Information Technology Capability and Performance of Manufacturing Firms in Nairobi City County, Kenya
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Date
2022
Authors
Gitau, Lucy Muthoni
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Although manufacturing firms support economic development, wealth creation and
poverty alleviation, a dismal performance has been reported. In Kenya, the share of
gross domestic product (GDP) to manufacturing sector has remained below 10 per
cent while its growth rate remained at about 5 percent in the last 10 years. This has
been attributed to low innovation and technology diffusion. This study examined the
effects of IT infrastructure, personnel, management and reconfiguration capabilities
on firm performance. Further, the moderating effect of firm size and the mediating
effect of competitive advantage, were explored. The study was anchored on Resource
Based View, Unified Theory of Acceptance and Use of Technology, knowledge based
and Dynamic Capability Theory and the balanced scorecard. Positivism philosophical
approach, descriptive and explanatory research design were adopted. Using stratified
and random sampling techniques, a sample of 222 manufacturing firms from Nairobi
City County, was obtained from a target population of 526 firms. A semi-structured
questionnaire was prepared and used for data collection. The internal consistency test
on the data collection tool yielded a Cronbach’s alpha coefficient >0.7 affirming the
reliability of the study instrument. Research experts confirmed validity of the study
instrument. The data was analysed through descriptive statistics to condense the
survey data. To test hypotheses, inferential statistics was used. The results showed a
positive significant effect of IT infrastructure capability (β=0.231, p=0.005 < 0.05),
IT personnel capability (β=0.165, p=0.044 < 0.05), IT management capability
(β=0.183, p=0.018 < 0.05) and IT reconfiguration capability (β=0.288, p=0.001 <
0.05) on performance. The study findings also exhibited a 49.2 per cent explanatory
power of IT capability on firm performance. From the study findings, the interaction
between IT capability and firm performance was partially mediated by competitive
advantage. Firm size did not moderate the relation between IT capability and firm
performance. Study findings provide knowledge in IT investment and configuration
of IT capability. Subsequently, firms’ IT managers and personnel should proactively
build relationships with business functions and promote effective use of information
technology through shared insights on business-related knowledge. Firm managers
should also invest in building IT capability through planning, organizing, coordinating
and control of IT use. Such interventions will lead to enhanced firm competitiveness
and performance.
Description
A Thesis Submitted in Partial Fulfilment of the Requirement f or the Award of the Degree of Doctor of Philosophy in Business (Management Information Systems) to the School of Business, Economics and Tourism of Kenyatta University
Keywords
Information Technology Capability, Manufacturing Firms, Nairobi City County, Kenya