DYNAMIC CAPABILITIES AND PERFORMANCE OF SMALL AND MEDIUM AGRIFOOD ENTERPRISES IN NAIROBI COUNTY
DYNAMIC CAPABILITIES AND PERFORMANCE OF SMALL AND MEDIUM AGRIFOOD ENTERPRISES IN NAIROBI COUNTY
Lewis Kimutai Bett - Master of Business Administration (Strategic Management), Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Ennos Anene - Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Despite the rapid growth and transformation of small and medium size enterprises (SMEs) in the recent past, their performance has been declining. As a result, Kenya has been experienced frequent food deficits. Owing to this, managers and scholars have considered how dynamic capabilities may be central to their strategies to enhance performance. The concept of dynamic capabilities has gained significance in the last decade and thereby increased research and varying definitions. The measurement of the performance of firms also doesn’t have a consensus. As such, this study looked to determine the influence of dynamic capabilities on the performance of small and medium size agrifood enterprises in Nairobi County. The specific objectives were to determine the influence of sensing capabilities on the performance of small and medium size agrifood enterprises in Nairobi County, to determine the influence of seizing capabilities on the performance of small and medium size agrifood enterprises in Nairobi County, to determine the influence of innovation capabilities on the performance of small and medium size agrifood enterprises in Nairobi County, to determine the influence of learning capabilities on the performance of small and medium size agrifood enterprises in Nairobi County. Sensing capability, seizing capability, innovation capability and learning capability are the independent variables. The study is grounded on the Dynamic Capability Theory and supported by Resource based View Theory, Knowledge-Based Theory of Innovation, Organizational Learning Theory, and Optimal Firm Size Theory. The study adopted descriptive research design. The study population consisted of 129 Food and Beverage SMEs based in Nairobi as listed in the Kenya Association of Manufacturer’s 2022/2023 database. The study adopted a random sampling method in order to identify appropriate sample size using systematic random sampling. A sample size 96 was determined using the formulae for determining sample size from a finite population. The target respondents were the owners, CEOs, Senior Managers, or directors of the agrifood SMEs. Primary data on dynamic capabilities, firm size and performance metrics was collected using structured questionnaires. A pilot test was done to determine the validity and reliability of the instruments. Data was analyzed using both descriptive and inferential statistics. Descriptive statistics were used to provide summary of survey data and summary statistics of the objectives. Regression analysis was used to investigate the hypothesized relationship among the study variables. The study used a multiple linear regression model. To investigate whether independent variables had combined effect on the dependent variables, Analysis of Variance (ANOVA) was used. The data was tabulated for ease of presentation and analysis. The study demonstrated that dynamic capacities had a positive impact on the performance of small and medium agrifood enterprises in Nairobi City County, Kenya. This implied that dynamic capabilities, including sensing, seizing, innovation and learning capabilities play a crucial role in the performance of small and medium-sized enterprises in the County. Based on the research findings, agrifood enterprise senior manager and/or owners are encouraged to systematically evaluate market developments and incorporate relevant insights into their business operations. Additionally, when formulating public policies to growth of agrifood enterprises, it is important to consider both the varied capability configurations uncovered in this study and the specific goals of SME owners to achieve more targeted strategic objectives.
