The Link between Analysis Dimension of Strategic Orientation and Firm Performance in Small and Medium Enterprises in the Hospitality Industry in Kenya: The Moderating Role of Top Manager’s Ownership Status
Abstract
Performance of Small and Medium Enterprises (SMEs) is important for the economic success of nations, and strategic orientation is documented as one of the critical success factors for business firms. However, empirical studies have yielded varied results on the influence of the various dimensions of strategic orientation under different conditions. Furthermore most studies have focused on large firms and more so in developed countries. The primary objective of this study was to examine the effect of analysis dimension of strategic orientation on the performance of SMEs in a developing economy. The study employed explanatory research design. Data was collected from a sample of 390 hotel and food service SMEs and was analyzed using descriptive and inferential statistics. Pearson Correlation was used to test for linear relationships between the variables while the research hypotheses were tested using multiple regression models. The findings indicated that Analysis dimension has statistically significant (β=0.929, Ï<0.05) and positive effect on firm performance. However, the study found that although top managers’ ownership status had statistically significant direct effect (β=0.264, Ï<0.05) on performance, its moderating effect (β=0.080, Ï>0.05) on the relationship between analysis dimension and firm performance was not significant. The study thus concluded that Analysis dimension significantly and positively affects firm performance in SMEs regardless of the ownership status of the top managers and recommends for managers and policy makers to focus on analysis strategies in order to enhance firm performance in SMEs.
References
Abiodun A.J., O. Osibanjo and O. Oyeniyi, (2011). Strategic orientations and technology policy: An empirical test of relationship in developing countries. Management Science Letters 1
Abell, D. (1980). The Starting point in ptrategic planning. Prentice Hall.
Adebayo, F.A, (2007). Management information system for managers. Ado-Ekiti: Green Line Publishers.
Ajayi, I. A. and Fadekemi, F, (2007). The use of management information systems (MIS) in
decision making in the South-West Nigerian Universities. Educational Research and Review, Vol. 2, No.5
Avci, U., Madanoglu, M. and Okumus, F. (2011). Strategic orientation and performance of tourism firms: Evidence from a developing country. Tourism Management, 32, 147-157.
Basu, S., Gupta, R. (2013). Explorations of strategic orientation (SO) dimensions on small firm growth and the challenge of resources. European Journal of Business & Management, 5(20), 2
Bagozzi, R.P., and Yi, Y. (1988). On the evaluation of structural equation models. Ac
ademy of Marketing Science Journal, 16.
Barth, E. , Gulbrandsen, T. and Schøne, P. (2005): Family ownership and productivity: The role
of owner-management. Journal of Corporate Finance11, no. 1–2
Bertrand, M. and Schoar A. (2003). Managing with style: The Effect of managers on firm
policies. Quarterly Journal of Economics, 118.
Bertrand, M and Schoar A. (2006). The role of family in family firms†Journal of Economic Perspectives, 20.
Bing Liu and Fu Z (2011). Relationship between strategic orientation and organizational performance in born global: A Critical Review, Int. J. Bus. Manage. 6 (3).
Bosse, D.A, Phillips, R.A, and Harrison, J.S. (2009). Stakeholders, reciprocity, and firm performance. Strategic Management Journal 30 (4)
Bourgeois III, L.J.,(1980). Performance and consensus.https://doi.org/10.1002/smj.4250010304
Choi, J., & Wang, H. (2009). Stakeholder relations and the persistence of corporate financial performance. Strategic Management Journal, 30: 895-907. http://dx.doi. org/10.1002/smj.759.
Central Bank of Kenya (2014). National Economic Survey report.
Choy, Samuel S. M. and Mula, J. M. (2008). The impact of strategic orientation dimensions on business performance: a case study based on an international organization. Educational Research and Review Vol. 2 (5), pp. 109-116, May 2007
Citroen, C. L. (2011). The role of information in strategic decision-making. InternationalJournal
of Information Management, 31(6), 493-501.
Cohen, J (1969). Statistical power analysis for the behavior sciences. NY: Academic Press.
Combs, J, T.Cook, and C. Shook (2005). The dimensionality of organizational performance and its implications for strategic management research. Eds.2 D.J Ketchen and D.D Bergh.
Davidsson, P. (2004). Researching entrepreneurship. New York: Springer.
Davidsson, P., Kirchhoff, B., Hatemi-J, A., Gustavsson, H. (2002). Empirical analysis of
business growth factors using Swedish data. Journal of Small Business Management, Vol. 40(4).
Davidsson, P., Wiklund, J., (2000).Conceptual and empirical challenges in the study of firm
growth, in Handbook of entrepreneurship, D. Sexton, H. Landström (eds.). Oxford: Blackwell.
Deloitte (2016). Kenya Economic Outlook.
Doane , D.P.and Seward , L.E.,(2011). Measuring skewness: A forgotten statistic. Journal of Statistics Education, 19(2).
Dobbs, M. and R. Hamilton, (2007). Small business growth: Recent evidence and new directions. Int. J. Entrepreneurial Behavior. Res., 13.
Eisenhardt K.M, Graebner M.E, (2007). Theory building from cases: opportunities and
challenges. Academy of Management Journal vol. 50.
Engelen, et al. (2012). Entrepreneurial orientation, firm performance and the moderating role of
transformational leadership behaviours. Journal of management, published online, 10 Aug
DOI: 10.1177/014 Sage Publications
Ersun, A. N., & Karabulut, A. T. (2013). Innovation management and marketing in global enterprises. International Journal of Business and Management, 8. (20). http://dx.doi.org/10.5539/ijbm.v8n20p76
Escriba-esteve A., Sanchez-peinado L. and Sancez-peinado E. (2008). International Small
Business Journal. http//isb.sagepub.com/26/4/463.
Fredrickson JW, Mitchell RT. (1984). Strategic decision processes: comprehensiveness and
performance in an industry with an unstable environment. Acad Manage J 1984;27.
Freeman, R.E. (1984). Strategic management: A stakeholder approach, 1st ed.; Pitman Publishing
Boston, MA, USA; pp. 24–25.
Garson, G.D,( 2012). Testing statistical assumptions. Statistical Publishing Associates, Asheboro, NC USA.
Global Entrepreneurship Monitor (2010). Malaysia, 2010
Gibson and Cassar (2005). Longitudinal analysis of relationships between planning and performance in small firms. Small Business Economics, vol.25, No.3
Gupta, R., and Basu, S., (2008). Influence of dimensions of strategic orientation (so) on the growth of small firms & resources as moderating variable: A study of Indian small &medium enterprises (SMEs), Institute of Management Technology (IMT) Ghaziabad (India)
Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E., (2010).Multivariate data analysis, 7thedition, Prentice Hall, Upper Saddle River, New Jersey.
Hayes A.F, (2013). Introduction to mediation, moderation, and conditional process analysis: A regression-based approach. New York, NY: The Guilford Press-Bolin 2014
Hitt, M. A., Ireland, R. D., Camp, S, M. and Sexton, D. L., (2001). Strategic Entrepreneurship: Entrepreneurial Strategies for wealth Creation. Strategic Management Journal 22 (Special Issue).
Ireland,R. D.,Hitt, M. A. and Sirmon, D.G. (2003). A Model of Strategic Entrepreneurship: The Construct and its dimensions. Journal of Management 29(6).
Jahangir, N. and Begum, N (2008). The role of perceived usefulness, perceived ease of use, security and privacy, and customer attitude to engender customer adaptation in the context of electronic banking. African Journal of Business Management Vol. 2(1).
Jensen, M.B., Johnson, B., Lorenz, E. and Lundvall, B.-Å. (2007), ‘Forms of knowledge and modes of innovation’, Research Policy, Vol. 36, No. 5.
Joachim, A. A and Stephen, I.A (2014). Strategic orientation and performance of agro-based firms in transition economy. African Journal of Business Management Vol. 8(13), pp. 495-501
Karim A.K, (2011). The significance of management information systems for enhancing strategic and tactical planning. Journal of Information Systems and Technology Management. vol.8 no.2 São Paulo
Kauffmann, C. (2005).Financing SMEs in Africa, Policy Insights No.7. OECD. http:// www.oecd.org/dev/insights.
Kenya Economic Survey, (2016). https://www.knbs.or.ke
Kenya National Bureau of Statistics, (2016).Micro, small and medium establishments’ basic report. https://www.knbs.or.ke
Kenya national development plan, Kenya Vision 2030 (2007). www.vision2030.go.ke/lib.
Kraus, S. Harms, R. Schwarz, E. (2008). Strategic business planning and success in small firms. Int. J. Entrepreneurship and Innovation Management.
Lad Zani and Vuuren, (2002). Entrepreneurship Training for Emerging SMEs in South Africa. Journal of Small Business Management 40(2).
Lau C. M and Bruton G.D, (2011). Strategic orientations and strategies of high technology ventures in two transition economies. Journal of World Business 46 pg 371-380
LiPuma, J.A, Newbert, Scott, L. (2011).The effect of institutional quality on firm export performance in emerging economies: a contingency model of firm age and size†Small BusinessEconomics 40:8, 17–84,
Lumpkin, G. T., & Dess, G. G. (1996).Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1).
Malmendier, Ulrike & Tate, Geoffrey. (2009). Superstar ceos. The Quarterly Journal of Economics. 124. 1593-1638.
Maury, B. (2006). Family ownership and firm performance: Empirical evidence from Western European corporations. Journal of Corporate Finance12, no. 2, 321–341.
Mbugua S., K., Njeru A. and Tirimba O.I., (2014). Factors Affecting the Performance of Small and Micro Enterprises in Limuru Town Market of Kiambu County, Kenya. International Journal of Scientific and Research Publications, Volume 4, Issue 12, December 2014
Meers, K.A. and Robertson, C., (2007). Strategic Planning Practices in Profitable Small Firms in the United States. The Business Review, 7(1):302-307. Available from: EBSCOHost:
Miles, R.E, and Snow, C.C., (1978). Organization strategy, structure, and process, New York(NY): McGraw-Hill, 1978. http://search.global.epnet.com
Miller, D. (1992). The generic strategy trap. Journal of Business Strategy, Vol. 13 Issue: 1
Miller, D, & Friesen, P.H., (1982). Innovation in conservative and entrepreneurial firms: two models of strategic momentum. Strategic Management Journal, vol. 3, pp. 1-25.
Morgan, R.E., and Strong, C.A., (2003). Business performance and dimensions of strategic orientation. Journal of Business Research, 56(3): 163-176.
Mughan, T., Lloyd-Reason, L. and Zimmerman, C., (2004). Management consulting and international business support for SMEs: need and obstacles. Education and Training Journal, 46(8/9):424-432.
Ntakobajira, N. (2013). Factors affecting the performance of Small and Micro Enterprises (SMEs) Traders at City Park Hawkers Market in Nairobi County, Kenya, Nairobi, Kenya.
O'Regan N, Ghobadian A, Sims M. (2006). Fast tracking innovation in manufacturing SMEs Technovation
Piech, K. (2004). The knowledge -based economy in transition countries. IJEBR, Selected issue.
Poon, J. M. L., Ainuddin, R. A., and Junit, S. H. (2006). Effects of self-concept traits and entrepreneurial orientation of firm performance. International Small Business Journal, 24(1).
Porter, M.E., (1980): Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: Free Press.
Postma, T.J.B.M. and Zwart, P.S. (2001). Strategic Research and Performance of SMEs. Journal of Small Business Strategy, 12, 52-64.).
Ray, G., Barney, J. B. and Muhanna, W. A. (2004). Capabilities, business processes, and competitive advantage: Choosing the dependent variable in empirical tests of the resource-based view. Strategic Management Journal, 25(1), pp. 23-37.
Razali, N. M., and Wah, Y. B., (2011). Power Comparisons of Shapiro-Wilk, Kolmogorov-Smirnov, Lilliefors and Anderson-Darling Tests. Journal of Statistical Modeling and Anlytics, 2.
Ronald, C. Anderson, and David, M. Reeb., (2003). Founding-Family Ownership and Firm Performance: Evidence from the S&P 500: The Journal of Finance Vol. 58, No. 3 pp. 1301-1328 : Published by: Wiley for the American Finance Association:http://www.jstor.org/stable/3094581
Rothaermel, F. T., (2012). Strategic Management: Concepts and Cases. McGraw Hill/Irwin, p. 5
Shane, S., and Venkataraman, S. (2000).The promise of entrepreneurship as a field of research. Academy of Management Journal, 25(1), 217-226.
Smallbone, D., and Wyer, P., (2000). Growth and development in the small firm, in Carter, S.James-Evans, D. (Eds), Enterprise and Small Business, Prentice Hall, Harlow, pp.409-433.
Takahashi, S.I.Y. (2009). Entrepreneurs as decisive human resources and business: Performance for the Lao SMEs, Chinese Business Review, 8 (7), pp. 29-47.
Tsai, W.M.H., MacMillan, I.C., and Low, M.B., (1991). Effects of strategy and environment on corporate venture success in industrial markets. J. Bus. Venturing 6 (1), 9–28.
Treacy, m. and Wiersema, F., (1995). The discipline of market leaders: Choose your customers, narrow your focus, and dominate your market. USA: Addison Wesley.
Uasin Gishu Integrated Development Plan 2013-2018 (2013). http://www.kpda.or.ke/documents/CIDP/Uasin%20Gishu.pdf
Venkatraman, N. (1989). Strategic orientation of business enterprises: The construct, dimensionality, and measurement. Management Science, 35(8).
Venkatraman, N. (1989). The concept of fit in strategy research: Toward verbal and statistical correspondence. Academy of Management Review, 14.
Venkatraman, N. and Ramanujam, V., (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review
Voss, G.B and Voss, Z.G., (2002). Strategic orientation and firm performance in an artistic environment. Journal of Marketing, 64(1)
Wall, T.D., Michie, Patterson, Wood, S. J Sheeran and West, M., (2004). On the Validity of subjective measures of company Performance. Personnel Psychology 57 (1).
Wiklund, J. and Shepherd, D., (2005). Entrepreneurial orientation and small business performance: a configurationally approach. Journal of Business Venturing. 20(1).
Wiklund, J., Patzelt, H., and Shepherd, D. (2009). Building an integrative model of small business growth. Small Business Economics, Vol. 32 No.4.
Wong, C.C. and Hiew, P.L. (2005). Diffusion of mobile entertainment in Malaysia: Drivers and Barriers. Journal of Enformatika, Vol. 5
World Bank report (2015: 2010); SME Finance
Zhou, K. Yim, C. and Tse, D., (2005). The Effects of Strategic Orientations on Technology- and
Market-Based Breakthrough Innovations, J. Market. 69.
