Abstract

The study investigated how a repositioning strategy can be applied to achieve the goals of a turnaround strategy. Thus, the study sought to establish the effect of a repositioning strategy on performance of large manufacturing firms based in Kenya that adopted a turnaround strategy. The study responded to calls to address existing gaps in the literature on both theoretical and conceptual scopes as well as the bias in extant research focusing on customer perspective in the operationalization of a repositioning strategy. The study drew from the RBV and the strategic choice theories and operationalized the repositioning construct into three indicators. The study was done as a descriptive survey of 107 large manufacturing firms in Kenya with data being obtained from functional level managers. The study found that the repositioning strategy was practiced by the firms within a range of moderate to very high extent. Network relationship and internal process control dimensions of the strategy were found to have a significant positive statistical effect on performance of the sampled firms. The findings provide evidence of complementarity between the RBV and strategic choice theories and raise implications for strategic management practice based on anchorage of strategic thinking orientation among firms.

1. Introduction

A central tenet of the strategic management literature is that gaining and sustaining competitive advantage requires a firm to establish a defensible market position, creating and capturing value through product/service differentiation and/or cost leadership ^{1, 2}. A firm's choice of strategic position is highly consequential because it typically requires investments in interrelated and specialized resource profiles or activity systems, including assets, capabilities, and knowledge, which are costly and time consuming for others to imitate ^{3, 4, 5}. The literature emphasizes that such investments represent commitments ³ that make repositioning difficult because asset redeployment is costly ⁶, the level of asset specificity is high ⁷, exit barriers are significant ⁸, or organizational inertia is present ⁹. Yet, while Caves and Porter ¹⁰ and Porter ¹¹ emphasized the difficulty of repositioning, today's economy increasingly requires such a strategy ¹².

Firms experiencing performance decline employ a variety of corporate turnaround strategies to deal with the situation ¹³. Turnaround strategy is a process by which firms experiencing declining performance overcome their problems and recover their pre-downturn performance ¹⁴. The purpose of turnaround strategy is to reposition an organization from a point of underperformance or failure to achieve its objectives to a point of performance ¹⁵. Besides, repositioning strategy shares parallels with turnaround, in terms of strategic character and the goal to improve value proposition. Repositioning is an entrepreneurial strategy which primarily focuses on generation of revenue, product innovation, product differentiation; re-branding, growth and innovation all of which may lead to an improved capacity to capture and retain market share ¹⁶.

The extant strategic management literature suggests a variety of corporate turnaround strategies that can be adopted by firms experiencing inefficiency or misalignment with their target market due to the extreme market conditions in the business environment ¹⁷. Mbogo and Waweru ¹⁸ reviewed relevant literature and reported that the various forms of turnaround strategies include cost cutting strategy, revenue generation strategy, reorganization strategy, retrenchment strategy and repositioning strategy. The Repositioning form of turnaround strategy is a conscious move an organization decides to take so as to carefully adapt to the ever-changing commercial environment ¹⁹. Wong and Merrilees ²⁰ define repositioning as a strategy meant to align the current and future organization/product/ service with the existing or future market conditions. It is a deliberate set of activities designed to change a firm's existing position ²¹.

Further, Jewell ²² posits that repositioning strategy is actually positioning unless the company, concept or product is completely new. The strategy is taken as a response by firms when facing unstable marketing environment, and enacted as a fundamental shift in the company’s value proposition ^{2, 23}. In addition, repositioning strategy is necessary when the operational environment leads to drastic changes in the competitive landscape, such as changes in consumer behavior. Thus, effective repositioning requires deliberate, proactive, and iterative management of consumers’ perceptions to ensure that both the old position is weakened and the new position is learned (Strategic Direction, 2008). Kumar and Moran ²⁴ contend that in an unstable business environment, repositioning strategy has an equal significance to the organizations as the initial positioning strategy formulation. The strategy is tailored towards increasing the operation of the firm by expanding its responsibilities ²⁵ hence the strategy was adopted because its determinants are based on the firm and the approach towards its execution has implications for the firm's strategic orientation ^{26, 27}.

The global manufacturing landscape has become increasingly fragmented and complex ²⁸. This is due to a rapid increase in manufacturing industries consolidating so as to increase efficiency in their value chain systems through process and managerial innovations ²⁹. The continuous expansion of production leads to further improvements in efficiency, reflecting learning dynamics. This expansion accelerates the growth of productivity within the sector and the economy as a whole. When productivity increases as a result of economies of scale, as well as advances in technology and organization, production costs decrease, reducing the prices of goods that had once been affordable only by a few ³⁰.

The resulting effect of these has been the shaping of the global industrial structures in terms of location, governance, and ownership of production ^{31, 32} with global manufacturing shifting away from developed economies towards emerging economies, mainly Asian countries. Developing countries’ share in world manufactured exports rose from 20.4 per cent in 1992 to 29.4 per cent in 2000 and 39 per cent in 2017 ³³, with an increase in their share of medium- and high-tech products . In 2010, for the first time, developing economies absorbed close to half of global FDI inflows ³⁴, while non- OECD countries generated half of the world GDP, measured in purchasing power parity ³⁵. These shifts reflect the relocation not only of production but also of related activities such as R&D and other professional services. According to some estimates, 90 per cent of all electronics R&D now takes place in Asia ³⁶. Alongside these trends, and the growing global demand for manufactured goods, a number of questions are emerging about dwindling natural resources, and the availability of fresh water, as well as adverse climate change, underlining the need to improve the overall efficiency of resource consumption ³⁷. A number of market, technical, and business model trends are also expected to reshape global manufacturing in the future ^{38, 39, 40}.

The extant literature indicates that performance of the manufacturing firms plays a pivotal role in enhancing the market share of the individual manufacturing firms as well as attaining the overall growth rate of the industry ⁴¹. Due to the global competitive pressure, manufacturing firms are likely to be exposed to a number of performance problems ranging from customer dissatisfaction, stiff competition, environmental uncertainty, globalization and lack of required raw materials ^{42, 43, 44}. Further the sector is struggling with internal management problems such as employee dissatisfaction, bureaucratic organizational structures, leadership challenges and outdated systems and processes ^{45, 46} that have direct effect on firm performance ⁴⁷.

Globally, manufacturing firms face performance challenges ranging from technological innovation, dynamic environmental conditions, changing customer requirements, market globalization, political instability and high level of competition ⁴⁸. Statistics indicate that the industry contribution to global economy decreased from £ 6.7 trillion in 2018 to £ 6.5 trillion in 2019 ⁴⁹ as well as a reduction in employment from 12.4 million in 2018 to 12.1 million in 2019 in united states of America ⁵⁰. Further manufacturing industry generated $2.17 trillion in gross domestic product (GDP) or 12.5 percent of total United States gross domestic product in 2018 compared with $2.1 trillion in gross domestic product in 2019 ⁵⁰. The repositioning strategy has been proposed as a suitable option for adoption by manufacturing firms experiencing performance challenges at micro and macro levels so as to improve performance ⁵¹.

The call to consider adoption of a repositioning strategy as a viable strategic option by manufacturing firms needs to be undertaken in line with three existing issues in the extant literature that revolve around the need to expand the theoretical scope, integrate diverse conceptualizations of the construct and to address existing empirical gaps in extant research ⁵². Previous researches indicate that researches that have been done have studied turnaround strategy relying on stage theory of successful turnaround, resource based view of the firm, institutional theory and stakeholder theory ^{53, 54} while ignoring theories that display the critical role played by management comprising the set of strategic thinkers that provide the balance between the strategic thinking imperative of external environmental focus and the internal processes aligning the organization to attain a strategic fit with its external context ¹⁷. A repositioning strategy mounted on the premise of accomplishing organizational turnaround would require such a balance such that conceptually it is possible to explain how a meso-level condition is enacted through the internally focused lens aimed at creating the required strategic fit. The extant scholarly efforts therefore require more scholarly initiatives to add on to the current level of understanding generated from application of the multiple theories so far applied. In this study, the authors considered the postulates of the strategic choice theory proposed by Child ^{55, 56} due to its merits that challenge the environmental determinism school to anchor into the strategic management process the critical role of management in the manner strategic choices are arrived at and paves way for enacting structurally supported meso-level conditions that would lead to attainment of a strategic fit in a dynamic business environment.

In terms of conceptualization of the construct of repositioning as an aspect of turnaround strategy, it is noted that scholars who have attempted to explore the impact of repositioning strategy on firm performance have conceptualized the variable differently ^{19, 51, 52} with majority of the studies having taken a bias in the focus of repositioning being conceptualized from the viewpoint of the customer perspective ^{57, 58} and with only a few of the studies conceptualizing the construct from the firm perspective ^{26, 27}. The authors draw support for the case to focus more on the firm based perspective from the contention by Koch and Gyrd-Jones, ⁵⁹ that supported a firm based perspective based on the reality that the available repositioning alternatives are confined to firms’ resources and internal business processes. This makes more practical strategic logic when the role of strategic thinkers in the strategic choice process is integrated into the conceptualization so that adoption of the strategy would be argued to reflect the firm's strategic orientation. In view of this the current study considered an expanded conceptualization that integrated perspectives drawn from both the customer and the firm ^{51, 58, 59, 60}.

The set of empirical studies done on repositioning strategy demonstrate possible areas necessary for advancement of knowledge in the manner of its application in a turnaround situation and other contexts. Several of these studies have mostly concentrated on cross country and small and micro enterprises and ignored the large firms ^{61, 62, 63}, and even across the studies, there is a notable lack of consistency in design and statistical rigor ^{64, 65}. While some of the researches have used cross sectional designs and descriptive data analysis only, others have used longitudinal designs coupled with inferential statistical analysis thus making it difficult to make authoritative conclusions and generalize across the findings ^{66, 67} and the contexts investigated have not given attention to the manufacturing sector ⁶⁸. In the context where this study was done, the role of the manufacturing sector has been emphasized in enabling the national economy to emerge from that of a low income to a middle income status through industrialization. In spite of this emphasis, the manufacturing sector has been growing at the rate of 6.2% against the projected rate of 10%. Research points out that the manufacturing firms face performance challenges arising from continuous customer complaints on industrial products, poor product design, improper market targeting and lack of research on new and dynamic processes and systems ^{69, 70}. According to the Economic Survey of 2018 by Kenya National Bureau of Statistics, manufacturing firms have experienced a decline in market share from 9.1% in 2017 to 8.8% in 2018, operational inefficiency at the rate of 29.6%, customer dissatisfaction 15.3%, competition at 14.3% and lack of required raw materials at 6.2% ⁷¹. Thus, the Kenyan manufacturing sector provided a relevant context for investigating the role of a repositioning strategy applied for a turnaround in enhancing its performance. The study assessed the effect of three indicators of the repositioning construct namely, network relationship, corporate rebranding and internal processes on performance of manufacturing firms in Kenya.

The perspective taken by the study to address the identified gaps contributes to the body of knowledge in management in several ways. First by expanding the theoretical scope of the set of theories previously applied in studying the construct of repositioning, the study enhances the understanding of the role of strategic choice making by enriching the strategic thinking perspective that is a hallmark of the strategic management process both at academic and practical levels. At the academic level, the role of the strategic choice theory is examined to demonstrate how it embeds the strategic management expected role played by management in understanding the context of their operation and selecting strategic options that enhance the ability of the organization to fit. At the practical level, the study opens the door for an understanding of how the management enacts conditions facilitated by the structure of the organization to enable the internal systems and processes to address the environmental conditions raising challenges and concerns for survival. By incorporating the characteristics of the meso-level conditions so created, the study adds to the existing stock of knowledge on the role of management in not only making strategic choices but also taking responsibility over the implementation of the choices. Secondly, the identified critical role of management as advanced by the strategic choice theory proponents is given an operationalized support using a firm based lens in the manner that the construct of repositioning strategy has been operationalized. The study integrated multiple perspectives to the operationalisation of the construct leaning towards the firm level and address existing biases that have dominated previous research efforts leaning towards a customer perspective. Finally, the study provides insights into the strategic behaviour of firms in a sector not well explored in terms of its adoption of repositioning strategy. The study provides findings that document results of the effect of three indicators of repositioning strategy in a manufacturing sector of an emerging economy. Thus the findings add to the existing research that has been biased towards a customer focused operationalisation of repositioning focusing on large manufacturing firms.

2. Literature Review

The study was anchored on Resource based View, strategic choice theory and institutional theory because the propositions of the two theories can be applied effectively while undertaking a repositioning process. Resource-Based View Theory was developed and postulated by Penrose ⁷² who gave the initial understanding to the resource-based view of a firm. Wernerfelt ⁷³ contributed to the theory which was later popularized by Barney’s ⁷⁴. However, other scholars have made important contribution to resource-based view theory conceptual development ^{75, 76, 77}. The logic behind RBV is based on assets and competencies being the foundation of an organization reaping from its advantage more so when resources are readily available and perfectly immobile ⁷⁸. The resource-based view (RBV) proposes that firms can enjoy competitive advantage if they innovatively deliver value to customers. The empirical literature points to the fact that firms pay a lot of attention on the creation and development of resources necessary for sustained competitive advantage ⁷⁹. A resource capability is the ability of a resource to accomplish a given task. Every organization represents a collection of resources that form the foundation for strategy and firm’s activities. The backdrop of competition needs a firm to possess a combination of capabilities that can be managed to enhance organisational performance. Therefore, performance differences are brought about by organizations distinctive resources and capabilities than structural features of a firm ⁷⁴. The Resource Based View theory can be recommended to explain how manufacturing firms can develop a sustainable competitive advantage when it’s able to competitively innovate and deliver superior value to its target customers. The resource-based view of a firm is linked to the current study because of its unique capabilities to offer a firm under repositioning process to acquire distinctive resources and capabilities as well as strengthening the current resources and capabilities of a firm, thereby increasing distinguishing competences and firm performance

The concept of strategic choice theory was associated with the work of John Child ⁵⁵ and continues to have a significant influence on the study of strategic management literature. Strategic choice theory postulates that leadership plays a fundamental role in embedding decisions that are partially influenced by the environment and primarily affected by top management choices ⁵⁵. The theory views organizational design along operational requirements of its environment. It is a platform that has given individual firms and managers the right to make strategic choices that have a direct impact on the environment in which they operate ⁸⁰. Further, the choices made become the fundamental principles that guide learning in the organization as well as the best approach towards the management of external environmental conditions and internal activities of the firm. Therefore, the action plans developed will guide on proper allocation of resources so as to achieve organizational goals and objectives ⁸¹.

Under this theory, the ability of the top management in making the best ‘choice’ based on available policies was anchored on how far the team can preserve autonomy within the environment, by achieving the expected levels of performance by the firm thus the theory is relevant to the extent that management of the manufacturing firms are able to manage the external environmental pressures brought about by stiff competition. Secondly, the theory serves as a guide in critical decision making process when it comes to stakeholder collaborations. Therefore, the contributions of strategic choice theory were used to inform the network ties and collaborations needed in repositioning turnaround by the sampled manufacturing firms facing performance challenges.

From the extant literature, scholars who have studied repositioning strategy have leaned on diverse epistemological perspectives in their conceptualizations of the construct. For example; Schoenberg ⁸² operationalized repositioning strategy as cost management, downsizing, strong internal processes, organizational restructuring and building for the future while Seamans and Zhu ⁶⁰ conceptualized repositioning strategy as organizational restructuring, network relationship and corporate rebranding. Ryan, Moroney, Geoghegan and Cunningham ⁵¹ measured repositioning strategy as value orientation, organisational learning, customer centrism, external positioning, management support and strong belief in the brand and product. Manocha ⁸³ conceptualized repositioning strategy as consumer relevance, product reuse, sustainable position, innovative brand, business processes, customer attraction and brand equity while Keller ⁸⁴ conceptualized brand repositioning as image repositioning, product repositioning, market repositioning and total repositioning while Khandwalla ⁸⁵ classified repositioning strategy as management overhaul, break even analysis, internal control, strategic change, product-market refocusing, increased sales, change in leadership, organisational restructuring, operational excellence and cost reduction. Finally, Boyne and Meier ¹⁷ operationalized repositioning strategy as moving into new markets, revenue generation, product development and mission redefinition.

Research shows that repositioning strategy has been extensively studied from the customer perspective ^{57, 58} while few studies have assessed repositioning from the firm’s perspective ⁵¹. Considering the significant difference between firm repositioning and customer repositioning ⁸⁶ the study gave special attention to the firm repositioning because of the robust approach which has a strategic orientation and whose determinants are based on the firm ^{26, 27}. In addition, Koch and Gyrd-Jones, ⁵⁹ contend that the available repositioning alternatives are confined to firms’ resources and internal business processes. It is with this view that the study adopted the approach of Boyne and Meier ¹⁷; Seamans and Zhu ⁶⁰; Ryan, Moroney, Geoghegan and Cunningham ³⁵ to operationalize repositioning strategy through network relationship, corporate rebranding and internal process control because of the strategic orientation and the robust application of the strategy during a turnaround process in the manufacturing firms. In addition, Pearce and Robinson, ¹⁴ affirm that the adopted strategies have a wider range of applicability in relation to business turnaround in organizations.

Network relationship is considered the embeddedness of firms in external networks to enhance the relationship component of a firm ⁸⁷. Network relationship is the process of exchanging, sharing and co-development of resources or capabilities between two or more independent firms so as to achieve mutually relevant benefits ⁸⁸. In this regard, if firms can network with their suppliers, buyers and competitors, it translates to a strong ingredient necessary to avoid competition and achieve competitive advantage ⁸⁹. The overall organisational improvement can be achieved when firms are able to identify opportunities, raise resources and enhance competitive advantage.

Network relationships enhance manufacturing firm’s competitiveness through the shared resources and capabilities. Networking therefore provides an essential path for individual manufacturing firms to address their problems as well as to improve their competitive position during repositioning process ⁹⁰. Companies that have better network enjoy relational advantage since today’s competitive landscape is no longer between companies but rather between marketing networks ^{91, 92}. Such networks consist of inter-organizational connections that are of importance namely collaborations, network affiliations, research and development and buyer coalition ⁹³. Further, network relationships also include branding, proper logistics, innovation, and competitive affiliations ^{94, 95}. The aim of network relationship is to develop a mutual relationship with key stakeholders so as to retain their loyalty in the business ⁹⁶. Network relationships help in gaining competitive advantage because of the privileged position, relational advantage, effective cooperation and unique ties. A firm’s network can be acquired, developed and shaped to become a critical resource to enhance competitive advantage ⁹⁷. In addition, successful repositioning strategy has been associated with a focus on firms with embedded network relationships where the company has separate capability on profitable customer segments ^{98, 99}. In consideration of various contributions cited in conceptual and empirical literature review, the variable (network relationship) was operationalized as distribution channel, strategic alliance, and competitive coalitions from which diverse aspects of these attributes of network relationship have been considered in previous empirical work.

Shangguan and Wang ¹⁰⁰ examined the impact of the network structure on individual stock performance in Chinese and established that network centrality and closure have a positive influence on performance. In addition, the study also found that future environmental uncertainty is decreased with network centrality. Maina, Marwa, Waiguchu and Riro ¹⁰¹ investigated the effect of network relationship and performance of SMEs in Kenya and found out that network structure, governance and content have a significant positive effect on firm performance. Further, Olufemi, Banjo, Lucas, and Quadri ¹⁰² while exploring the interplay between strategic alliance and network processes in describing the outcome on firm performance in a highly unpredictable environment in Nigeria found that network density has a positive effect on firm performance.

Though the variable has been extensively studied, its conceptualization and operationalization has been shifting given the study and the context. In addition, it was noted that only a few studies incorporated the use of theoretical inclination to support the relationship of the variable. Finally, the studies done were not examined under the context of a repositioning strategy in manufacturing industry setup

Rebranding is the process of developing a name, symbol or a logo with the determination to have a differentiated organisational position in the mind of customers and competitors ¹⁰³. Muzellec and Lambkin ¹⁰⁴ defined rebranding as an organization's attempt to change its self-identity when it modifies the image perceptions among its external stakeholders. Corporate rebranding is a strategy to develop and maintain a firm’s reputation to its numerous stakeholders ¹⁰⁵. Corporate rebranding is brought about by several factors like organisational behavior, level of communication and symbolism that assist the firm respond to change. Goi and Goi ¹⁰⁶ while examining the dimensions of customer brand equity in Malaysia grouped the causes of organisational rebranding as internal and external. The study went further to outline the internal factors as change in organisational structure, social image, product differentiation while the external factors include level of competition, unstable marketing environment, unstable economic conditions and changes in legal framework. Muzellec and Lambkin ¹⁰⁴ state that rebranding is done to change stakeholder’s perception about a certain brand. Customer’s perception of a brand is important since it forms a foundation of a company’s brand image as well as elevating the trust and confidence of a company and its employees ³⁰.

Attempts to investigate the concept of corporate rebranding have extensively focused on rebranding as a marketing strategy that aims at changing the customer’s perception while giving little attention to corporate rebranding as a turnaround strategy ¹⁰⁷ with the ability to revive the declining firm performance. For example; Ali, Nazam, Akash, Hamid, Hashim and Baig ¹⁰⁸ explored the impact of corporate rebranding on customer satisfaction in the context of beverage firms in Pakistan. Corporate rebranding was operationalized as name, logo, slogan, color, and packaging. It was found out that corporate rebranding dimensions such as brand renaming, logo redesigning, slogan rephrasing, color reshaping and package redesign have significant impact on customer satisfaction. Nana, Tobias and Chiliya ¹⁰⁹ while assessing the factors influencing rebranding on brand equity and firm performance of SMEs in South Africa established that brand equity and customer experience have a positive influence on SMEs performance. Further, Yeboah and Addaney ¹¹⁰ while studying the impact of corporate rebranding and performance of financial institutions in Ghana, found that competition is a major cause of banks identity change

Therefore, the extant empirical literature highlights the role of corporate rebranding strategy in enhancing firm performance. It is also important to note that corporate rebranding as strategy is formulated at the corporate level of the organization while the implementation is done at the marketing department as a business level strategy. Further, the configuration and strategic execution of the strategy will determine the impact the strategy will have on firm performance. Studies done on the variable were conducted in insurance, banking health, transport but have given less attention to the manufacturing sector hence cannot be used for generalization of findings. Therefore, this study has adopted a robust approach to consider a bundle of indicators of rebranding in a manner that will enhance firm performance by having brand equity, brand audit and market analysis as the appropriate measure of corporate rebranding.

The market position taken by a firm needs support from systems within the organization. The role of internal processes in a turnaround strategy execution is to implement a viable course of action as to reverse a struggling business to economic viability through cognition and knowledge of the causes of declining performance ¹⁴. Hammer ¹¹¹ defines internal process as a concerted effort an organization undertakes to create and add value to products consumed by its customers. Internal business processes can be defined as a set of activities that a firm undertakes to gain competitive advantage ¹¹². The perspective adopted to have a lean internal business processes leads to increased revenue and customer satisfaction. Therefore, management needs to give attention to such internal operations that lead to customer satisfaction ¹¹³. The processes and competencies that organizations intend to excel in should be specified earlier enough so as to take appropriate measures. These key internal processes are continuously checked to enhance the outcome. The actions taken by individual employees that affect the corporate objectives should be related to the management decision about the key internal processes and competencies. Further Fairchild ¹¹⁴ affirms that the relationship enables the lower-level employees to have clearly set targets for actions and decisions that improve organisational capability hence contributing to the overall firm performance.

Within the context of the organisational setup, internal processes can be categorized into operational processes, value chain and management processes consisting of information processing, control, coordination, communication and governance ¹¹⁵. The fundamental element towards efficient and effective organisational management lies on a well-structured flow of operational and management process. Therefore, organisational efficiency enhancement directly affects the core business processes improvement. According to Nicovich, Dibrell and Davis ¹¹⁶ internal business processes include supplier acquisition, production processes, distribution processes, customer relationship management and after sales services. Resources left on their own cannot enjoy competitive advantage; they only provide competitive strength to the firm if they are exploited through strong internal processes that leads to superior firm performance ¹¹⁷. Further, Kotter ¹¹⁸ contends that a well-managed internal process can be a means of transforming and repositioning the organization. Banker, Bardhan and Asdemir ¹¹⁹ explains that a strong internal control helps in cushioning the organization from anticipated changes in the environment and contingent moves by intelligent opponents based on its capabilities and unique resources. Indeed, Wade and Hulland ¹²⁰ contends that strong internal process enables the organization to effectively gain a sustainable advantage over its competitors.

The extant empirical literature indicates that the variable has been studied and operationalized differently by researchers. For example, Kariuki ¹²¹ in his study operationalized internal process control as efficient technology, revenue control, strategic planning, organisational structure and strategic planning; Tibbs and Langat ¹²² in their study conceptualized internal process as product diversity, innovation, advanced technology, standardization, value addition, strategic alignment while Asa, Prasad and Htay ¹²³ measured internal process control as level of creativity, delivery schedule, service quality, operational excellence and cost cutting. Wood and Sangster ¹²⁴ while examining internal cost control measures in an organization classified the factors as reduced rejection rate, efficient lead times, and improved production capacity. Etim and Agara ¹²⁵ acknowledged the measures under internal process perspective to include, defect rate, reduced complaints level, improved after sales service, flexible systems, and reduced production lead time, skilled and motivated employees. Along the value chain, the study identified control activities, lead time, innovation rate and after sales service as the measures of internal processes that have the ability to enhance firm performance.

Firm performance is the total value created by a firm over time and is conceptualized under return on investment, increased market share, return on capital employed, customer retention and liquidity ratio ¹²⁶. Over the years, management, policy makers, lenders and entrepreneurs have heavily relied on financial measures of firm performance and ignored other aspects that are critical to a firm ¹²⁷. In addition, organisational leadership considers that firm performance is similar to financial performance ¹²⁸. Freeman ¹²⁹ describes performance as the total value created by the firm through its activities, which is the sum of the utility created for each of a firm's legitimate stakeholders. This can further be explained as the value achieved from each of the organization’s genuine investors. Hansen and Wernerfelt ¹³⁰ conceptualized firm performance as a combination of environmental, organizational and the human elements that helps in the development of organisational culture. Organisational culture management will affect behaviour which results into enhanced firm performance.

From the extant literature, scholars who have studied firm performance, have operationalized the variable differently depending on the context ^{131, 132}. Therefore, there are several organisational performance indicators that have been utilized in different studies. Empirical studies indicate that the frequently used measures of performance are return on investment, profitability, customer retention, return on equity, product innovation and operational performance ^{133, 134, 135}. Tangen ¹³⁶ affirms that organizations need to combine different performance measurements to realize a composite index of the overall performance. According to Venkatraman and Ramanujan ¹³⁷, organisational performance has been conceptualized to include financial performance, sustainability performance, and organizational effectiveness. Further, the construct of firm performance in addition to financial measures includes non-functional indicators such as efficient processes, value addition, new product development and service quality.

Performance of the manufacturing firms plays a pivotal role in enhancing the market share of the individual manufacturing firm as well as attaining the overall growth rate of the industry ⁴¹. Due to the competitive pressure, manufacturing firms are faced with a number of performance problems ranging from customer dissatisfaction, stiff competition, environmental uncertainty, globalization and lack of required raw materials ^{42, 43, 44}. Further the sector is struggling with internal management problems such as employee dissatisfaction, bureaucratic organizational structure, leadership challenges and outdated systems and processes Fawcett, Ellram & Ogden, ⁴⁵ that have direct effect on firm performance ⁴⁶.

Kaplan and Norton ¹¹³, Neely, Adams and Kennerley ¹³⁸ came up with a balanced approach to performance measuring system (PMSs) to incorporate both the financial and non-financial measures, in addition to explaining the cause-and-effect relationships among several procedures which provide a clear understanding to the relationship between PMS and organizations strategy. Several quality management models have gained acceptance and are frequently used by organizations as models for performance management. The principle behind these models is to come up with an integrated approach towards measuring and achieving organisational objectives. Deming model is among the forerunners advocating for an all-round performance management models with multiple variables. Gomes, Yasin and Lisboa ¹³⁹ affirms the views of other scholars by stating that firms should incorporate other softer aspects of performance measurements such as corporate accountability, marketing performance, customer satisfaction and environmental performance. In reference to environmental performance and corporate social performance, Fauzi, Svensson and Rahman ¹⁴⁰ proposed a robust approach to performance management system with multiple dimensions as the triple bottom line (TBL). This approach not only evaluates performance based on the financial aspects, but goes deeper to incorporate both the environmental and social activities as part of firm performance ¹⁴¹.

From the extant literature, scholars who have studied firm performance, have operationalized the variable differently depending on the context ^{128, 131, 142} thus leading to the diverse indicators of organisational performance .Empirical studies indicate that the frequently used measures of performance are return on investment, profitability, customer retention, return on equity, product innovation and operational performance ^{133, 134, 135}. Tangen ¹³⁶ affirms that organizations need to combine different performance measurements to realize a composite index of the overall performance. According to Venkatraman and Ramanujan ¹³⁷, organisational performance has been conceptualized to include financial performance, sustainability performance, and organizational effectiveness. Further, the construct of firm performance in addition to financial measures include non-functional indicators such as efficient processes, value addition, new product development and service quality.

Cozzolino and Rothaermel ¹⁴³ in their study conceptualized firm performance to include the triple bottom line (TBL) effect on performance. This perspective looks at performance with a broad organisational objective towards sustainability. In addition, to objectively evaluating firm overall performance, there is need to incorporate all measures in the TBL, more profoundly to strike a balance between economic, social and environmental performance of the firm. Large manufacturing firms will only remain relevant if they adopt a more integrative performance measurement. Further, there is a growing concern in the manufacturing firms for the adoption of sustainability performance ¹⁴⁴. As a result, the performance indicators need to reflect these sustainability concerns. The study adopted several measures of the performance construct as market share, customer satisfaction, new processes, response rate to market crisis and profitability

The summarized conceptual and empirical literature have pointed certain issues; First, the conceptual literature has focused on the broader aspect of repositioning strategy while examining the relationship between the variables such as environmental uncertainty, competitive advantage, cost reduction, organizational restructuring , corporate strategy, customer attraction, product diversification and market penetration, and the studies done were conducted in banking, health, and insurance sector hence studies done were not in the context of manufacturing firms. Secondly, the literature review indicated that repositioning strategy has not been defined as a variable and executed as a strategy while taking the firm perspective. Thirdly, studies that have been conducted on network relationship, corporate rebranding and internal processes have investigated the variables as a function of an organization and not as a type of repositioning strategy, thus repositioning strategy and its role on firm performance has not been conclusively assessed. Therefore, there is need to conceptualize repositioning strategy in a manner that allows for the integration of theoretical reasoning advanced by RBV theory, that posits for strategic configuration and bundling of key organizational resources having the ability to attain sustained completive advantage under the VRIO framework. Further, the embed strategies form a strong foundation that can be used to drive superior firm performance.

Based on the conceptual, theoretical and empirical review conducted in this study, the study proposes a simple conceptual framework that predicts the effect of repositioning strategy on performance of manufacturing firms in Nairobi City County, Kenya in Figure 1.

Repositioning strategy has been operationalized using three variables: network relationship, corporate rebranding and internal process control while performance of manufacturing firms was measured using indicators such as market share, customer satisfaction, profitability, response rate to market crisis and new processes. The study argued that proper deployment of resources and capabilities can be a source of sustained competitive advantage leading to superior firm performance. Thus, the researcher propose that the deployed repositioning strategy will lead to the achievement of firm performance. Specifically, the study proposes that:

Hypothesis H₁: Network relationships has significant effect on performance of large manufacturing firms in Nairobi City County, Kenya.

Hypothesis H₂: Corporate rebranding has significant effect on performance of large manufacturing firms in Nairobi City County, Kenya.

Hypothesis H₃: Internal Processes has significant effect on performance of large manufacturing firms in Nairobi City County, Kenya.

3. Research Methodology

The study adopted descriptive research design in line with the approach adopted in similar studies in developing country settings ^{145, 146} so as to recognize the degree and nature of the cause-and-effect relationship existing between the study variables. Descriptive research design is used to examine the effect of change in existing processes then emphasize on analysis of the research problem to give an explanation on the design of relationship among the study variables ¹⁴⁷. In this regard, the design was considered to be appropriate as it helped to establish the effect of repositioning strategy on performance of selected large manufacturing firms in Nairobi County, Kenya.

The study targeted 107 large manufacturing firms registered with the Kenya Association of Manufacturers and clustered into eleven productive sectors. The functional areas formed the unit of observation while large manufacturing firms represented the unit of analysis. A multi-stage sampling technique was applied in this study to identify the respondents who provided the primary data for this study. This sampling approach involves a combination of several probability sampling techniques at several steps ¹⁴⁸. In order to identify the respective respondents for each of the manufacturing firms a three multi-stage random sampling method as proposed by ¹⁴⁹ was used. The first stage used purposive sampling in selecting eleven productive sectors within the manufacturing firms. The second stage involved the use of stratified random sampling to select four functional departments comprising of planning, operations, finance and marketing in each manufacturing firm. The third stage involved the use of purposive sampling to select all the heads of the departments in the four functional units of the selected manufacturing firms. Kilika ¹⁴⁶ also used this approach in his study.

Questionnaire was used to collect primary data. The questionnaire was divided into three sections; section one was used to collect demographic information of the respondents, section two was used to collect information on company characteristics and collaborations while the last section was used to collect information concerning the study variables. A Pilot study was conducted to find out the validity and reliability of the research instrument ¹⁵⁰. Cronbach's alpha (α) was used to measure the reliability of the research instrument, and according to Field ¹⁵¹, a Cronbach alpha of 0.7 and above was considered adequate. In this study, an alpha score of 0.7 and above for all the variables was considered satisfactory. Quantitative data was analyzed using Statistical Package for Social Sciences (SPSS Version 23.0). Descriptive statistics of the mean, frequencies, standard deviation, and percentages were calculated and interpreted for all the study variables. The information was then presented in form of tables. Coefficient of determination (R²) was used to test the significance of the model and used in measuring the extent to which variation in firm performance is explained by variations in repositioning strategy. F-statistic was also computed at 95% confidence level to test the overall significance of the model. Hypothesis testing was done using p-values to aid decision making regarding the null hypothesis. To enable the test of hypotheses a composite index for each variable in each manufacturing firm was computed to transform the quantitative data obtained through the questionnaire. The composite index was computed using the weighted harmonic mean as recommended by ^{146, 152}. Diagnostic tests were conducted to confirm that data met the assumptions of regression analysis. Table 2 shows the results of the diagnostic tests.

4. Research Findings

The study sought to collect data from 428 respondents from 107 selected large manufacturing firms in Nairobi City County. The questionnaires returned are as shown in Table 3.

From Table 3, it was observed that out of 428 distributed questionnaires, 276 questionnaires were filled and returned for analysis hence translating to an overall response rate of 64.5%. According to Mugenda and Mugenda ¹⁵³, the response rate was considered satisfactory for the analysis.

The study sought to obtain information from the respondents who were the heads of department of marketing, finance, operations and corporate planning. The information sought was able to address selected manufacturing firms’ demographic characteristics, organizational characteristics, industry characteristics and their network collaborations. The statistics in Table 4 indicate the distribution of gender, departmental distribution and employees’ years of experience.

From Table 4, the summarized statistics on the cross tabulated results of gender by rank, departmental distribution and employees years of experience indicates that there were 169 (61.2%) male respondents and 107 (38.8%) female respondents.

The study required the respondents to indicate the various firm’s collaborations which included collaboration with the government, suppliers, distributors, research institutes and environment regulatory authorities. The results of these collaborations are presented in Table 5 below.

Descriptive statistics provide a summary of the characteristics of the study variables using measures of central tendency and dispersion, specifically the mean and the standard deviation. The findings are presented in Table 6.

The summarized results indicate that all the variables had a Cronbach Alpha coefficient greater than P> 0.05 thus satisfactory for the analysis. Further it was observed that the aggregate mean and standard deviation were above average with network relationship, internal processes and firm performance having a positive significant correlation while corporate rebranding reported a non-significant Pearson correlation.

Hypotheses testing was done through multiple regression analysis. The results of the tests were interpreted through the adjusted R² values and P values at P < 0.05 significance level. The variables under study were regressed on performance indicators and a composite measure for all the variables computed to reflect overall variables. The results of the regression are as shown in Table 7.

From the regression model, it was observed that hypotheses one (network relationship has a significant effect on firm performance of selected large manufacturing firms in Kenya) had a significant positive effect on firm performance with β=0.325 and P< 0.05. Based on the findings, the study failed to accept the null hypothesis and concluded that network relationship has a significant positive effect on firm performance of selected large manufacturing firms in Kenya. The statistics also indicate that hypothesis two (corporate rebranding has a significant effect on firm performance of selected large manufacturing firms in Kenya) had a negative effect on firm performance that was not statistically significant thus the study failed to reject the null hypothesis. The study concluded that corporate rebranding does not have a significant effect on performance of manufacturing firms in Kenya. Finally, for the third hypothesis which sought to establish the effect of internal process control on firm performance of selected large manufacturing firms in Kenya, it was observed that the hypothesis was significant with β=0.519 at P =0.000 hence the study failed to accept the null hypothesis and concluded that internal process control has a significant positive effect on performance of selected large manufacturing firms in Kenya. Based on the statistics, it was concluded that internal process control has a significant positive effect on performance of selected large manufacturing firms in Kenya.

5. Discussions of the Findings

The findings presented are discussed in this section in view of their contribution to knowledge in strategic management. The discussion is done in line with the objectives.

The first objective of the study was to determine the effect of network relationships on firm performance of selected large manufacturing firms in Kenya. The results of the study showed that network relationship has a significant positive effect on firm performance of the sampled large manufacturing firms in Nairobi City County. From the demographic characteristics, it was observed that majority of the respondents had worked in the manufacturing firms for between six and ten years indicating that they were experienced managers with in-depth understanding of their role in creating value from the resources, developing rarity and resource specificity which results in competitive advantage and improved performance. Theoretically, in line with the VRION Framework the study pointed that possession of key resources that create value, ensure rarity, inimitability, organizational specificity and non-substitutability ¹⁵⁴ together with their effective development and deployment enables organizations to achieve and sustain competitive advantage ⁷⁴. In this study two dimensions of the VRION Framework were identified: value and organization specificity which were addressed through creating value and combining resources ¹⁵⁴. The predictor construct in the hypothesis was operationalized measured as the extent of embeddedness of firms in external networks to enhance the relationship component of the firm and its stakeholders and evidenced through strategic alliance, distribution channels and competitive coalitions. The descriptive scores indicated that these aspects of the construct were practiced by the manufacturing firms to a high extent (Mean=3.7, s.d=1.1.63). How the firms achieved this was demonstrated by the extent to which they initiated collaborations with government bodies at county and national levels, research institutes, suppliers and distributors. The researchers consider this move to create and sustain collaborations as a move propelled by the insights of the strategic choice theory where management having analyzed and understood the complexity of their environments, takes a proactive role and enacts structurally enabled meso level units through which the collaborations are created and sustained through relevant boundary span roles. Therefore, while the RBV lens stands to explain how the repositioning strategy was deployed in the form of a strategic asset, the strategic choice offers insights on the proactiveness of management to create a meso state through which the deployed strategic assets bring about desired strategic benefits to the firms by helping to manage an otherwise adverse external environment. There is therefore great relevance in the postulates of the strategic choice theory in not only complementing the RBV theory but also rendering theoretical support to the strategic thinking literature on how to proactively manage the challenges of the dynamic external environment.

The second objective of the study was to evaluate the effect of corporate rebranding on firm performance of selected large manufacturing firms in Nairobi City County. Though the descriptive statistics indicated that corporate rebranding in the form of brand audit, brand equity and market analysis reported a moderate level of emphasis and practice in the sampled large manufacturing firms, two considerations were found suitable to explain the case of the insignificant negative effect of branding on performance based on the descriptive behavior of the variable among the sampled firms and secondly the set of meso level conditions enacted by the firms to manage their environments. In terms of the behaviour of the variable in the study context, the authors noted that two aspects of the variable stemming from brand audit and market analysis respectively, namely corrective actions arising from audit analysis and analysis of performance of brands in the market though being critical to a branding strategy, they were practiced at a relatively low extent (mean<3). These two are considered to be part of the management control system initiated to track progress in the manner strategies are being executed in line with desired goals. In the case of the branding strategy, the enhancement of the effective control systems is informed by the annual audit reports presented by the managers of the sampled manufacturing firms. Further, the information generated from the audit reports helps in brand performance review as well as taking corrective actions on lessons learnt ¹⁵⁵. To the extent that they are not given serious attention, this would imply that management may not have considered their role as being practically critical. Secondly, the enacted meso level conditions by the firms to deal with their environments could have a bearing on why the respondents did not consider these attributes of branding as critical. These conditions which revolved around building networks with key stakeholders at regulatory and market dimensions may have helped the firms address critical marketing related concerns that branding would have such as through linkages with industrial research, distributors and suppliers. While this move by management may have had the ability to acknowledge the existence of a turbulent external environment on the one hand, it may on the other hand have helped the firms to adopt relevant environmental management strategies not limited to the management of the speed at which the products keep on changing, the intensity of competition and variation in customer preferences to reduce the adverse effects of the perceived and real level of turbulence ⁵⁵.

The third objective of the study sought to establish the effect of internal processes on firm performance of selected large manufacturing firms in Nairobi City County.The descriptive statistics showed that internal processes control had a high mean that was interpreted to imply that the systems were strongly embedded in the manufacturing firms. The predictor construct was measured using statements that sought to understand the extent that the sampled manufacturing firms realign the value chain system in a way that would allow for free flow of activities with the overall shortest lead time, lowest cost, highest quality and most dependable delivery. The descriptive results were consistent with the postulates of RBV theory which posits that in a competitive business environment, organizations can achieve competitive advantage leading to improved firm performance, based on how well they bundle their resources to the extent that it operates under VRIO framework ⁷⁴. Therefore, the postulates of RBV theory seem to be well applied in the industry and contributing to an understanding of the positive effect of internal process on firm performance of selected large manufacturing firms. In addition, a strong and well-coordinated internal system helps in enhancing competitive advantage through the value-chain by providing a strategy for businesses seeking to streamline their operations, enhance efficient operational processes so as to contribute to the bottom line of an organization ¹⁵⁶. Secondly, the manner in which the predictor construct was operationalized and measured is that it had a strong inclination towards the meso level conditions the firms have initiated in dealing with their environments. The operational indicators focused on controlling internal processes to guarantee quality to the customer, continuous improvements and a commitment towards relationship management which were shown to be practiced to a very high extent(Mean>4.5) by the sampled firms. The firm characteristics confirmed this high extent through the high frequency of the respondents reporting that the companies have collaborations with industrial and agricultural based research institutes through which innovations are nurtured, facilitation to understand market needs so as to develop necessary responses to the market through appropriate product improvements. For this to happen, firms need to have within their work structures units that undertake boundary span roles for liaising with the main actors through which information flows from the external environment into the right decision making units in the manufacturing firms. Thus, through this lens the strategic choice theory finds relevance in explaining the case of a repositioning strategy implemented to achieve a turnaround organizational concern.

6. Implications for Theory and Practice

The findings of the study as reported and discussed have a number of implications for the strategic management scholarship. The first implication revolves around the strategic roles that managers are expected to play in organizations. Through the findings and discussions, the authors point to the manner in which the strategic roles of managers have been performed by the sampled managers in the study. Both the general management and strategic management literature highlights the strategic role of managers in making strategic decisions that include among others the entrepreneurial and negotiator roles. It is evident that the sampled managers have played their respective strategic entrepreneurial and negotiator roles through strengthening of networks and building collaborations with stakeholders ⁸⁸. By considering postulates of the strategic choice theory in interpreting this hypothesis, the findings of this study integrate the reasoning from the work of Mintzberg ¹⁵⁷ on the roles of managers with that of Child ^{55, 56} to bring out insights into how these traditional roles can be utilized to play meso level roles that further entrench a firms strategic thinking orientation and thereby contribute to its success in changing business environments. Thus, based on the network relationship objective, the hypothesis contributed to knowledge in strategic management in several ways. First by filling the identified gap on the effect of network relationships on firm performance of the sampled large manufacturing firms. Towards this, the hypothesis addressed the gap by indicating the strategic role of managers in strengthening the firm’s network and building collaborations with key stakeholders ⁹³. Secondly, by providing empirical evidence that enhances generalizability of findings on the effect of network relationships on firm performance. Previous studies had been done focusing on the developed nations and in financial institutions ⁹⁸ while the current study was done in the manufacturing sector of an emerging economy.

Secondly, the findings presented and discussed bring to the fore complementarities between the postulates of the RBV and the strategic choice theories. The RBV has been used in this study to offer explanations on the possible path through which the repositioning turnaround strategy explains variations in performance of the sampled manufacturing firms. While this has been explained through the focus on deployment of the strategy as a strategic resource, the strategic choice offers an explanation that offers critical insights on how that strategic aspect of the resource is brought about using the manner in which the managerial roles are played when managers make strategic decisions that create the meso level conditions that make it possible for the deployed strategy to produce the desired results for organizations. Through this identified complementarity, the findings of the study serve to reignite debate on the relevance of the strategic choice theory in anchoring strategic thinking and its corresponding practice among managers in organizations. The authors regard this as an important contribution of the study in that the study offers both internally focused and environmentally based explanations to strategic thinking at both micro and macro levels. The micro level will focus on the managerial roles played by managers which the RBV and strategic choice theories help to explain while the macro level will focus on the firm level related strategic behavior in creating the meso level conditions that the strategic choice theory explains.

7. Conclusions and Suggestions for Future Research

The study sought to establish the effect of repositioning strategy and performance of selected large manufacturing sector in Nairobi City County. Repositioning strategy was the independent variable while firm performance was the dependent variable. Repositioning strategy was conceptualized as network relationship, corporate rebranding and internal process control. Using multiple regression model, the study empirically tested the variable to determine its effect on firm performance. The findings of the model led to the following conclusions and the subsequent suggestions for further studies.

Based on the study findings, the study made the following two conclusions. First, the study concluded that the sampled large manufacturing firms have developed and deployed various repositioning strategies namely network relationship and internal processes to a high extent while corporate rebranding was moderately deployed. The deployment of the repositioning strategy was done in a way that created meso level conditions in the firms that accounted for the effect of the strategy on the performance of the firms. Secondly, two components of the repositioning strategy namely network relationship and internal process control have a significant effect on performance of the sampled manufacturing firms in an emerging economy context. The conclusions made however are not without limitations. The contextual scope of the study was limited to firms within Nairobi and the interpretation may be limited to the conditions prevailing in this setting. Secondly, the operationalization of the predictor construct was limited to three indicators. The literature has a more comprehensive set of indicators that can be included in empirical attempts to explain the effect of the repositioning strategy on firm performance. Methodologically, the study made conclusions based on parametric statistics that may require application of more robust statistical rigor in addition to the non-parametric ones to enhance generalizability. The authors suggest that future research can consider expanding the scope of the conceptualization of the construct of repositioning strategy in a similar context undertaken as a country wide survey of all the firms and apply more robust statistical techniques in both parametric and non-parametric categories to address the statistical rigor faced in the current research.

References