Dynamic Capabilities and Performance of Selected Manufacturing Firms in Kenya
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Performance of food manufacturing firms has been on a declining trend leading to the relocation of some firms to other countries. As a result, the country has been experiencing frequent food deficits. The search for how performance can be enhanced has led scholars and managers to consider dynamic capability to be at the heart of firm strategy. This study, therefore, sought to examine how dynamic capabilities influence the performance of selected manufacturing firms in Kenya. The specific objectives were to assess the effect of adaptive capabilities on performance of food manufacturing firms in Kenya, to determine the effect of marketing capabilities on performance of food manufacturing firms in Kenya, to establish the effect of alliancing capabilities on performance of food manufacturing firms in Kenya, to examine the effect of managerial capabilities on performance of food manufacturing firms in Kenya, to establish the moderating effect of firm size on the relationship between dynamic capabilities and performance of food manufacturing firms in Kenya and to assess the mediating effect of firm competence on the relationship between dynamic capabilities and performance of food manufacturing firms in Kenya. Adaptive capability, marketing capability, alliancing capability and managerial capability were the dependent variables of the study. Firm competence and firm size were the mediating and moderating variables, respectively. The study was grounded on the dynamic capability theory supported by the competence-based theory, the upper echelons theory, the resource-based theory, the stakeholder theory and the BSC framework. The study was founded on a positivist research philosophy and utilized a descriptive and explanatory research design. The population consisted of 70 food manufacturing listed in the Kenya Association of Manufacturer‟s directory. Primary data was collected from 190 respondents using self-administered semi-structured questionnaires selected using a proportional stratified sampling technique. Descriptive statistics were computed to describe the characteristics of the study variables and multiple regression analysis was conducted to determine the nature and magnitude of the relationships between the independent and dependent variables. The findings show that there is a significant direct and positive effect of adaptive capabilities, marketing capabilities, alliancing capabilities and managerial capabilities on performance of food manufacturing firms in Kenya. The findings also show that firm competence partially mediates the relationship between dynamic capabilities and performance of food manufacturing firms in Kenya. Firm size was found not to have a moderating effect on the relationship between dynamic capabilities and performance. The findings supported the theoretical foundation of the dynamic capabilities theory that firm performance and sustainable competitive advantage depends on its ability to react rapidly and flexibly to changing market environments. The study recommends that the management of food manufacturing firms should set aside budgets to build dynamic capabilities. Food manufacturing firms should also build alliances with producers of raw materials to stabilize the supply of inputs and customers to stabilize the market for processed food. They should also cooperate with peers to solve industry problems and engage government agencies for a favorable regulatory framework. The firms should also build technological competences through sponsoring employees for technical training and invest in the development of capabilities that increase their ability to reconfigure themselves to cope and thrive even during times of unexpected adversities.