Dynamic capabilities, organizational ambidexterity, leadership style and competitive advantage of manufacturing firms in Nairobi, Kenya

Abstract

Competitive advantage has been momentous in recent times to the development and accomplishment of organizations’ goals and objectives. Previous studies on manufacturing firms particularly in less developed countries have revealed that a third of these firms have failed to become operational as well as additional failures or closures of firms in previous years due to lack of leadership role in sensing, seizing and reconfiguring firms capabilities leading to competitive advantage. Despite many studies that have carried out in respect to dynamic capabilities and competitive advantage there are no empirical studies in Kenya that show the effect of organizational ambidexterity and leadership style on the relationship between dynamic capabilities and competitive advantage of manufacturing firms which this study strives to achieve. The main objective of the study was moderated mediation of organizational ambidexterity and leadership style on the relationship between dynamic capabilities and competitive advantage of manufacturing firms in Nairobi, Kenya. The study specific objectives were to: determine the effect of sensing capabilities, seizing capabilities and reconfiguration capabilities on competitive advantage; the mediating effect of leadership style; the moderating effect of organizational ambidexterity; and the moderated mediation of organizational ambidexterity and leadership style on these relationships. The study was grounded by Resource Based View Theory supported by Porters Forces and Dynamic Capabilities theories. The study used positivism paradigm, explanatory research design, simple random and stratified sampling on a target population of 795 manufacturing firms located in Nairobi, Kenya. A sample size of 321 firms was selected based on Yamane formula of determination in selecting respondents to be served with the questionnaires. Study hypotheses were tested using hierarchical regression at 0.05 significance level and the results showed that all values were less than 0.05. The study findings revealed that sensing capabilities; seizing capabilities; reconfiguration capabilities and dynamic capabilities had a positive and significant effect on competitive advantage (β =.392, p=.000); (β = .194, p=.000); (β =.174, p=.001) and (β = .535, p=.000). Findings further showed that transformational leadership style (LLCI = .001, ULCI = .115); transactional leadership style (LLCI = .016, ULCI = .098) mediates the relationship between dynamic capabilities and competitive advantage. Furthermore, the findings revealed that organizational ambidexterity moderates the relationship between dynamic capabilities and competitive advantage (LLCI = .030, ULCI = .212, β =.121, p=0.05) and moderated mediation of organizational ambidexterity and leadership style (LLCI = .000, ULCI = .046; β=.014) on the relationship between dynamic capabilities and competitive advantage. In conclusion, the study provides new theoretical insight into the moderating effect of organizational ambidexterity, mediating effect of leadership style on the relationship between dynamic capabilities and competitive advantage. Results showed that at higher organizational ambidexterity, dynamic capabilities had a higher effect on competitive advantage compared to lower level hence the major contribution of this study as they enriched RBV, Porters Forces and Dynamic Capabilities Theories. The study recommends that managers, policy makers and industry practitioners should put more emphasis on, and appreciate the role of the leader in the deployment of dynamic capabilities by sensing, seizing and reconfiguring capabilities so as to achieve competitive advantage especially in the ever changing contemporary operating environment. Scholars should use these findings to further research on other sectors or subsectors of the economy.