INFLUENCE OF ORGANIZATIONAL CAPABILITY ON COMPETITIVE ADVANTAGE OF INFORMATION TECHNOLOGY SERVICE COMPANIES IN NAIROBI CITY COUNTY, KENYA
Rosemary Wanjiku Mungai - Masters Student, Jomo Kenyatta University of Science and Technology, Kenya
Jared Deya - Lecturer, Jomo Kenyatta University of Science and Technology, Kenya
ABSTRACT
The central focus of this research was to establish how organizational capabilities influence the competitive advantage of IT service companies in Nairobi City County, Kenya. Specifically, the study sought to determine the influence of financial capability, human resource capability, technological capability, marketing capability and process capability on competitive advantage in IT service companies in Nairobi City County, Kenya. The study was anchored on resource-based theory, human capital theory, dynamic capabilities theory, technology acceptance theory, processual theory of strategy and competitive advantage theory. The study adopted descriptive research. The target population was the top IT companies in Kenya. There were 45 major information technology services provider companies in Kenya. These firms are the most reviewed and have solutions and services that are highly rated. As such, the units of analysis were the 45 IT service providers in Kenya. The study sought opinions of the top and middle managers working in the head offices of the IT firms. Accordingly, the units of observation were the 444 top and middle management staff working in the IT service firms in Kenya. This research used a mixture of sampling techniques including stratified and purposive sampling techniques. The Yamane’s formula was used to calculate the sample size. Resulting from Yamane’s formula, the study sampled 210 respondents. This study utilized primary data, and questionnaires aided the collection of the data. Pilot study was carried out among 21 management staff working in other IT service firms in Nairobi County. Reliability with a predetermined threshold of 0.7 was conducted using Cronbach's alpha. The raw primary data collected was coded prior to being input into Statistical Package for Social Sciences (SPSS) software. The data collected was purely quantitative and it was analyzed by descriptive analysis. The researcher conducted a multiple regression analysis. The findings were presented using tables and figures as appropriate. The study found that financial capability influences the competitive advantage of IT service firms in Kenya to a moderate degree. HR capability had a significant influence on the competitive advantage of the IT service firms. Technological capability affects the competitive advantage of the IT service firms to a moderate extent. Marketing capabilities have a moderate impact on the competitive advantage of the IT service firms. Process capability affects the competitive advantage of the IT service firms to a moderate extent. The study concludes that financial capability, human resource capability, technological capability, marketing capability and process capability have a positive effect on the competitiveness of the IT service firms. The study recommends enhancing the levels of financial capability towards efficient utilization of financial resources to enhance service delivery and hence competitive advantage. The IT service firms need to re-orient their employees to align their values with those of the organizations. The IT service firms should develop efficient human capability systems to guide them in making decisions that are consistent with their philosophies and stated objectives. IT service firms should use marketing positioning to attract customers in engaging with the services and products. The IT service firms should advance process capabilities that emphasizes the importance of specific prerequisites, correct index usage, and a commitment to continuous improvement.