilities it possess and ones it can acquire or shed-off. Organization can thus focus on resource integration and reconfiguration to achieve sustainable competitive advantage. Limitation of the study included first, unwillingness of respondents in participating in this study. Secondly, due to the varied locations of LMCs, several researchers were used. The study recommends future research on specific concepts on organizational resources and dynamic capabilities on how they alter the resource base using case studies and longitudinal studies with a focus on organizations that have fully embraced the sustainable balanced scorecard as a tool for measuring organization and performance.
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