INFLUENCE OF STRATEGIC CAPABILITIES ON PERFORMANCE OF FIRMS IN THE LEATHER INDUSTRY IN KENYA

Abstract

Performance of the firms in leather industry has deteriorated whereby some firms have closed their businesses. The firms are characterized by lack of quality effluent facilities, high cost and low availability of quality hides, scarce design and process skills, difficulties in accessing and understanding export markets and insufficient availability of growth capital. The domestic market share of Kenyan leather firm’s products has been eroded by imports of new low-cost leather footwear, mainly from China and India, as well as donated, second-hand footwear bringing to question the capabilities of the firms in the leather industry to compete in the domestic market. As a result, this study sought to establish the influence of strategic capabilities on performance of firms in the leather industry in Kenya. Specifically, the study sought to determine the influence of technological capability, human resource capability, knowledge management capability and marketing capabilities on performance of firms in the leather industry in Kenya. A descriptive research design was adopted. The target population was all the 16 tanneries which are the firms operating in the leather industry in Kenya. The unit of observation was the heads of department from operations, human resource, IT, Marketing and Administration. Therefore, a total of 80 respondents were targeted. A census was conducted on the entire target population. Data was collected through a structured questionnaire and analysed through Statistical Package for Social Sciences version 24. Both descriptive and inferential analysis was used. The results indicated that strategic capabilities have a positive and significant influence on performance of the firms in leather industry in Kenya. The study recommends the firms in the leather industry to invest in building more technological capability by investing in improvement of technology hardware infrastructure, software infrastructure, development initiatives and hiring of technical experts; to invest in developing the human resource capacity of the employees through workshops, seminars and trainings ; invest in building knowledge by investing in knowledge creation systems such as surveys, IT, emails and knowledge creation platforms such as benchmarking and workshops and invest in customer relationship management platforms such as online complaints systems, customer satisfaction surveys as well as brand management initiatives through promotions and advertising.

Key Words: Technological Capability, Human Resource Capability, Knowledge Management Capability, Marketing Capabilities, Organizational Performance