Strategic Thinking and Performance of Floriculture Firms in Kenya

Abstract

The cut flower is the highest contributor of the Kenyan fresh horticultural exports. The Cut flower farming is growing very fast and largely impacts the foreign exchange income. It also creates a direct employment to close to 50,000 people, and indirectly to 500,000 more. As much as cut flower is significant in the Kenyan economic growth, its quality in the global market has not been consistent enough. Its performance is affected by many factors. Some of them include Cost management issues and the understanding of its market. Cut flower firms should apply models that respond to the environment in order for them to improve their performance and increase its competitiveness. The primary objective of this study was to ascertain the influence of strategic thinking, specifically in terms of strategic direction, core competencies, and human capital development, on the performance of floriculture firms in Kenya, using the balanced scorecard as a measure of performance. The study was anchored on the environmental dependency theory as well as the resource based view theory. The population of the study was 89 floriculture firms in Kenya. Employing a descriptive cross-sectional research design, the study gathered data from 68 firms giving a response rate of 76.4% which was considered adequate. Data collection relied exclusively on primary data procured through structured questionnaires. The collected data was subsequently analyzed using descriptive, correlational, and regression methodologies. The regression results revealed a significant effect of the selected independent variables on organizational performance. Core competencies emerged as the most potent predictor with a coefficient of .719 (p<.05), followed by human capital development with a coefficient of .298 (p<.05), and strategic direction with a coefficient of .161 (p<.05). The model illustrated that approximately 91.3% of the variance in organization performance could be elucidated by these independent variables. The study concluded that there is a robust association between organizational performance and the practices of strategic direction, core competencies, and human capital development. Particularly, the emphasis on core competencies and human capital development emerged as critical determinants of success in the floriculture sector. The study recommends the need for floriculture firms to invest in the identification, development, and leveraging of distinctive capabilities; prioritize initiatives that enhance employee skills, engagement, and career progression; and prioritize the enhancement and communication of their strategic direction. Future studies should investigate the effect of strategic thinking on performance of firms in other contexts. Incorporating qualitative research methods, like in-depth interviews, could also provide richer, more nuanced insights.