Strategic Responses and Performance of Telecommunication Firms in Nairobi City County, Kenya

Abstract

The contribution of telecommunication sector to the country’s economy cannot be underestimated. However the sector’s contribution to the Gross Domestic Product in the Kenyan context is very marginal compared to other countries within Africa and across the globe. Myriad of challenges such as inaccessibility to efficient network services in most parts of the country, unhealthy competition, high costs of services are just but a few of the evidences of a struggling sector. These amongst other performance issues have been blamed on low technological advancement in which majority of the firms are believed to have poor infrastructure and inadequate investment in appropriate strategic responses to face not only the unprecedented business environment but also to offer services that satisfy customer diverse demands. Hence, the need to investigate the effect of strategies adopted in response to improve the sector’s performance. The study investigated strategic responses including research and development, technology advancement, employee strategic training and development and operational restructuring strategies on performance using data from four operators in Nairobi City County, namely: Safaricom Public Limited Company, Airtel Networks, Telkom Kenya Limited and Equitel Limited which currently constitute the mobile and internet service providers in Kenya. The investigation was supported by four theoretical underpinnings including Resource Based Theory, Human Capital theory, Knowledge Based theory and Diffusion of Innovations theory. The research adopted descriptive research design. The target population for the study was 3834 employees drawn from four departments of the four firms. Proportionate stratified random sampling was used to select the sample size of 385 respondents which formed 10% of the total population. The researcher collected primary data using structured questionnaire. Descriptive statistics were then used to analyse quantitative data. Multiple Regression analysis was used to analyse the effect of the independent variables: technology advancement, research and development, strategic training and operational restructuring on the dependent variable: performance. Using Statistical Package for Social Sciences, version 23, the results were presented in the form of tables and figures. The study findings indicated that, technology advancement, research and development strategy, employee strategic training and development have a positive and a significant effect on firm performance. However, operational restructuring strategy had a negative effect. Technology advancement was found to be a major determinant for a better performing firm. The study recommends that firms should invest more in current technology in order to provide efficient and reliable products and services that meet the large number of customers with diverse needs.