EFFECT OF STRATEGIC CAPABILITY ON COMPETITIVE ADVANTAGE OF INFORMATION TECHNOLOGY FIRMS IN NAIROBI CITY COUNTY, KENYA
Gideon Koech Chepkole - Masters of Business Administration (Strategic Management), Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Jared Deya - Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
In comparison to firms from other sectors such as insurance, banking and manufacturing, firms in IT sector in Kenya have contributed marginally to the GDP and economy in general. The general implication of this trend is that IT firms in Kenya are performing poorly and have been unable to achieve highly competitive advantage to compete with other multinational firms that have penetrated in local Market. This study therefore sought to establish the effect of strategic capabilities on competitive advantage of IT firms in Nairobi City County. The specific objectives of the study were: to establish the effect of Human Resource Capability on competitive advantage of IT firms in Nairobi City County; to establish the effect of Financial Resource Capability on competitive advantage of IT firms in Nairobi City County; to establish the effect of Knowledge Management capability on competitive advantage of IT firms in Nairobi City County and to establish the effect of Cost Efficiency Capability on competitive advantage of IT firms in Nairobi City County. The study incorporated the suggestions of the following theories that explain the contribution of each of the independent variables on CA: Resource Based View Theory, Dynamics Capability Theory, Human Capital Theory, Porter Generic Strategies Model and Porter 5 Forces Model. A descriptive research design was used in this study. The target population of the study comprised of the 143 owners of IT firms in Nairobi City County. The study adopted census survey since the population of the study is small. The instrument for primary data collection in this research was a numerical 5-point Likert scale questionnaire. The study found out that financial resource capability, knowledge management capability and cost efficiency capability had a positive and significant influence on competitive advantage of IT firms in Nairobi City County. The study further found out that Human Resource Capability had an inverse influence on competitive advantage of IT firms in Nairobi City County. The study concludes that the key staff of the firm had undergone adequate training in various areas of IT. There were adequate team development whereby team-based activities were actively developed and promoted. There was a performance-based pay which emphasizes rewarding employee contributions and achievements. IT firm strived to maintain and accurately balance its expenditure within its stream of financial resources. The financial plans and budgets were fully aligned to the organization’s strategic planning. The key staff of the firm have adequate knowledge of the specific needs of the customers. The key staff of the firm have adequate knowledge of the organizational culture. The firm practices strategic pricing in terms of lower prices or more product features for the same price. The products of the firm were designed in capacity-fill, productivity as well as yield. The study recommends that the policy makers need to employ the key staff who have undergone adequate training in various areas of IT. The policy makers need to ensure that there is an effective HR policy that governs practices to acquire, cultivate and retain human resources. The firm need to strive to forecast income/expenditure, monitors and highlights emerging financial issues. The firm ought to have a flexible financial plans and budgets to allow for spending patterns to be adjusted accordingly. The management of the firm need to ensure that the key staff of the firm have adequate knowledge of the nature of the rivalry posed by existing firms. The management need to ensure that the firm focuses on economies of scale for the purpose of pricing and focuses to keep costs as low as possible but consistent with the value provided. The management need to ensure that the firm is suitably located to cut down on supply costs for instance proximity to reliable sources of various IT inputs.
