Corporate Technological Capability as a Driver to Firm Performance: A Study on Firms Listed at the Nairobi Securities Exchange
Main Article Content
Abstract
The aim of this paper was to assess the role played by corporate technological capabilities on firm performance. The ability of a firm to integrate information technology in its operations has been known to be integral in driving organizational success by promoting efficiency and effectiveness. The prevailing underperformance of the listed firms in Kenya raises the question on whether these firms have integrated adequate technology and whether they have what it takes to effectively incorporate technology in their operations, hence the subject of this study. Through a descriptive research design, the study surveyed 240 senior management personnel drawn from the 64 listed firms using a structured questionnaire. The data was analysed using SPSS and Amos software for descriptive statistics and structural equation modelling respectively. The findings revealed that technological capabilities had a significant influence on the performance of firms listed at the NSE (R2 = .096; β = 0.150; P=0.0001<0.05). It was concluded that through adequate ICT infrastructure, ICT human skills and the commitment to integrate and accept use of ICT, the listed firms would strengthen their operational efficiency thus record superior performance.
Article Details
Section
Articles
References
Adamides, E., & Karacapilidis, N. (2020). Information technology for supporting the development and maintenance of open innovation capabilities. Journal of Innovation & Knowledge, 5(1), 29-38.
Arora, B., & Rahman, Z. (2017). Information technology capability as competitive advantage in emerging markets: Evidence from India. International Journal of Emerging Markets, 12(3), 447-463.
Bakan, I., & Sekkeli, Z. H. (2017). Types of information technology capability and their impacts on competitiveness. Research Journal of Business and Management, 4(2), 212-220.
Basheer, M., Siam, M., Awn, A., & Hassan, S. (2019). Exploring the role of TQM and supply chain practices for firm supply performance in the presence of information technology capabilities and supply chain technology adoption: A case of textile firms in Pakistan. Uncertain Supply Chain Management, 7(2), 275-288.
Bataineh, A., Alhadid, A., Alabdallah, G., Alfalah, T., Falah, J., & Idris, M. (2015). The role of information technology capabilities in capitalizing market agility in Jordanian telecommunications sector. International Journal of Academic Research in Business and Social Sciences, 5(8), 90-101.
Cai, Z., Huang, Q., Liu, H., & Liang, L. (2016). The moderating role of information technology capability in the relationship between supply chain collaboration and organizational responsiveness: evidence from China. International Journal of Operations & Production Management, 36(10), 1247-1271.
Chae, H. C., Koh, C. E., & Park, K. O. (2018). Information technology capability and firm performance: Role of industry. Information & Management, 55(5), 525-546.
Chepkole, G. K., & Deya, J. (2019). Effect of strategic capability on competitive advantage of information technology firms in Nairobi City County, Kenya. International Academic Journal of Human Resource and Business Administration, 3(5), 104-127.
Chu, Y., Chi, M., Wang, W., & Luo, B. (2019). The impact of information technology capabilities of manufacturing enterprises on innovation performance: Evidences from SEM and fsQCA. Sustainability, 11(21), 5946.
Eliyana, A., Handriana, T., & Fatimah, N. (2021). Dynamic Capabilities Information Technology Enabler For Performance Organization. Retrieved from https://digitalcommons.unl.edu/libphilprac/4901/
Fakunmoju, S., Arokodare, M., & Makinde, G. (2020). Strategic agility and competitive advantage of oil and gas marketing companies: the moderating effect of information technology capability and strategic foresight. The Journal of Accounting and Management, 10(3).
Hansen, G. S., & Wernerfelt, B. (1989). Determinants of firm performance: The relative importance of economic and organizational factors. Strategic Management Journal, 10(5), 399-411.
Hao S, & Song M (2016). Technology-driven strategy and firm performance: are strategic capabilities missing links? J Bus Res 69:751–759
Heenetigala, K. (2011). Corporate governance practices and firm performance of listed companies in Sri Lanka (Doctoral dissertation, Victoria University Melbourne).
Herbling, D. (2015, December 3). NSE-listed companies profit warnings hit 11 for second year. Business Daily. Retrieved from http://www.businessdailyafrica.com/
Jayabalan, J., Dorasamy, M., Raman, M., Sambasivan, M., & Harun, S. (2021). Unleashing frugal innovation in private higher education institutions via intellectual capital and Information technology capability: a systematic literature review. F1000Research, 10.
Jinnan, W., Lihua, H. & Lin, L. (2014). Impact of Information Technology Capability on Financial Performance of Chinese Listed Companies during the Period of Economic Downturn. WHICEB 2014 Proceedings. Paper 43. http://aisel.aisnet.org/whiceb2014/4
Kamar, K., Lewaherilla, N. C., Ausat, A. M. A., Ukar, K., & Gadzali, S. S. (2023). The Influence of Information Technology and Human Resource Management Capabilities on SMEs Performance. International Journal of Artificial Intelligence Research, 6(1.2).
Kemboi, N., Kinyariro, D. K., Gesage, M. B., & Maina, J. N. (2023). Relationship Between Dividend Yield And Financial Performance Of Listed Firms At The Nairobi Securities Exchange. Financial Studies, 27(1).
Kim, S., Kim, B., & Seo, M. (2020). Impacts of Sustainable Information Technology Capabilities on Information Security Assimilation: The Moderating Effects of Policy—Technology Balance. Sustainability, 12(15), 6139.
King’oo, R. N., Kimencu, L., & Kinyua, G. (2020). Empirical analysis of effect of information technology capability on performance of private universities in Kenya. International Journal of Managerial Studies and Research, 8(11), 52-61.
Lioukas, C. S., Reuer, J. J., & Zollo, M. (2016). Effects of information technology capabilities on strategic alliances: Implications for the resource‐based view. Journal of Management Studies, 53(2), 161-183.
Lu, Y., Zhou, L., Bruton, G. & Weiwen, L. (2010). Capabilities as a mediator linking resources and the international performance of entrepreneurial firms in emerging economy. Journal of International Business Studies, 41, 419-436.
Masoud, R., & Basahel, S. (2023). The Effects of Digital Transformation on Firm Performance: The Role of Customer Experience and IT Innovation. Digital 3, 109–126. https://doi.org/10.3390/ digital3020008
McAfee, A., & Brynjolfsson, E. (2008). Investing in the IT that makes a competitive difference. Harvard Business Review, 86(7/8), 98.
Musimba, M.A. (2013). Firm level competencies and international performance of Companies listed at the Nairobi Securities Exchange.
Ndotono, C. M. (2023). Board Characteristics and The Financial Performance of Agricultural Firms Listed in The Nairobi Securities Exchange, Kenya. International Journal of Academic Research in Economics and Managment and Sciences, 12(2), 222 – 236.
Ngele, E., & Omido, K. (2020). Effect of information technology capability on competitive advantage of the Kenyan banking sector: A critique. International Journal of Advanced Research in Management and Social Sciences, 9(1), 76-2.
Panda, S., & Rath, S. K. (2021). Information technology capability, knowledge management capability, and organizational agility: The role of environmental factors. Journal of Management & Organization, 27(1), 148-174.
Shahzad, F., Du, J., Khan, I., Shahbaz, M., Murad, M., & Khan, M. A. S. (2020). Untangling the influence of organizational compatibility on green supply chain management efforts to boost organizational performance through information technology capabilities. Journal of cleaner production, 266, 122029.
Teece, D. J. (2007). Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319-1350.
Teece, D. J. (2014). A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of International Business Studies, 45(1), 8-37.
Wellalage, N. H., & Locke, S. (2012). Ownership structure and firm financial performance: Evidence from panel data in Sri Lanka. Journal of Business Systems, Governance and Ethics, 7(1), 52-65.
Zhang, J., & Li, H. (2022). The impact of big data management capabilities on the performance of manufacturing firms in asian economy during COVID-19: the mediating role of organizational agility and moderating role of information technology capability. Frontiers in Psychology, 13, 833026.
Arora, B., & Rahman, Z. (2017). Information technology capability as competitive advantage in emerging markets: Evidence from India. International Journal of Emerging Markets, 12(3), 447-463.
Bakan, I., & Sekkeli, Z. H. (2017). Types of information technology capability and their impacts on competitiveness. Research Journal of Business and Management, 4(2), 212-220.
Basheer, M., Siam, M., Awn, A., & Hassan, S. (2019). Exploring the role of TQM and supply chain practices for firm supply performance in the presence of information technology capabilities and supply chain technology adoption: A case of textile firms in Pakistan. Uncertain Supply Chain Management, 7(2), 275-288.
Bataineh, A., Alhadid, A., Alabdallah, G., Alfalah, T., Falah, J., & Idris, M. (2015). The role of information technology capabilities in capitalizing market agility in Jordanian telecommunications sector. International Journal of Academic Research in Business and Social Sciences, 5(8), 90-101.
Cai, Z., Huang, Q., Liu, H., & Liang, L. (2016). The moderating role of information technology capability in the relationship between supply chain collaboration and organizational responsiveness: evidence from China. International Journal of Operations & Production Management, 36(10), 1247-1271.
Chae, H. C., Koh, C. E., & Park, K. O. (2018). Information technology capability and firm performance: Role of industry. Information & Management, 55(5), 525-546.
Chepkole, G. K., & Deya, J. (2019). Effect of strategic capability on competitive advantage of information technology firms in Nairobi City County, Kenya. International Academic Journal of Human Resource and Business Administration, 3(5), 104-127.
Chu, Y., Chi, M., Wang, W., & Luo, B. (2019). The impact of information technology capabilities of manufacturing enterprises on innovation performance: Evidences from SEM and fsQCA. Sustainability, 11(21), 5946.
Eliyana, A., Handriana, T., & Fatimah, N. (2021). Dynamic Capabilities Information Technology Enabler For Performance Organization. Retrieved from https://digitalcommons.unl.edu/libphilprac/4901/
Fakunmoju, S., Arokodare, M., & Makinde, G. (2020). Strategic agility and competitive advantage of oil and gas marketing companies: the moderating effect of information technology capability and strategic foresight. The Journal of Accounting and Management, 10(3).
Hansen, G. S., & Wernerfelt, B. (1989). Determinants of firm performance: The relative importance of economic and organizational factors. Strategic Management Journal, 10(5), 399-411.
Hao S, & Song M (2016). Technology-driven strategy and firm performance: are strategic capabilities missing links? J Bus Res 69:751–759
Heenetigala, K. (2011). Corporate governance practices and firm performance of listed companies in Sri Lanka (Doctoral dissertation, Victoria University Melbourne).
Herbling, D. (2015, December 3). NSE-listed companies profit warnings hit 11 for second year. Business Daily. Retrieved from http://www.businessdailyafrica.com/
Jayabalan, J., Dorasamy, M., Raman, M., Sambasivan, M., & Harun, S. (2021). Unleashing frugal innovation in private higher education institutions via intellectual capital and Information technology capability: a systematic literature review. F1000Research, 10.
Jinnan, W., Lihua, H. & Lin, L. (2014). Impact of Information Technology Capability on Financial Performance of Chinese Listed Companies during the Period of Economic Downturn. WHICEB 2014 Proceedings. Paper 43. http://aisel.aisnet.org/whiceb2014/4
Kamar, K., Lewaherilla, N. C., Ausat, A. M. A., Ukar, K., & Gadzali, S. S. (2023). The Influence of Information Technology and Human Resource Management Capabilities on SMEs Performance. International Journal of Artificial Intelligence Research, 6(1.2).
Kemboi, N., Kinyariro, D. K., Gesage, M. B., & Maina, J. N. (2023). Relationship Between Dividend Yield And Financial Performance Of Listed Firms At The Nairobi Securities Exchange. Financial Studies, 27(1).
Kim, S., Kim, B., & Seo, M. (2020). Impacts of Sustainable Information Technology Capabilities on Information Security Assimilation: The Moderating Effects of Policy—Technology Balance. Sustainability, 12(15), 6139.
King’oo, R. N., Kimencu, L., & Kinyua, G. (2020). Empirical analysis of effect of information technology capability on performance of private universities in Kenya. International Journal of Managerial Studies and Research, 8(11), 52-61.
Lioukas, C. S., Reuer, J. J., & Zollo, M. (2016). Effects of information technology capabilities on strategic alliances: Implications for the resource‐based view. Journal of Management Studies, 53(2), 161-183.
Lu, Y., Zhou, L., Bruton, G. & Weiwen, L. (2010). Capabilities as a mediator linking resources and the international performance of entrepreneurial firms in emerging economy. Journal of International Business Studies, 41, 419-436.
Masoud, R., & Basahel, S. (2023). The Effects of Digital Transformation on Firm Performance: The Role of Customer Experience and IT Innovation. Digital 3, 109–126. https://doi.org/10.3390/ digital3020008
McAfee, A., & Brynjolfsson, E. (2008). Investing in the IT that makes a competitive difference. Harvard Business Review, 86(7/8), 98.
Musimba, M.A. (2013). Firm level competencies and international performance of Companies listed at the Nairobi Securities Exchange.
Ndotono, C. M. (2023). Board Characteristics and The Financial Performance of Agricultural Firms Listed in The Nairobi Securities Exchange, Kenya. International Journal of Academic Research in Economics and Managment and Sciences, 12(2), 222 – 236.
Ngele, E., & Omido, K. (2020). Effect of information technology capability on competitive advantage of the Kenyan banking sector: A critique. International Journal of Advanced Research in Management and Social Sciences, 9(1), 76-2.
Panda, S., & Rath, S. K. (2021). Information technology capability, knowledge management capability, and organizational agility: The role of environmental factors. Journal of Management & Organization, 27(1), 148-174.
Shahzad, F., Du, J., Khan, I., Shahbaz, M., Murad, M., & Khan, M. A. S. (2020). Untangling the influence of organizational compatibility on green supply chain management efforts to boost organizational performance through information technology capabilities. Journal of cleaner production, 266, 122029.
Teece, D. J. (2007). Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319-1350.
Teece, D. J. (2014). A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of International Business Studies, 45(1), 8-37.
Wellalage, N. H., & Locke, S. (2012). Ownership structure and firm financial performance: Evidence from panel data in Sri Lanka. Journal of Business Systems, Governance and Ethics, 7(1), 52-65.
Zhang, J., & Li, H. (2022). The impact of big data management capabilities on the performance of manufacturing firms in asian economy during COVID-19: the mediating role of organizational agility and moderating role of information technology capability. Frontiers in Psychology, 13, 833026.