Corporate Growth Strategies, External Operating Environment and Firm Performance: An Empirical Survey of Large Manufacturing Firms in Nairobi City County, Kenya

Abstract

Theoretical literature in strategic management describes performance as outcome of firm’s strategic objectives, which are developed and executed at the corporate level of management. Conceptual propositions also suggest that the external operating environment of a firm influences the relationship between its corporate strategies and performance. This paper examines the direct effect of corporate growth strategies on performance of large manufacturing firms in Nairobi City County, Kenya. The strategies under study are market development, product development and diversification. The paper also examines the moderating effect of external operating environment on the relationship between corporate growth strategies and performance of the large manufacturing firms. The authors adopted indicators of competitive position, consumer behaviour and credit accessibility to measure external operating environment.Multistage probability sampling technique was used to select study sample of 189 firms. One hundred forty eight firms responded where primary data was collected using a semi-structured questionnaire. Data was analysed using descriptive and inferential statistics. The study findings indicate that corporate growth strategies have a positive and significant impact on a firm’s performance. It also found out that external operating environment has a moderating effect on the relationship between corporate growth strategies and firm performance. The study has important implications for managers and policy makers of the manufacturing firms.