The Influence of dynamic capabilities on firm performance of listed manufacturing firms in Kenya

Abstract

Manufacturing firms worldwide are faced with high competition which causes them to explore new ways of re-configuring their resources so as to gain superior firm performance. Existing studies have addressed the interaction between dynamic capabilities and firm performance, especially in the high tech sectors, with mixed findings. The dynamic capabilities view s an approach which helps to study whether firms can influence their firm performance by integrating, building and re-configuring their resources and competences. The aim of this study was to explore the relationship between dynamic capabilities and firm performance in the context of the Kenyan Manufacturing sector. The objectives of this study were to establish the influence of sensing capabilities on firm performance in the Kenyan listed manufacturing firms, to determine the influence of seizing capabilities on firm performance in the Kenyan listed manufacturing firms and to examine the influence of reconfiguration capabilities on firm performance in the Kenyan listed manufacturing firms. The study adopted a descriptive cross-sectional research design. A census survey was used with the study population comprising all the 27 listed manufacturing firms classified and listed by the Nairobi Securities Exchange as at December 2018. Primary data was collected from 3 respondents per firm using a structured questionnaire. A Likest scale was used to capture the perception of the managers on the influence of dynamic capabilities on firm performance. A content validity test was used to ensure that the questionnaire included an adequate and representative set of terms that tapped the concept. Data was analyzed using SPSS for descriptive and inferential statistics. The finding suggested that a positive relationship exists between sensing capability and firm performance; and seizing capability and firm performance. Reconfiguration capability was found to reduce the firm performance in the short term, due to the associated costs of asset realignment and business model redesign and restructuring.