Information Systems Resources, Capabilities and Performance of Firms in Telecommunications Industry, Kenya

Abstract

Kenya's economy today is driven majorly by information-based service businesses where telecommunication industry is playing a critical economic role. According to Communications Authority of Kenya report of 2017, Kenya mobile phone service providers have a combined total of 37.8 million customers with Safaricom Kenya Limited leading the others (Airtel, Telkom and Equitel) in subscription rate as well as innovative products and services. In the quest to explain their difference in performance, this study examined the relationship between information systems (IS) resource, capabilities and performance, specifically, the contribution of these factors towards market dominance and unique competencies enjoyed by Safaricom Kenya Limited. The study also sought to establish if IS capabilities have a moderating effect on the relationship between IS resources and performance which has received limited research from scholars. The purpose of this study was to analyse the relationship between IS resources, IS capabilities and performance of firms in the telecommunications industry in Kenya. The specific objectives were to: establish the relationship between IS resources; IS capabilities and firm performance and determine the moderating effect of IS capabilities on the relationship between IS resources and firm performance; in the telecommunications industry in Kenya. The study was anchored on resource-based view and contingency theories. Review of the existing literature was done and a conceptual framework developed along with the research hypotheses. A positivism paradigm using correlational survey research design was used. The population of the study was 408 staff comprising all executive, tactical and operational level managers from the business and IT sections in each firm. A sample of 202 staff was drawn through proportionate stratified random sampling method. Primary data was collected using structured questionnaire measured on likert type interval scales between November 2017 and January 2018. Reliability of the research instrument was tested against Cronbach's alpha coefficient where an overall reliability score of 0.814 was achieved while validity was gauged using panel of experts, ensuring that the indicators of each variable were within the same construct and operationalizing the instrument as per the variables. Descriptive statistics comprising means and standard deviations were used to analyse the data. Hypotheses were tested using correlation coefficient and regression analysis. The findings indicated that IS resources has a moderate relationship (R = 0.372, Pl= .404, R 2 =.138, p<0.05) with firm performance demonstrating that an investment in IS resources leads to an adequate improvement on performance. IS capabilities and firm performance were also found to have a moderate relationship (R = 0.409, Bl= .389, R 2 =.167, p<0.05) implicating that whenever firms in the industry invested on innovative IS capabilities there was a significant improvement on performance. Based on the study findings, it also became apparent that there is a positive effect of IS capabilities (.1R2 = .096, p<0.05) on the relationship between IS resources and firm performance. On the basis of the results of this thesis, it was concluded that firms in the industry should invest in IS resources and development of innovative IS capabilities since they have significant influence on their performance. They should also ensure that the development of IS capabilities are in line with their business goals because of its moderating effect. This study may be useful to industry players by gaining better understanding on various IS resources and IS capabilities that they can utilize to improve and sustain their performance besides policy formulation. And by advancing a model that depicts the relationship between IS resources and IS capabilities influence on firm performance, this study may make a significant contribution to theory building in the field of information systems.