Effect of strategic agility on organizational performance of Steel manufacturing firms in Kenya

Abstract

Steel plays a crucial role in today's economy, serving as an indicator of a country's economic strength and reflecting investments in infrastructure. In Kenya, the steel industries accounts for approximately 13% of the manufacturing sector and is interconnected with complementary sectors such as housing, construction, energy, electronics, and chemicals. However, the steel industries in Kenya faces various challenges that hinder its ability to adapt to changing market dynamics and emerging technologies. Key among these challenges are high electricity costs, inadequate infrastructure, expensive inputs, heavy taxes competition from well established brands, volatile market prices, political instability and significant capital requirements. Previous research has not explored strategic agility as a potential solution to mitigate the effects of these challenges, specifically examining the impact of strategic agility moderators such as organizational culture, leadership, flexibility, and strategic sensitivity. Therefore, the study’s objective is to investigate the effect of strategic agility on the performance of steel industries in Kenya. Specific objectives of the study were; to establish the effect of organizational culture on performance of Kenyan Steel Manufacturing Firms, to determine the influence of leadership on performance of Kenyan Steel Manufacturing Firms, to investigate the effect of flexibility on performance of Kenyan Steel Manufacturing Industries and to examine the effect of strategic sensitivity on performance of Kenyan Steel Manufacturing Firms. The study was anchored on Dynamic Capabilities Theory and Ambidexterity theory to understand organizational adaptability. Using a correlational research design, the study targeted 33 steel industries in Kenya, with respondents of 132 top managers. Census method was used to study the respondents with primary data collected through structured questionnaires, which constituted of quantitative questions. Reliability tests was conducted using Cronbach's Alpha with a threshold value of 0.7. To ensure validity, the study sought expert opinions and conducted a comprehensive literature review. Multiple regression analysis was employed to examine the relationship between the variables. The independent variables accounted for 53.8% proportion of variance in performance. It is evident from the results that all model coefficients were significant except Leadership (Sig=.986, p>0.05) and Flexibility (Sig=.315, p>.05). The findings also shows that the B statistics, Organization culture (B = .393, p <.05) had positive significant effect on performance. Leadership (B = .001, p >.05) minimal effect on performance which also was not significant. Flexibility (B= -.052, p >.05) had a negative effect on performance and was not significant, (Sig=.315, p>.05). Strategic Sensitivity (B = .168, p <.05) had positive significant effect on performance. In addition, Organization culture, strategic sensitivity model coefficients were found to be positive, indicating that they had a positive significant effect on performance. Flexibility coefficient was found to be negative, thus negative effect on performance. The study concludes that Organizational culture had positive effect on performance, leadership had no significant effect, flexibility had no significant effect, and strategic sensitivity had a positive significant effect on the performance of Kenyan Steel Manufacturing Firms. The study recommends that firms should invest in cultivating a strong and positive organizational culture, promote cross-functional collaboration within the organization, and invest in continuous leadership development programs. The findings may be significant to the steel manufacturing industries particularly in the improvement of their strategic agility. Scholars may also find a wealth of empirical findings for referential purposes while the government and other stakeholders may use these findings in decision making.