Moderating effect of competitive strategy on the relationship between strategic orientation and performance among pharmaceutical manufacturing firms in Kenya

Abstract

Organizational performance is key to the sustainability of a firm. However, pharmaceutical firms have been experiencing performance issues in the recent past. Thus, the study sought to examine the moderating effect of competitive strategy on the relationship between strategic orientation and performance among pharmaceutical manufacturing firms in Kenya. The study was informed by the resource-based view theory and the dynamic capability theory. The explanatory research design was utilized in the study. The study targeted employees from the top and middle level management of 43 Pharmaceutical manufacturing firms in Kenya. According to HR records, by the end of 2020, there were 168 employees from the top management and 469 employees from the middle management from the registered pharmaceutical manufacturing firms in Kenya. The sample size was 246 obtained by using the Yamane formula. The researcher used a random sampling technique to get the sample size from each firm. Questionnaires were used as the research instruments. The pilot study was conducted to examine the validity and reliability of the research instruments. The study was analyzed using descriptive and inferential statistics. The correlation results showed that entrepreneurial orientation, learning orientation, technological orientation and customer orientation are positively and significantly associated with performance. The regression results showed that entrepreneurial orientation and performance are positively and significantly related (β=0.162, p=0.001). Learning orientation and performance was found to be positively and significantly related (β=0.441, p=0.000). Technological orientation and performance are positively and significantly related (β =0.169, p=0.002). It was established that customer orientation and performance are positively and significantly related (β=0.241, p=0.000). The study showed the coefficient of determination (R squared) increased in all six models (R square in the first model was 0.697 (69.7%), 0.920 (92.0%) in the second model, 0.929 (92.9%) in the third model, 0.931 (93.1%) in the fourth model, 0.937 (93.7%) in the fifth model and 0.939 (93.9%) in the sixth model. Thus, competitive strategy moderates the relationship between strategic orientation and the performance of pharmaceutical manufacturing firms in Kenya. The study concluded that entrepreneurial orientation includes the firm introducing new products ahead of the competitors, concentrating on the expected future demand and supply, manipulating the market environment through unique marketing tactics, minimizing the expected risks and targeting different market segments. The study further concludes that learning orientation is determined by employees working in unity and any opinion being taken with much consideration. Similarly, technological orientation and performance is positively and significantly related. The customer orientation includes the firm continually monitoring its commitment levels and positioning in serving the needs of its consumers. Customer orientation is influenced by ensuring the business goals are driven largely by consumer satisfaction. Competitive strategy moderates the relationship between strategic orientation and the performance of pharmaceutical manufacturing firms in Kenya. Thus, the study recommended that every organization should pay attention to customer orientation, entrepreneurial orientation, learning orientation and technological orientation. The firms should introduce new products ahead of the competitors, concentrates on the expected future demand and supply, manipulates the market environment through unique marketing tactics and minimize the expected risks. The firms need to adopt new modern ways of marketing and support new ideas of all the employees. Learning in the firms be promoted and learning opportunities compulsory to all the employees. The organization should provide customers with unique, different and distinct products from competitors. Moreover, it is recommended that future studies can be conducted to examine other factors that influence the performance within the pharmaceutical manufacturing firms other than strategic orientation, such as capacity building, working environment and leadership styles with a moderating effect of regulatory framework or firm size.