Strategic Leadership and Performance of Small and Medium-Sized Dairy Processing Firms in Kenya
Mbaya, Joyce Muthoni
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The dairy sector plays a vital role in the economic growth of Kenya but many firms in the sector, especially the small and medium-sized, continue to face performance challenges related to unregulated informal milk market, high industry barriers and deficiencies in strategic leadership competences. Strategic leaders also lack skills to convert the firms to levels of competitiveness and profitability. Although strategic leadership has received attention both in practice and scholarly, its effect on the performance of small and medium-sized dairy processing firms remains uncertain. This study aimed to investigate the effect of strategic leadership on the performance of small and medium-sized dairy processing firms in Kenya. Specifically, the study sought to determine the effect of strategic thinking, strategic learning and strategic action on the performance of small and medium-sized dairy processing firms in Kenya. The study also sought to determine the mediating and moderating effect of competitive advantage and firm characteristics respectively on the relationship between strategic leadership and performance of small and medium-sized dairy processing firms in Kenya. The study was anchored on the Path-Goal Leadership theory, the Porter’s Generic Strategies Model, the Balanced Score Card Model and the Leidtka Model. Positivism research philosophy was adopted. Descriptive and explanatory research designs were used. All the twenty three registered small and medium-sized dairy processing firms in Kenya were surveyed, from which the chief executive officer, finance manager, marketing manager and production manager were selected thus forming a sample size of ninety two respondents. Primary data was collected by use of semi-structured questionnaires. Quantitative data was analysed using descriptive statistics and inferential analysis. Descriptive statistics such as mean and standard deviation were used to explain data characteristics, while multiple regression was used to test the effect of the study variables on firm performance. Qualitative data collected was analysed using common themes and presented in narrative form. Reliability of the questionnaire was tested using Cronbach’s Alpha and found to be above the recommended threshold thus found to be reliable. Validity of the instrument was tested using face validity, content validity and construct validity. The diagnostic tests conducted were test for normality, linearity, multicollinearity and heteroscedasticity. The fitness of the model was tested using the adjusted coefficient of determination. F-statistic was computed at 95% confidence level. Decision on hypothesis testing was based on P-values at 5% significance level. The results showed that strategic thinking, strategic learning and strategic action had a positive significant effect on the performance of small and medium-sized dairy processing firms in Kenya. Competitive advantage had a complete mediating effect, while firm characteristics had a significant moderating effect on the relationship between strategic leadership and performance of small and medium-sized dairy processing firms in Kenya. The study contributes to the body of knowledge by filling contextual, empirical, and conceptual gaps identified earlier in literature. The study recommends that the management and regulators in the dairy industry should promote strategic thinking, strategic learning, and strategic action among staff by providing strategic trainings, workshops and seminars to improve their performance. The firms should differentiate their products and increase their firm size to increase their capacity and attract more customers thus improve performance. The study suggests that longitudinal studies on the dairy industry should be carried out to establish if similar conclusions will be reached.