Moderating effect of Innovation on the Relationship between Customer Focus Strategy and Performance of Manufacturing Firms in Kenya
Keywords:
Customer, Focus, Innovation Strategy, Performance, Manufacturing, FirmsAbstract
Purpose: The manufacturing sector is experiencing a major problem of stiff competition emanating from illicit and illegal trade. The study aims at providing insights on relationship between customer focus strategy and performance of manufacturing firms in Kenya to achieve competitiveness. The objective was to establish the moderating effect of innovation on the relationship between customer focus strategy and performance of manufacturing.
Methodology: The study was anchored on Porter's competitive strategy typology. The study adopted the explanatory research design. The study targeted population of 766 procurement managers from manufacturing firms in Kenya. The Yamane's formula was used to compute a sample size of 264 procurement managers. Stratified, simple random and purposive sampling was used to select respondents. Questionnaire was used to collect primary data. The data was coded and entered in the computer for analysis using the Statistical Package for Social Sciences. Quantitative data was analyzed using Process Macro.
Results: Results indicated that customer focus strategy (β= -.346, p=.000) had negative and significant relationship with performance of manufacturing firms. Innovation (β=.822, p=.000) were positively significantly related with performance of manufacturing firms. The interaction between customer focus strategy and innovation was significant (β=.373, p=.000), indicating that the effect of customer focus strategy on performance of manufacturing firms depended on innovation strategy. The study concluded that customer focus strategy had a negative significant relationship with performance of manufacturing firms. The study concluded that innovation moderate the relationship between customer focus strategy and performance of manufacturing firms in Kenya.
Unique Contribution to Theory, Policy and Practice: The manufacturing firms pursuing focus competitive strategy should strive to identify customers whose needs and wants are not met by differentiators and cost leaders and offer services and products not offered by their competitors in order to remain competitive in the market place. In order to gain from this strategy, the manufacturing firms should pay attention to the market segment which is sustainable so as to avoid the dangers encountered when pursuing focus competitive strategy such as focusing on a segment that is pursuing innovation.
Downloads
References
Abd Aziz, N. N., & Samad, S. (2016). Innovation and competitive advantage: Moderating effects of firm age in foods manufacturing SMEs in Malaysia. Procedia Economics and Finance, 35, 256-266.
Ahire, S. L., Golhar, D. Y., & Waller, M. A. (1996). Development and validation of TQM implementation constructs. Decision sciences, 27(1), 23-56.
Aiken, L. S., West, S. G., & Reno, R. R. (1991). Multiple regression: Testing and interpreting interactions. sage.
Akcigit, U., & Kerr, W. R. (2018). Growth through heterogeneous innovations. Journal of Political Economy, 126(4), 1374-1443.
Alam, I. (2013). Customer interaction in service innovation: evidence from India. International Journal of Emerging Markets.
Aliasghar, O., Rose, E. L., & Chetty, S. (2019). Where to search for process innovations? The mediating role of absorptive capacity and its impact on process innovation. Industrial Marketing Management, 82, 199-212.
AlQershi, N., Abas, Z., & Mokhtar, S. S. M. (2018). Strategic innovation as driver for SME performance in Yemen. Journal of Technology and Operations Management, 13(1), 30-41.
Anaza, N. A., & Rutherford, B. (2012). How organizational and employee"customer identification, and customer orientation affect job engagement. Journal of Service Management.
Anupkuma, A. (2005). Principles of management: An analysis of the contributions of various thinkers to the field of management, and a review of the management practices of five companies.
Arunda, C. O. (2015). The influence of innovation on competitive advantage: a case of MPESA (Doctoral dissertation, United States International University-Africa).
AteÅŸ, N. Y., Tarakci, M., Porck, J. P., van Knippenberg, D., & Groenen, P. J. (2020). The dark side of visionary leadership in strategy implementation: Strategic alignment, strategic consensus, and commitment. Journal of Management, 46(5), 637-665.
Chijioke, N., Vu, H. M., & Olatunji, F. (2018). Influence of strategy formulation drivers on strategic performance. Ekonomicko-manazerske spektrum, 12(2), 15-25.
Chotekorakul, W., & Nelson, J. (2013). Customer orientation, merchandising competencies, and financial performance of small fashion retailers in Bangkok. Journal of Fashion Marketing and Management: an International Journal.
Coltman, T., Devinney, T. M., & Midgley, D. F. (2011). Customer relationship management and firm performance. Journal of Information Technology, 26(3), 205-219.
Cooper, D., and Schindler, P. (2008). Business Research Methods (10th ed.). New York, NY: McGraw Hill.
Dearing, J. W., & Cox, J. G. (2018). Diffusion of innovations theory, principles, and practice. Health affairs, 37(2), 183-190.
Decramer, A. (2015). Looking for the Value of Strategic drivers in firm performance and competitiveness. Management Decision, 49(3), 468-483.
Egbetokun, A., Mendi, P., & Mudida, R. (2016). Complementarity in firm-level innovation strategies: A comparative study of Kenya and Nigeria. Innovation and Development, 6(1), 87-101.
Elbanna, S., Kapoutsis, I., & Mellahi, K. (2017). Positive politics and strategic decision making outcomes: The role of macro-economic uncertainty. Management Decision, 55(10), 2218-2236.
Fathali, A. (2016). Examining the impact of competitive strategies on corporate innovation: An empirical study in automobile industry. international Journal of Asian social science, 6(2), 35-145.
Frow, P., Nenonen, S., Payne, A., & Storbacka, K. (2015). Managing co"creation design: A strategic approach to innovation. British journal of management, 26(3), 463-483.
Frow, P., Nenonen, S., Payne, A., & Storbacka, K. (2015). Managing co"creation design: A strategic approach to innovation. British journal of management, 26(3), 463-483.
Grimm, P. E. (2005). Ab components' impact on brand preference. Journal of Business Research, 58(4), 508-517.
Ibidunni, A. S., Ogundana, O. M., & Okonkwo, A. (2021). Entrepreneurial competencies and the performance of informal SMEs: The contingent role of business environment. Journal of African Business, 22(4), 468-490.
Ibingira, F., Muturi, P., & Rurangwa, G. (2017). Effect of innovation strategies on organizational performance: a case study of bank of Kigali. European Journal of Business and Social Sciences, 6(6), 29-37. http://www.ejbss.com/recent.aspx-/
Indahsari, B., Heriyadi, N. A., Listiana, E., & Fauzan, R. (2023). The Effect of Online Advertising and Electronic Word of Mouth on Purchase Intention through Brand Image as a Mediating Variable. South Asian Res J Bus Manag, 5(1), 1-9.
KAM (2014) "Business Intelligence; Things look up for Manufacturing Sector" Retrieved from; https://fedcsis.org/2014/kam.html Accessed on 11th October 2021
Kamaamia, S. (2017). Marketing Strategies and Performance of Mediamax network Limited (Doctoral dissertation, University of Nairobi).
Kavulya, P. W., Muturi, W., Rotich, G., & Ogollah, K. (2018). Effect of customer focus strategy on the performance of Saccos in Kenya. International Journal of Business Strategies, 3(1), 1-16.
Kaya, A. (2015). The relationship between spiritual leadership and organizational citizenship behaviors: A research on school principals' behaviors. Educational Sciences: Theory & Practice, 15(3).
Kim, A. J., & Ko, E. (2012). Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand. Journal of Business research, 65(10), 1480-1486.
Knoke, D. (2018). Changing organizations: Business networks in the new political economy. Routledge.
Lado, A., Paulraj, A., & Chen, I. (2011). Customer focus, supply-chain capabilities and performance: Evidence from US manufacturing industries. International Journal of Logistics Management, 22(2), 202-221.
Lee, C., Hallak, R., & Sardeshmukh, S. R. (2016). Innovation, entrepreneurship, and restaurant performance: A higher-order structural model. Tourism management, 53, 215-228.
Lu, W., Shen, L., & Yam, M. C. (2008). Critical success factors for competitiveness of contractors: China study. Journal of Construction Engineering and Management,134(12), 972-982.
Lynn, G., & Kalay, F. (2015). The effect of vision and role clarity on team performance. Journal of Business Economics and Finance, 4(3).
Macharia, J. K., & Pelser, T. G. (2014). Key factors that influence the diffusion and infusion of information and communication technologies in Kenyan higher education. Studies in Higher Education, 39(4), 695-709.
Maoz, M., Jacobs, J., Davies, J., & Thompson, E. (2009). Predict 2010: customer service meets Social CRM. Gartner RAS core Research.
Mark J, Nwaiwu JN (2015). Impact of political environment on business performance of multinational companies in Nigeria. Afric, Res. Rev. 9(3):1-10.
Muangkhot, S., & Ussahawanitchakit, P. (2015). Strategic marketing innovation and marketing performance: an empirical investigation of furniture exporting businesses in Thailand. The Business & Management Review, 7(1), 189.
Muhammad Shakeel Sadiq Jajja & Shaukat Ali Brah & Syed Zahoor Hassan & Vijay R. Kannan, 2014. "An examination of product innovation and buyer-supplier relationship in Pakistani firms," International Journal of Productivity and Performance Management, Emerald Group Publishing, vol. 63(8), pages 1031-1045, November.
Mukerjee, K. (2013). Customer"oriented organizations: A framework for innovation. Journal of Business Strategy.
Mutegi, F. K. (2018). Role of Innovation Strategy on Insurance Penetration in Kenya (Doctoral dissertation, COHRED-JKUAT).
Muthoni, M. D. (2017). Workforce diversity management and employee performance in national biosafety authority, Kenya (Doctoral dissertation, Doctoral dissertation, Master's Thesis, Kenyatta University).
Mutindi, U. J. M., Namusonge, G. S., & Obwogi, J. (2013). Effects of strategic management drivers on organizational performance: a survey of the hotel industry in Kenyan coast.
Najafi-Tavani, S., Najafi-Tavani, Z., Naud, P., Oghazi, P., & Zeynaloo, E. (2018). How collaborative innovation networks affect new product performance: Product innovation capability, process innovation capability, and absorptive capacity. Industrial marketing management, 73, 193-205.
Ndemezo, E, y Kayitana, Ch. (2017). Innovation and Firms' Performance in the Rwandese Manufacturing Industry. A firm Level Empirical Analysis, 1-19. Recuperado de http://includeplatform.net/wp-content/uploads/2017/12/Research-Paper-on-Innovationand-firms-performance.pdf.
Njeri, A. (2017). Effects of innovation strategy on firm performance in telecommunications industry: A case of Safaricom Kenya limited (Doctoral dissertation, United States International University-Africa).
Nowacki, R., & Bachnik, K. (2016). Innovations within knowledge management. Journal of Business Research, 69(5), 1577-1581.
Nurunnabi, M., Esquer, J., Munguia, N., Zepeda, D., Perez, R., & Velazquez, L. (2020). Reaching the sustainable development goals 2030: Energy efficiency as an approach to corporate social responsibility (CSR). GeoJournal, 85(2), 363-374.
Nyoike, E. W., Ngugi, P. K., & Muturi, W. (2017). The influence of creativity on performance of Small and Medium Manufacturing enterprises in Kenya. European Journal of Business Management, 5(9), 15-39.
Nyuur, R. B., Brecic, R., & Debrah, Y. A. (2018). SME international innovation and strategic adaptiveness: The role of domestic network density, centrality and informality. International Marketing Review.
Oczkowski, E., Krivokapic-Skoko, B., & Plummer, K. (2013). The meaning, importance and practice of the co-operative principles: Qualitative evidence from the Australian co-operative sector. Journal of co-operative Organization and Management, 1(2), 54-63.
Oira, J. K., & Kibati, P. (2016). Influence of innovation on the performance of commercial banks in Nakuru central business district. Journal of Business and Management, 18(10), 102-113.
Pan, W., Gibb, A. G., & Dainty, A. R. (2012). Strategies for integrating the use of off-site production technologies in house building. Journal of construction engineering and management, 138(11), 1331-1340.
Porter, M. E. (1980). Industry structure and competitive strategy: Keys to profitability. Financial analysts journal, 36(4), 30-41.
Porter, M. E. (1985). Technology and competitive advantage. Journal of business strategy, 5(3), 60-78.
Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior research methods, 40(3), 879-891.
Reguia, C. (2014). Product innovation and the competitive advantage. European Scientific Journal, 1(1), 140-157.
Ribau, C. P., Moreira, A. C., & Raposo, M. (2018). Categorising the internationalisation of SMEs with social network analysis. International Journal of Entrepreneurship and Small Business, 35(1), 57-80.
Sanuri Mohd Mokhtar, S. (2013). The effects of customer focus on new product performance. Business Strategy Series, 14(2/3), 67-71.
Soliman, F. (2013). Does innovation drive sustainable competitive advantages?. Journal of Modern Accounting and Auditing, 9(1), 130.
Subramanian, N., Gunasekaran, A., Yu, J., Cheng, J., & Ning, K. (2014). Customer satisfaction and competitiveness in the Chinese E-retailing: Structural equation modeling (SEM) approach to identify the role of quality factors. Expert Systems with Applications, 41(1), 69-80.
Tajeddini, K., Elg, U., & Trueman, M. (2013). Efficiency and effectiveness of small retailers: The role of customer and entrepreneurial orientation. Journal of Retailing and Consumer Services, 20(5), 453-462.
Tari, J.J., Heras-Saizarbitoria, I., & Pereira, J. (2013). Internalization of quality management in service organizations, Managing Service Quality, 23(6), 456-473.
Tuan, N., Nhan, N., Giang, P., & Ngoc, N. (2016). The effects of innovation on firm performance of supporting industries in Hanoi, Vietnam. Journal of Industrial Engineering and Management, 9(2), 413-431.
Ungerman, O., Dedkova, J., & Gurinova, K. (2018). The impact of marketing innovation on the competitiveness of enterprises in the context of industry 4.0. Journal of competitiveness, 10(2), 132.
Verhoef, P. C., & Lemon, K. N. (2013). Successful customer value management: Key lessons and emerging trends. European Management Journal, 31(1), 1-15.
Wagana, D. & Kabare, K. (2015). The influence of Corporate Governance on Corporate Performance Among Manufacturing Firms in Kenya: Theoretical Model. International Journal of Academic Research in Business and Social Sciences, Vol. 5, No. 4 ISSN: 2222-6990.
Wang, D., Li, P., & Huang, L. (2022). Time-frequency volatility spillovers between major international financial markets during the COVID-19 pandemic. Finance Research Letters, 46, 102244.
Xie, X., Huo, J., & Zou, H. (2019). Green process innovation, green product innovation, and corporate financial performance: A content analysis method. Journal of business research, 101, 697-706.
Yaacob, Z. (2014). The Direct and Indirect Effects of Customer Focus on Performance in Public Firms. International Journal for Quality Research, 8(2).
Yamane, Taro (1972). "Statistics: An introductory analysis." New York: Harper & Row.
Zakir, M. (2017). Review on tea (Camellia sinensis) research achievements, challenges and future prospective including Ethiopian status. International Journal of Forestry and Horticulture, 3(4), 27-39. http://dx.doi.org/10.20431/2454-9487.0304005
Zulkiffli, S. N. A., Zaidi, N. F. Z., Padlee, S. F., & Sukri, N. K. A. (2022). Eco-Innovation Capabilities and Sustainable Business Performance during the COVID-19 Pandemic. Sustainability, 14(13), 7525.
Zutshi, A., Mendy, J., Sharma, G. D., Thomas, A., & Sarker, T. (2021). From challenges to creativity: enhancing SMEs' resilience in the context of COVID-19. Sustainability, 13(12), 6542.
Downloads
Published
How to Cite
Issue
Section
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
