Effect of firm capabilities on the non-financial performance of fast-moving consumer goods firms in Nairobi metropolitan area

Abstract

Whereas the global consumer goods market has been expanding with the changes in the income level and overall global connectedness, locally, most of the firms within the fast-moving consumer goods industry have been exiting the market or scaling down operations. Several authors have investigated the causes behind this trend, but most have focused on financial performance. Consequently, this study sought to examine the non-financial performance of the firms operating within the fast-moving consumer goods (FMCG) industry in the Nairobi Metropolitan Area. The study specifically examined the effect of managerial capabilities, marketing capabilities, resource capabilities, and technological capabilities on the non-financial performance of these FMCG firms in the Nairobi Metropolitan Area. The study was primarily grounded on the dynamic capabilities theory and the stakeholder theory. The study adopted a positivist research philosophy and utilized a quantitative approach in analyzing the interaction between study variables. The population of the study was 263 FMCG firms operating within the Metropolitan Area. The unit of observation was159 senior-level managers drawn from the FMCG industry. The study employed a structured research questionnaire deploying electronic data collection through Google forms to ensure respondents' accessibility. The collected study data were analyzed using descriptive and inferential analysis. The study's main limitation was getting access to qualified respondents since the data collection was carried out during an ongoing global pandemic. However, this was countered with the use of digital data collection methods, which were more effective in situations where physical contact was impossible. The study found a moderate and positive effect of managerial, marketing, and technological capabilities on the FMCG firms' non-financial performance. The study also found a strong positive effect of resource capabilities on non-financial performance. The research concluded that firm capabilities had a positive and significant effect on firm capabilities on the non-financial performance of fast-moving consumer goods firms. The study concluded that managerial capabilities, marketing capabilities, resource capabilities, and technological capabilities significantly influence non-financial performance. The study recommends that FMCG firms integrate digital technologies into their marketing activities and product development from these findings. Further, FMCG firms should improve investment in emerging technologies and the professional development of their personnel. The study also recommends that FMCG firms should regularly review their internal structure to ensure it is supportive of efficient decision making and communication within the firm. Further research is necessary to determine the relationship between external capabilities and FMCG firms’ performance in Kenya.