Cost Leadership Strategy, Competitive Advantage, and Performance: A Cross-Sectional Study in the Context of Milk Processing Firms in Kenya
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Date
2020
Authors
Kimiti, Paul G.
Muathe, Stephen M. A.
Murigi, Elishiba M.
Journal Title
Journal ISSN
Volume Title
Publisher
GIAP Journals
Abstract
Purpose of the study: Cost leadership strategy is driven by economies of scale, economies of scope, and operational
efficiency is a remedy to a performance where firms are facing high costs. This study sought to investigate the influence of
cost leadership strategy on the performance of milk processing firms in Kenya through the lens of competitive advantage as a
mediator.
Methodology: The study adopted descriptive and explanatory non-experimental research designs. It was a census of all 29
milk processing firms registered with Kenya Dairy Board as of June 2019. Sampling was done using proportionate stratified
random sampling technique and data was collected using self-administered semi-structured questionnaires. The analysis was
done using means, standard deviations, and regression.
Main Findings: The findings showed that a cost leadership strategy had a positive and significant effect on the performance
of milk processing firms in Kenya with a competitive advantage partially mediating the relationship. The constituent
measures of cost leadership strategy namely economies of scale, economies of scope, and operational efficiency accounted
for 40.1% of the variation in firm performance.
Applications of this study: This study provides suggestions for firms to manage costs and therefore improve performance.
This is by increasing the size of operations, expanding into related business areas, and improving operational processes.
Novelty/originality of this study: The study examines the influence of cost leadership strategy in a new context of milk
processing firms in Kenya. It also incorporates a competitive advantage as a significant variable affecting the relationship
between costs and performance.
Description
Research Article
Keywords
Firm Performance, Cost Leadership Strategy, Competitive Advantage, Milk Processing Firms in Kenya
Citation
International Journal of Management, Innovation & Entrepreneurial Research Vol. 6, No 2, 2020, pp 64-76