Strategic Action and Performance of Small and Medium Sized Dairy Processing Firms in Kenya

Abstract

The dairy sector plays a crucial role in the economic growth and development of Kenya. However, many firms in the sector, especially the small and medium sized, continue to face performance challenges such as competition from unregulated informal milk market, accessing markets and high industry barriers, poor policy environment among others. Although strategic action has received attention both in practice and scholarly, its effect on the performance of small and medium sized dairy processing firms remains uncertain. This study sought to determine the effect of strategic action on performance of small and medium sized diary processing firms in Kenya. The study was anchored on the balanced score card model and adopted a positivism research philosophy. Descriptive and explanatory research designs were used. A census survey was conducted. Primary data was collected from the chief executive officer, finance manager, marketing manager and production managers. Descriptive statistics such as mean and standard deviation were used to explain data characteristics and multiple regressions were used to test the effect of strategic action on firm performance. The results showed that strategic action has a positive significant effect on performance of small and medium sized dairy processing firms in Kenya. It is thus perceived that strategic action is a key driving factor in the performance of small and medium sized dairy processing firms in Kenya through the capabilities and activities of managers in the implementation process that aids building of competitive advantage of the firms. The study contributes to the body of knowledge by filling contextual, empirical, and conceptual gaps identified in literature and establishes a link between strategic action and performance of small and medium sized dairy processing firms in Kenya. The study recommends that small and medium sized dairy processing firms in Kenya should invest in their brands, simplify business operations and strategically allocate resources to various firm activities to enhance firm performance.