Relationships among Structural Adaptations, Strategy Implementation and Performance of Manufacturing Small and Medium Firms in Thika, Kenya

Abstract

This paper examined the relationship between structural adaptations during strategy implementation and performance of small and medium manufacturing firms (SME) in Thika Sub-County in Kenya. Three structural dimensions investigated in this study included the formalization, centralization and specialization of functions. The study is underpinned in McKinsey’s 7-S/Higgins 8-S strategy frameworks and the Dynamic Capabilities View of the firm. Guided by the philosophy of logical positivism, a mixed research design was adopted. A self-administered questionnaire was used to collect primary data from 115 SME manufacturing firms using a simple random sampling procedure from a total population of 165 SME manufacturing firms. Pearson’s correlation and OLS regression analysis was used for data analysis. The study found statistical evidence that structural adaptations of the SME firm (r=.442**, P<.001) are positively and significantly related to its performance. Among the structural dimensions examined, the study found that formalization (r=.456**, P<.001) and specialization (r=.350**, P<.001) are positively and significantly related to SME’s performance. However, centralization (r=.159, P=.09) was found to be positively related to the SME’s performance but the relationship is statistically insignificant.