Relationships among Structural Adaptations, Strategy Implementation and Performance of Manufacturing Small and Medium Firms in Thika, Kenya
Peter Kihara *
School of Business and Economics, Kenya Methodist University, P.O.Box 45240-00100, Nairobi, Kenya
Henry Bwisa
College of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, P.O.Box 6200-00200, Nairobi, Kenya
John Kihoro
The Cooperative University College of Kenya, P.O.Box 24814-00200, Nairobi, Kenya
*Author to whom correspondence should be addressed.
Abstract
This paper examined the relationship between structural adaptations during strategy implementation and performance of small and medium manufacturing firms (SME) in Thika Sub-County in Kenya. Three structural dimensions investigated in this study included the formalization, centralization and specialization of functions. The study is underpinned in McKinsey’s 7-S/Higgins 8-S strategy frameworks and the Dynamic Capabilities View of the firm. Guided by the philosophy of logical positivism, a mixed research design was adopted. A self-administered questionnaire was used to collect primary data from 115 SME manufacturing firms using a simple random sampling procedure from a total population of 165 SME manufacturing firms. Pearson’s correlation and OLS regression analysis was used for data analysis. The study found statistical evidence that structural adaptations of the SME firm (r=.442**, P<.001) are positively and significantly related to its performance. Among the structural dimensions examined, the study found that formalization (r=.456**, P<.001) and specialization (r=.350**, P<.001) are positively and significantly related to SME’s performance. However, centralization (r=.159, P=.09) was found to be positively related to the SME’s performance but the relationship is statistically insignificant.
Keywords: Strategy implementation, structural adaptations, dynamic capabilities, firm’s performance