The Relationship Between Technology Strategy and Competitive Performance in the Telephony Industry in Kenya

Abstract

Technology ha been used extensively by many organizations to acquire a competitive advantage over the competition. The gap in the study and particularly basing in the Kenyan market environment is whether there really exist a link between how the firm perform and the technology strategy in place. Therefore the objective of this study was to determine the relationship between technology strategy and competitive performance in the telephony firms in Kenya. This study was carried out on the three firms involved in the telephony industry in Kenya; Telkom, which operates the fixed line system, Safari com and Kencell which both operate in the cellular system. Pragmatic telephony professionals, accustomed to intense price competition and focused on the bottom line, have difficulty justifying investments in advanced technology. This study set out to find out the results of research to begin answering the question, "does technology matter?" This study indicated that a higher value for a number of technology strategy dimensions is associated with superior competitive performance. The findings were that 23 of the 40 possible relationships between dim en ions of technology strategy and competitive performance illustrate a significant positive relation hip. This number of significant relationships determined in this analysis is far more frequent than could have occurred by chance. According to the analyzed data there is a strong positive correlation between the number of subscribers and holding capacity of the switching equipment, software version, numb er of b a c t ti n launched , number of trans-coders: (p =0.00,0.963), (p 0.44 4), (p ) an d (p '-0. 895) respectively. The correlation coefficient between sales turnover and the technology variable are also strong and positive, except the software version whose coefficient is not significant and also negative. These strong and positive correlations imply that a change in the level of technology has a strong positive influence on the sales turnover of the companies. The findings also indicate that the Average Revenue Per User as a measure of performance has no significant relationship with the technology variables i.e. Holding capacity of the switching equipment, software version, Number of base stations launched, number of trans-coders: (p=.929,0.33), (p= .937 ,-0.029), (p =. 707 , -137), (p=439,.276) respectively. These results demonstrate clear technology strategy and competitive performance relationships. These findings indicate that technology does matter. This led to the conclusion that telephony industry managers should pay close attention to their technology strategies in order to remain competitive. Further research examining the causality of successful competitive performance of telephony firm is warranted. The chicken-egg controversy described by Gluck and Jauch (1984) merit investigation in telephony industry in Kenya i .e if those firms that demonstrate a relatively higher technology strategy valuation are shown to be more successful,does that show that technology strategy leads to success,or are those that are more succesful able to devote more attention to technology strategy?