Managerial Competencies and Firm Performance in the Furniture Manufacturing Sector in Kenya

Keywords: leadership, employee development, decision-making, succession planning, governance and management systems

Abstract

Purpose: The study aims to examine the contribution of managerial competencies with indicators, namely leadership, employee development, decision making, succession planning and governance to the performance of the furniture manufacturing sector with firm size and firm age as a moderating variable.

Design / Method / Approach: The study adopted a descriptive and explanatory research design of which a sample of 280 licensed firms was randomly selected. Structured questionnaires were distributed to the managers and a factor analysis was used to reduce the number of variables and find out the underlying constructs while the analysis of moments of structures was applied to develop a theory.

Findings: The study found that managerial competencies and firm performance had a positive and statistically significant contribution. The moderating effect of firm size and age on firm performance was found negative predicting that the variable had no moderating influence on firm performance.

Theoretical Implications: This study concludes that to enhance firm performance measured in terms of profitability and growth there is need to manage and sustain firm performance based on leadership, employee development, decision-making, succession planning and governance to create competitive advantages through an effective strategy implementation process.

Practical Implications: This study will not only add value to the existing body of knowledge in strategic management practice but also point out that while implementing the strategy, CEOs and senior managers should consider these factors in order to improve firm performance.

Originality / Value: This study is unique since it provides an expansion of the conceptualization of a managerial competency framework.

Research Limitations / Future Research: The study findings are solely based on the views of managers/owners and therefore, the results are prone to managers’ bias. Thus, more studies should incorporate other stakeholders, namely consumers, suppliers and dealers. The study is only based on furniture manufacturing firms in eight counties and therefore, generalizability of the findings could be limited to only the eight counties. Thus, more studies should be carried out to include other counties making the study more national.

Paper type: Empirical

Downloads

Download data is not yet available.

References

Ahmad, N. H., Halim, A. H., & Zainal, S. (2010). Is entrepreneurial competency the silver bullet for SME success in a developing nation? International Business Management 4(2): 67–75. https://doi.org/10.3923/ibm.2010.67.75.

Alenezi, H., Tarhini, A., & Sharma, S. K. (2015). Development of quantitative model to investigate the strategic relationship between information quality and e-government benefits. Transforming Government: People, Process and Policy, 9(3), 324-351. https://doi.org/10.1108/TG-01-2015-0004.

Alkalha, Z., Al-Zu’bi, Z., Al-Dmour, H., Alshurideh, M., & Masa’deh, R. (2012). Investigating the effects of human resource policies on organizational performance: An empirical study on commercial banks operating in Jordan. European Journal of Economics, Finance and Administrative Sciences, 51(1), 44-64. Retrieved from https://bit.ly/3JapqFE.

Almajali, D. A., Masa'deh, R. E., & Tarhini, A. (2017). Antecedents of ERP systems implementation success: a study on Jordanian healthcare sector. Journal of Enterprise Information Management, 29(4), 549-565. https://doi.org/10.1108/jeim-03-2015-0024.

Anand, A., Coltman, T., & Sharma, R. (2016). Four steps to realizing business value from digital data streams. MIS Quarterly Executive. Retrieved from http://ro.uow.edu.au/buspapers/1007.

Asumeng, M. (2014). Managerial competency models: A critical review and proposed holistic-domain model. Journal of Management Research, 6(4), 1-21. https://doi.org/10.5296/jmr.v6i4.5596.

Balarezo, J., & Nielsen, B. B. (2017). Scenario planning as organizational intervention. Review of International Business and Strategy, 27(1), 2–52. https://doi.org/10.1108/RIBS-09-2016-0049.

Barnat, R. (2012). Tools for developing organizational strategies. Introduction to Management. Retrieved from http://www.introduction-to-management.24xls.com/en238.

Barney J. B., Della Corte, V., Sciarelli, M., & Arikan, A. (2012). The role of resource-based theory in strategic management studies: Managerial implications and hints for research. Handbook of research on competitive strategy, 109-146.

Barney, J. B., Ketchen, D. J., & Wright, M. (2011). The Future of Resource-Based Theory. Journal of Management, 37(5), 1299–1315. https://doi.org/10.1177/0149206310391805.

Bartlett, M. S. (1954). A note on the multiplying factors for various χ 2 approximations. Journal of the Royal Statistical Society. Series B (Methodological), 296-298. Retrieved from https://www.jstor.org/stable/2984057.

Berko O. Damoah, O. (2013). Strategic factors and firm performance in an emerging economy. African Journal of Economic and Management Studies, 4(2), 267–287. https://doi.org/10.1108/ajems-02-2013-0013.

Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297–334. https://doi.org/10.1007/bf02310555.

Danişman, Ş., Tosuntaş, Ş. B., & Karadağ, E. (2015). The effect of leadership on organizational performance. In Leadership and organizational outcomes (pp. 143-168). Springer, Cham. https://doi.org/10.1007/978-3-319-14908-0_9.

Ekwoaba, J. O., Ikeije, U. U., & Ufoma, N. (2015). The Impact of Recruitment and Selection Criteria on Organizational Performance. Global Journal of Human Resource Management, 3(2), 22-33. Retrieved from https://bit.ly/3KC2wr1.

Field, A. P., & Miles, J. (2009). Discovering statistics using SPSS:(and sex and drugs and rock'n'roll). London, England: Sage Publications.

Frederick, H. H., Kuratko, D. F., & O'Connor, A. (2015). Entrepreneurship: Theory/Process/Practice with Student Resource. Access for 12 Months. Cengage AU.

Getz, G., & Lee, J. (2011). Why your strategy isn’t working. Business Strategy Series, 12(6), 303-307. https://doi.org/10.1108/17515631111185932.

Grant, R M. & Verona G., (2015). What is holding back empirical research into organizational capabilities? Remedies for common problems, 13(1), 61-74. https://doi.org/10.177/1476127014565988.

Hair Jr, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2021). A primer on partial least squares structural equation modeling (PLS-SEM). Sage publications.

Halil, E. A. & Hassan, A. (2012). The effect of firm size on profitability: An empirical Icelandic funds Bitrost. Journal of Social Sciences, 1, 33-42.

Hendra, R., & Hill, A. (2018). Rethinking Response Rates: New Evidence of Little Relationship Between Survey Response Rates and Nonresponse Bias. Evaluation Review, 43(5), 307–330. https://doi.org/10.1177/0193841X18807719.

Huang, H. U. I., Radzi, C. W. J. W. M., Jenatabadi, H. S., Kasim, F. A., & Son, R. A. D. U. (2013). Influence of organizational learning and innovation on organizational performance in asian manufacturing food industry. Asian Journal of Empirical Research, 3(8), 962-971. Retrieved from https://archive.aessweb.com/index.php/5004/article/view/3569.

John, A. O., & Adebayo, O. (2013). Effect of firm size on profitability: Evidence from Nigerian manufacturing sector. Prime Journal of Business Administration and Management (BAM), 3(9), 1171-1175. Retrieved from https://cutt.ly/AANK7jX.

Kaiser, H. F. (1974). An index of factorial simplicity. Psychometrika, 39(1), 31-36. https://doi.org/10.1007/BF02291575.

KAM (2017). Policy and Sustainability Report. Kenya Association of Manufacturers. Retrieved from https://kam.co.ke/kam/wp-content/uploads/2018/06/KAM-Policy-Sustainability-Report-2017.pdf.

Kash, B. A., Spaulding, A., Gamm, L. D., & Johnson, C. E. (2014). Healthcare strategic management and the resource-based view. Journal of Strategy and Management, 7(3), 251-254. https://doi.org/10.1108/JSMA-06-2013-0040.

Kline, R. (2011). Principles and Practices of Structural Equation Modelling, New York: The Guilford Press.

Konigova, M., Urbancova, H., & Fejfar, J. (2012). Identification of Managerial Competencies in Knowledge-based Organizations. Journal of Competitiveness, 4(1), 129–142. https://doi.org/10.7441/joc.2012.01.10.

Loderer, C. F., & Waelchli, U. (2010). Firm Age and Performance. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1342248.

Miller, S., Wilson, D., & Hickson, D. (2016). Beyond Planning: Strategies for Successfully Implementing Strategic Decisions. Long range planning, 37(3), 201-218. https://doi.org/10.1016/j.lrp.2004.03.003.

Namale, D. (2012). Imported furniture pushing carpenters out of market in Kenya. Business Daily, 13, Retrieved from https://bit.ly/37klXpP.

Nolan, R. L. (2012). Ubiquitous IT: The case of the Boeing 787 and implications for strategic IT research. The Journal of Strategic Information Systems, 21(2), 91-102. https://doi.org/10.1016/j.jsis.2011.12.003.

Obeidat, B. Y., Al-Hadidi, A., Tarhini, A., & Masa’deh, R. (2017). Factors affecting strategy implementation. Review of International Business and Strategy, 27(3), 386–408. https://doi.org/10.1108/RIBS-10-2016-0065.

Obeidat, B.Y., Al-Sarayrah, S., Tarhini, A., Al-Dmour, R. H., & Al-Salti, Z. (2016a). Cultural Influence on Strategic Human Resource Management Practices: A Jordanian case study. International Business Research, 9(10), 33-50. https://doi.org/10.5539/ibr.v9n10p94.

Obeidat, B.Y., Al-Suradi, M., Masa'deh, R., & Tarhini, A. (2016b). The Impact of Knowledge Management on Innovation: An Empirical Study on Jordanian Consultancy Firms. Management Research Review, 39(10), 22-38. https://doi.org/10.1108/MRR-09-2015-0214.

Ogaja, C. K., & Kimiti, G. K. (2016). Influence of strategic leadership on implementation of tactical decisions in public universities in Kenya. International Journal of Science and Research (IJSR), 5(1), 681-689. Retrieved from https://www.ijsr.net/get_abstract.php?paper_id=NOVI52760.

Okumus F., (2003). A framework to implement strategies in organizations. Management Decision, 41(9), 871-882. https://doi.org/10.1108/00251740310499555.

Pallant, J. (2020). SPSS survival manual: A step by step guide to data analysis using IBM SPSS. Routledge.

Papadogonas, T. A. (2007). The financial performance of large and small firms: evidence from Greece. International Journal of Financial Services Management, 2(1/2), 14. https://doi.org/10.1504/ijfsm.2007.011668.

Penrose, E. T. (2009). The Theory of the Growth of the Firm. Oxford university press.

Rylkova, Z. (2015). Measurement of organizational performance in relation to competitors. Economics and Management, 7(2), 13- 19. https://doi.org/10.12846/j.em.2015.02.02.

Schumacher, R. E., & Lomax, R. G. (2010). A beginner’s guide to structural equation modelling. Mahwah, NJ: Lawrence Erlbaum Associates.

Sekaran, U. & Bougie, (2013). Research Methods for Business: A Skill Building Approach (4th Ed.). New York: John Wiley & Sons Inc.

Szczepańska-Woszczyna, K. (2020). Management Theory, Innovation and Organisation: A Model of Managerial Competencies. Routledge.

Tahmasb, A., Niknafs, A., & Mirvaziri, H. (2014). The evaluation of managerial competence based on the classification of imbalanced data in the field of data mining. Reef Resources Assessment and Management Technical Paper, 40(2), 117-122.

Teece, D. J. (2014). A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of international business studies, 45(1), 8-37. https://doi.org/10.1057/jibs.2013.54.

Theus, I. C. (2019). Strategies for succession planning and leadership training development for nonprofit organizations (Doctoral dissertation, Walden University). Retrieved from https://www.proquest.com/openview/293086fcf9bbc7e38d94765de50e0f37/1?pq-origsite=gscholar&cbl=18750&diss=y.

Tripathi, K., & Agrawal, M. (2014). Competency based management in organizational. Global Journal of Finance and Management, 6(4), 349-356. Retrieved from http://www.ripublication.com/gjfm-spl/gjfmv6n4_10.pdf.

Watkins, M. W. (2018). Exploratory Factor Analysis: A Guide to Best Practice. Journal of Black Psychology, 44(3), 219–246. https://doi.org/10.1177/0095798418771807.

World Bank. (2013). Enterprise Survey for Informal Firms: Kenya, Washington, DC. Available at: Retrieved from http://www.enterprisesurveys.org.

World Bank. (2014). Kenya economic update: anchoring high growth – can manufacturing contribute more? Kenya Economic Update; Edition No. 11. Washington, DC; World Bank Group.

Yamane (1973). Statistics: An Introductory Analysis. 3rd Edition, Harper and Row, New York.

Yasuda, T., (2005). Firm growth, size, age and behavior in Japanese manufacturing. Small Business Economics, 24(1), 1–15. https://doi.org/10.1007/s11187-005-7568-y.

Zikmund, W. G., Babin, B. J., Carr, J. C., & Griffin, M. (2013). Business research methods. Cengage learning. Retrieved from http://sutlib2.sut.ac.th/sut_contents/H85111.pdf

Published
2022-03-10
How to Cite
Were, J. (2022). Managerial Competencies and Firm Performance in the Furniture Manufacturing Sector in Kenya. European Journal of Management Issues, 30(1), 25-35. https://doi.org/10.15421/192203