Influence of Operational Processes on the Performance of Manufacturing Firms: Empirical Evidence from SMEs in Kenya



Abstract Views
693

Downloads
761

Citations

Share

##plugins.themes.bootstrap3.article.sidebar##

Submitted Nov 13, 2020
Published Dec 30, 2020
10.24018/ejbmr.2020.5.6.614

Abstract viewed = 693 times

Table of Contents

##plugins.themes.bootstrap3.article.main##

Manufacturing firms in Sub-Saharan Africa are facing both internal and external pressures from intense global competition, turbulent markets, and the increasing sophistication of manufacturing technologies which influences its performance. This increasing rate of change in the sector is compelling firms to pay attention to the operational processes. Due to this reason, the study sought to determine the effect of operational processes on the performance of manufacturing SMEs in, Kenya. The study adopted an explanatory design had a sample size of 136 firms which was drawn using proportionate stratified sampling. Primary data collection involved the use self–administered questionnaires and instrument validation was achieved through the development of constructs from previous studies, scale development, instrument pre-testing and validation. The instrument was subjected to inter-consistency test using the Cronbach's coefficient with a value ≥ 0.70 affirming that the research instrument was reliable. The results show that operational processes cumulatively explain 37% of the variations in firm performance, therefore, the study concluded that the operational processes have a significant and positive effect on firm performance. The study recommends that the management of these firms should attempt to improve on the strategy processes and contents based on models that have been applied successfully in other contextual areas.

Keywords: Manufacturing firms, operational strategy, operational processes, Small and medium enterprises (SMEs), firm performance

Downloads

Download data is not yet available.

References

  1. Adil, M. S. (2015). Strategic human resource management practices and competitive priorities of the manufacturing performance in Karachi. Global Journal of Flexible Systems Management, 16(1), 37-61.
     Google Scholar
  2. Akgul, A. K., Gozlu, S. & Tatoglu, E. (2015). Linking operations strategy, environmental dynamism & firm performance, Kybernetes, Emerald, 44(3), 406 – 422.
     Google Scholar
  3. Andersen, T. J. (2000). Strategic planning, autonomous actions and corporate performance. Long-range planning, 33(2), 184-200.
     Google Scholar
  4. Amoako-Gyampah, K., & Acquaah, M. (2008). Manufacturing strategy, competitive strategy and firm performance: An empirical study in a developing economy environment. International journal of production economics, Elsevier 111(2), 575-592.
     Google Scholar
  5. Aosa, E. (2011). Strategic management within Kenya firms. DBA Africa management review, 1(1), 25-36.
     Google Scholar
  6. Ates, A. & EPSRC (Engineering & Physical Sciences Research Council) Fund. (2008). Strategy process in manufacturing SMEs (Small medium enterprises). PhD thesis, University of Strathclyde.
     Google Scholar
  7. Avella, L., Fernandez, E., & Vazquez, C. J. (2001). Analysis of manufacturing strategy as an explanatory factor of competitiveness in the large Spanish industrial firm. International Journal of Production Economics, Elsevier, 72(2), 139-157.
     Google Scholar
  8. Awwad, A., Al Khattab, A., & Anchor, J. R. (2010). Competitive priorities and competitive advantage in Jordanian manufacturing. Working Paper. Emerging Markets Research Group University of Huddersfield, Huddersfield, UK.
     Google Scholar
  9. Barney, J. B. (2014). How marketing scholars might help address issues in resource-based theory. Journal of the Academy of Marketing Science, 42(1), 24-26.
     Google Scholar
  10. Barney, J., Wright, M., & Ketchen, D. J. (2001). The resource-based view of the firm: Ten years after 1991. Journal of Management. Sage, 27(6), 625– 641.
     Google Scholar
  11. Barlett, J. E., Kotrlik, J. W., & Higgins, C. C. (2001). Organizational research: Determining appropriate sample size in survey research. Information Technology, Learning, and Performance Journal, 19(1), 43.
     Google Scholar
  12. Bi, R., Davison, R. M., & Smyrnios, K. X. (2015). IT and fast growth small-to-medium enterprise performance: An empirical study in Australia. Australasian Journal of Information Systems, 19, S247-S266.
     Google Scholar
  13. Bititci, U., Ackermann, F., & Ates, A., & Davies, J., Garengo, P., Gibb, S., MacBryde, J., Mackay, D., Maguire, C., Van Der Meer, R., Shafti, F., Bourne, M. & Firat, S. U. (2011) Managerial processes: business processes that sustain performance. International Journal of Operations & Production Management, 31(8), 851 – 891
     Google Scholar
  14. Bloom, N., Genakos, C., Sadun, R., & Van Reenen, J. (2012). Management practices across firms and countries. Academy of management perspectives, 26(1), 12-33.
     Google Scholar
  15. Bouranta, N., & Psomas, E. (2017). A comparative analysis of competitive priorities and business performance between manufacturing and service firms. International Journal of Productivity and Performance Management. 66(7),914-931.
     Google Scholar
  16. Boyer, K. K., & Lewis, M. W. (2002). Competitive priorities: investigating the need for trade‐offs in operations strategy. Production and operations management, 11(1), 9-20.
     Google Scholar
  17. Buyl, T., Boone, C., & Matthyssens, P. (2011). Upper echelons research and managerial cognition. Strategic Organization, 9(3), 240-246.
     Google Scholar
  18. Cagliano, R., Acur, N., & Boer, H. (2005). Patterns of change in manufacturing strategy configurations. International Journal of Operations & Production Management.
     Google Scholar
  19. Cai, S., & Yang, Z. (2014). On the relationship between business environment and competitive priorities: The role of performance frontiers. International Journal of Production Economics, 151, 131-145.
     Google Scholar
  20. Chakravarty, B. J., & Roderick, E, W. (2002). Strategy process: forming, implementing and changing strategies. Handbook of strategy and management, 182.
     Google Scholar
  21. Chege, J., Ngui, D., & Kimuyu, P. (2014). Scoping paper on Kenyan manufacturing (No. 2014/136). WIDER Working Paper. 25.
     Google Scholar
  22. Chi, T., Kilduff, P. P., & Gargeya, V. B. (2009). Alignment between business environment characteristics, competitive priorities, supply chain structures, and firm business performance. International Journal of productivity and performance management. Emerald. 58(7), 645-669.
     Google Scholar
  23. Demeter, K. (2003). Manufacturing strategy & competitiveness. International Journal of Production Economics, Elsevier, 81–82; 205–213.
     Google Scholar
  24. Demeter, K., Boer, H., Peng, D. X., Schroeder, R. G., & Shah, R. (2011). Competitive priorities, plant improvement and innovation capabilities, and operational performance. International Journal of Operations & Production Management. 31(5), 484-510.
     Google Scholar
  25. Dinh, H. T., & Clarke, G. R. (Eds.). (2012). Performance of manufacturing firms in Africa: An empirical analysis. The World Bank.
     Google Scholar
  26. Dinh, H. T., & Monga, C. (2013). Light manufacturing in Tanzania: A reform agenda for job creation and prosperity. The World Bank.
     Google Scholar
  27. Dukovska-Popovska, I., & Boer, H. (2008, June). Manufacturing strategy configurations, contingencies and performance. In Proceedings from the 15th International Annual EurOMA Conference (pp. 15-18).
     Google Scholar
  28. Fafchamps, M., & Quinn, S. (2018). Networks and manufacturing firms in Africa: Results from a randomized field experiment. The World Bank Economic Review, 32(3), 656-675.
     Google Scholar
  29. Frohlich, M. T., & Dixon, J. R. (2001). A taxonomy of manufacturing strategies revisited. Journal of operations management, 19(5), 541-558.
     Google Scholar
  30. González‐Benito, J., & Suárez‐González, I. (2010). A study of the role played by manufacturing strategic objectives and capabilities in understanding the relationship between Porter's generic strategies and business performance. British Journal of Management, 21(4), 1027-1043.
     Google Scholar
  31. Government of Kenya (2012). Draft National Industrialization Policy Framework for Kenya 2012-2030. Ministry of Industrialization and Enterprise Development; Nairobi.
     Google Scholar
  32. Government of Kenya (2018). Accessed from http://www.industrialization.go.ke/images/downloads/vision-2030-manufacturing-sector.pdf.
     Google Scholar
  33. Grant, R. M. (1991). The resource-based theory of competitive advantage: implications for strategy formulation. California management review, 33(3), 114-135.
     Google Scholar
  34. Grant, N., Cadden, T., McIvor, R., & Humphreys, P., (2013). A taxonomy of manufacturing strategies in manufacturing companies in Ireland, Journal of Manufacturing Technology Management, Emerald, 24(4), 488 – 510.
     Google Scholar
  35. Gunby, N. W. (2009). Firm performance and complementary strategy development Processes, Management Decision. Emerald, 47(5), 806 – 818.
     Google Scholar
  36. Hayes, R. H., & Wheelwright, S. C. (1984). Restoring our competitive edge: competing through manufacturing (Vol. 8). New York: Wiley.
     Google Scholar
  37. Helfat, C. E., Finkelstein, S., Mitchell, W., Peteraf, M. A., Singh, H., Teece, D. J., & Winter, S. G. (2007). Dynamic Capabilities: Understanding Strategic Change in Organization. Blackwell Publishing: Malden MA.
     Google Scholar
  38. Hung, S. C., Hung, S. W., & Lin, M. J. J. (2015). Are alliances a panacea for SMEs? The achievement of competitive priorities and firm performance. Total Quality Management & Business Excellence, 26(1-2), 190-202.
     Google Scholar
  39. Jagoda, K., & Kiridena, S. (2015). Operations strategy processes and performance: Insights from the contract apparel manufacturing industry. Emerald, 26(2), 261 – 279.
     Google Scholar
  40. Jitpaiboon, T., Gu, Q., & Truong, D. (2016). Evolution of competitive priorities towards performance improvement: a meta-analysis. International Journal of Production Research, 54(24), 7400-7420.
     Google Scholar
  41. Kathuria, R., Partovi, F. Y., & Greenhaus, J. H. (2010). Leadership practices, competitive priorities, and manufacturing group performance. International Journal of Operations & Production Management.
     Google Scholar
  42. Koufteros, X. A., Vonderembse, M. A., & Doll, W. J. (2002). Examining the competitive capabilities of manufacturing firms. Structural equation modelling, Routledge, 9(2), 256-282.
     Google Scholar
  43. KAM (2018). Manufacturing priority agenda 2018; sparking Kenya's industrial transformation for job creation. Accessed from https://kam.co.ke/kam/wp-content/uploads/2018/02/2018-Manufacturing-Priority-Agenda.pdf.
     Google Scholar
  44. Kim, G., Shin, B., Kim, K. K., & Lee, H. G. (2011). IT capabilities, process-oriented dynamic capabilities, and firm financial performance. Journal of the association for information systems, 12(7), 1.
     Google Scholar
  45. KNBS (2020) Economic survey 2020. Accessed from https://www.knbs.or.ke/?page_id=3142.
     Google Scholar
  46. Kerpedzhiev, G., Lehnert, M., & Röglinger, M. (2016). The future of business process management in the future of work. In Proceedings of the 24th European Conference on Information Systems. AIS, Tel Aviv.
     Google Scholar
  47. Kiridena, S., Jagoda, K. & Lin, H. (2013). Operations strategy processes: how significant are they?. Managing on the Edge: 27th ANZAM Conference (pp. 1-19). Hobart, Australia: Australia & New Zealand Academy of Management.
     Google Scholar
  48. Krasnikov, A., & Jayachandran, S. (2008). The relative impact of marketing, research-and-development, and operations capabilities on firm performance. Journal of Marketing, 72(4), 1-11.
     Google Scholar
  49. Löfving, M., Säfsten, K., & Winroth, M. (2014). Manufacturing strategy frameworks suitable for firms. Journal of Manufacturing Technology Management, 25(1), 7-26.
     Google Scholar
  50. McGahan, A. M., & Porter, M. E. (2005). Comment on ‘Industry, corporate and business‐segment effects and business performance: a non‐parametric approach by Ruefli and Wiggins. Strategic Management Journal, 26(9), 873-880.
     Google Scholar
  51. McKelvie, A., & Davidsson, P. (2009). From resource base to dynamic capabilities: an investigation of new firms. British Journal of Management, 20, S63-S80.
     Google Scholar
  52. McKenzie, D., & Woodruff, C. (2015). Business practices in small firms in developing countries. The World Bank.
     Google Scholar
  53. Mills, J., Platts, K., & Gregory, M. (1995). A framework for the design of manufacturing strategy processes. International Journal of Operations & Production Management, 15(4), 17-49.
     Google Scholar
  54. Miller, J. G., & Roth, A. V. (1994). A taxonomy of manufacturing strategies. Management Science, INFORMS, 40(3), 285-304.
     Google Scholar
  55. Narayanan, V.K., Zane, L. J., & Kemmerer, B. (2011). The Cognitive Perspective in Strategy: An Integrative Review, Journal of Management, Sage, 37(1) 305-351.
     Google Scholar
  56. O’Regan, N., & Ghobadian, A. (2002). Formal strategic planning. Business Process Management Journal. Emerald, 8(5), 416-429.
     Google Scholar
  57. Panagiotou, G. (2006). Managerial cognitions of competitive environments: a strategic group analysis, Management Research News, Emerald, 29(7) 439 – 456.
     Google Scholar
  58. Penrose, E. T. (1959). The Theory of the Growth of the Firm. Oxford university press. Oxford.
     Google Scholar
  59. Peng, D. X., Schroeder, R. G., & Shah, R. (2008). Linking routines to operations capabilities: A new perspective. Journal of operations management, 26(6), 730-748.
     Google Scholar
  60. Peteraf, M. A. (1993). The cornerstones of competitive advantage: a resource‐based view. Strategic management journal, 14(3), 179-191.
     Google Scholar
  61. Phusavat, K., & Kanchana, R. (2007). Competitive priorities of manufacturing firms in Thailand, Industrial Management & Data Systems, Emerald, 107(7), 979 – 996.
     Google Scholar
  62. Porter, M. E. (1985). Value chain. The Value Chain and Competitive advantage: creating and sustaining superior performance.
     Google Scholar
  63. Protogerou, A., Caloghirou, Y., & Lioukas, S. (2011). Dynamic capabilities and their indirect impact on firm performance. Industrial and Corporate Change, 21(3), 615-647.
     Google Scholar
  64. Pun, K. F. (2004). A conceptual synergy model of strategy formulation for manufacturing. International Journal of Operations & Production Management. Emerald, 24(9) 903 – 928.
     Google Scholar
  65. Qiang, C. F. H. Y. M. (2012). Relationship between Competitive Priorities and Performance Based on OEM Model [J]. Chinese Journal of Management, 1.
     Google Scholar
  66. Rusjan, B. (2000). Manufacturing Competitive Priorities & Weaknesses of Slovenian Companies: An Empirical Investigation. Journal for East European Management Studies, Rainer Hampp Verlag, 5(1), 6-27.
     Google Scholar
  67. Rytter, N. G., Boer, H., & Koch, C. (2007). Conceptualizing operations strategy processes. International Journal of Operations & Production Management, Emerald. 27(10), 1093-1114.
     Google Scholar
  68. Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students, 5thEd Prentice Hall, New York.
     Google Scholar
  69. Sarmiento, R., Shukla, V., & Izar-Landeta, J. M. (2013). Performance improvements seen through the lens of strategic trade-offs. International Journal of Production Research, 51(15), 4682-4694.
     Google Scholar
  70. Schou, S., & Cardoso, J. (2014). How many manufacturing firms are there in Mozambique? (No. 2014/084). WIDER Working Paper.
     Google Scholar
  71. Shee, H. K., Foley, P., & Van Gramberg, B. (2008). The relationship between operations capability and firm competitiveness. International Journal of Global Business and Competitiveness, 3(1), 19-30.
     Google Scholar
  72. Singh, M., Basak, P., & Singh, R. (2013). Manufacturing strategy issues in selected Indian manufacturing industry. Management Science Letters, 3(3), 731-742.
     Google Scholar
  73. Singh, H., & Mahmood, R. (2014). Manufacturing strategy and export performance of small and medium enterprises in Malaysia: moderating role of external environment. International Journal of Business and Commerce, 3(5), 37-52.
     Google Scholar
  74. Sun, H., & Hong, C. (2002). The alignment between manufacturing and business strategies: its influence on business performance. Technovation, 22(11), 699-705.
     Google Scholar
  75. Swamidass, P. M., & Newell, W. T. (1987). Manufacturing strategy, environmental uncertainty and performance: a path analytic model. Management Science, 33(4), 509-524.
     Google Scholar
  76. Tell, J. (2012). Managerial strategies in small, fast-growing manufacturing firms, Journal of Management Development, Emerald, 31(7), 700 – 710.
     Google Scholar
  77. Tegarden, L. F., Sarason, Y., & Banbury, C. (2003). Linking Strategy Processes to Performance Outcomes in Dynamic Environments: The Need to Target Multiple Bull's Eyes. Journal of Managerial Issues, Pittsburgh State University 15(2), 133-153.
     Google Scholar
  78. Verreynne, M. L., & Meyer, D. (2008). Strategizing to improve entrepreneurial orientation: the case of small firms.
     Google Scholar
  79. Verreynne, M. L., & Meyer, D. (2010). Small business strategy and the industry life cycle. Small Business Economics, Springer, 35(4), 399-416.
     Google Scholar
  80. Xiaosong, P. D., Schroeder, R. G., & Shah, R. (2011). Competitive priorities, plant improvement and innovation capabilities, and operational performance: A test of two forms of fit. International Journal of Operations & Production Management, 31(5), 484-510.
     Google Scholar
  81. Ward, P. T., & Duray, R. (2000) Manufacturing strategy in context: environment, competitive strategy and manufacturing strategy. Journal of operations management, Elsevier, 18(2), 123-138.
     Google Scholar
  82. Weiss, J. A., & Jalilian, H. (2016). Manufacturing as an engine of growth. In: Weiss J and Tribe M (Eds.) Routledge Handbook of Industry and Development. London: Routledge. 26-37.
     Google Scholar
  83. Were, A. (2016). Manufacturing in Kenya: Features, challenges and opportunities. International Journal of Science, Management and Engineering, 4(6), 15-26.
     Google Scholar