Impact of Strategic Control Practices and Strategic Orientation On Organizational Performance of Sugar Firms in Western Kenya

Abstract

Despite strategic management advocating for the use of strategic control practices to improve the implementation of strategic plans and organizational performance, establishing the strategic control-performance relationship has been problematic, suggesting failure by researchers to consider contingent variables. This study used data, collected during the period November 2008 to May 2009 from 109 senior managers in a census survey of 45 firms in the sugar value-chain in western Kenya, to examine the prevalence of strategic control practices, strategic orientation types, the relationship between strategic control and organizational performance and the moderating effect of strategic orientation on the relationship between strategic control and organizational performance. Descriptive statistics, bi-variate regression analysis and moderated regression analysis were used to analyze data. The findings revealed moderate prevalence of strategic control practices (belief control mean 2.96, std dev 0.65; boundary control mean 2.93, std dev 0.65; diagnostic control 2.84, std dev 0.87; Interactive control 2.86, std dev 0.83). The most prevalent strategic orientation was the reactor (60%), followed by defender (24%); prospectors (9%) and analyzers (7%). All the four levers were positively and significantly related to organizational performance (belief ~ = 0.288, P < 0.05, boundary ~ = 0.364, P < 0.01, diagnostic ~ = 0.358, P < 0.01 and interactive ~ = 0.393, P < 0.01). Whereas a positive relationship between strategic control system and organizational performance was significantly moderated by strategic orientation for boundary control systems (~ = 0.344, P < 0.01) and for diagnostic control CP = 0.265, p < 0.05), belief control and interactive controls systems showed no such effects. The results suggest that belief control systems and interactive control systems are higher order controls. The results of this study suggest that urgent measures are required by the firms in the study to design strategic control systems to cope with the changing business environment. The study contributes to validation and upgrade of the existing strategic control theory. For managers, the study sheds light on the design and use of strategic controls and also for public sector managers in guiding the strategic change. It is recommended that future studies focus on the specific firms in sugar value chain and adopt longitudinal case-study designs to establish causal relationships among variables.