Operations Strategy And Performance Of Management Consultancy Firms In Nairobi City County, Kenya

ABSTRACT

Competition in the modern world requires consultancy firms to adopt operations strategies that will ensure superior performance. Previous studies have identified challenges facing consultancy firms which have led to their poor performance such as uncertainty of returns, poor reputation, development of sustainable strategies and inadequate resources. Strategic management literature has not addressed performance dimensions of these firms and the dimensions used by practising firms have not been tested empirically. Previous research on operations strategy has concentrated on manufacturing sector through conceptual reasoning and at aggregate levels only. There is lack of empirical investigation linking operations strategy with performance among management consultancy firms. Therefore, this research aimed at investigating the effect of operations strategy on performance of management consultancy firms in Nairobi City County, Kenya. More specifically, it assessed the effect of resource management strategy, facility strategy, value proposition strategy and knowledge-based value chain strategy on performance of management consultancy firms in Nairobi City County. The study also sought to establish the mediating and moderating effect of organizational competences and regulatory framework respectively on the relationship between operations strategy and performance. This study was anchored on resourcebased view theory, knowledge value chain model, social capital theory, Hayes and Wheelwright four stage model and the institutional theory. The study was founded on positivism philosophy and adopted a descriptive and explanatory research designs. Target population for the study was all the 227 management consultancy firms in human resource, marketing, accounting and finance and operations management in Nairobi City County out of which 144 were selected using stratified random sampling technique. Primary data was collected using semi structured questionnaire. Quantitative data was analysed using descriptive and inferential statistics. Hypotheses testing was carried out at 5% significance level and F-statistic was used to test the significance of the model and computed at 95% confidence level. Quantitative data was presented in form of tables and charts. Qualitative data collected through open ended questions was analysed using conceptual content analysis. The study found that resource management strategy, value proposition strategy and knowledge-based value chain strategy have a significant positive effect on performance of management consultancy firms in Nairobi City County while facility strategy has no significant effect. Organizational competences have a partial mediating effect on the relationship between operations strategy and performance of management consultancy firms in Nairobi City County while regulatory framework has no significant moderating effect on the relationship between operations strategy and performance. The study recommends that the management of management consultancy firms in Nairobi City County should focus on deploying resource management, value proposition and knowledge based value chain strategies in a more strategically aligned manner in order to gain value, rarity, inimitability, organization specificity and non- substitutability. They should focus on building competences such as allocated, administrative, transactional and technical competences to guarantee sustained performance through maintaining their staff for a longer period of time, organising training seminars, meetings and encouraging information sharing. They should also develop and implement strategies to minimize the effect of the regulatory framework on the performance of consultancy firms and the government should come up with policies that are not punitive to the consultancy firms so as not to negatively affect their performance. The study called on future research to investigate the effect of operations strategy on performance in other service oriented organisations.