Mugambi G.K. M'Nchebere1 and Professor Peter K’Obonyo, PhD2
1School of Business and Economics, Moi University, Eldoret, Kenya
2School of Business, University of Nairobi, Nairobi, Kenya
Corresponding address pkobonyo@uonbi.ac.ke
The influence of market strategy on corporate performance has been and still is a central
issue in Strategic Management Discipline. In spite of immense academic curiosity in this area,
exemplified by extensive empirical research, results still remain inconclusive. Some argue that
performance differences across firms is as a result of strategic choice the firm makes
regarding the market and its subsequent positioning while others argue that firm
performance is influenced by the context within which it operates. Besides, empirical studies
that forge these propositions in an African setting, and specifically in Kenya using empirically
grounded PIMS (Profit Impact of Market Strategy) principles, are scanty. This study
examined the influence of PIMS principles on corporate performance in Kenya. Both primary
and secondary data were collected from Listed Companies in Kenya. Primary data were
collected vide a structured close ended Likert type questionnaire administered to all 56 CEOs
of quoted companies in a census survey. Secondary data were collected on financial
performance of the same companies for a period of five years between 2002 and 2006. Data
were analyzed using descriptive and multivariate techniques. Theory testing show that
Kaplan and Norton’s Balanced Score Card (BSC) conforms to Kenyan context and remains a
viable measure of Corporate performance. Further, the study provides additional support for
the linkages between PIMS principles and corporate performance, suggesting that PIMS
principles are generalizable across a broad spectrum of contexts though the veracity of
prediction varies across the principles and the model is also context specific. In Kenyan
context, the PIMS model explains up to 53.9% (Adj.R2 =0.539) of variation in corporate
performance. These findings hold implications for corporate managers. They should pay
special attention to market positioning strategies especially product quality and market share.
These strategies should be specifically targeted to cash generating portfolios calibrated in such
a manner as to avoid investment intensity that acts as a drag to profitability. Future studies
should seek to replicate the findings of this study to Small and Micro Enterprises. Also open to
further study is extension of this study results by employing optimization methodology
procedures to address the limitation of spuriousness.
Keywords: PIMS, Corporate Performance, Contextual Application, Kenya
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