Effect of Dynamic Capability on the Performance of Matatu Saccos in Meru County

Abstract

Purpose: The purpose of this study was to determine the effect of dynamic capability on the performance of matatu Saccos in Meru County.

Methodology: A descriptive cross-sectional survey research design was utilized. The target population was eight Matatus Saccos operating in Meru County. The census approach was utilized to collect data from 42 board members of the 8 Saccos. Questionnaires were used to collect data. The method for the administration of the questionnaires was the drop-and-pick method. The study conducted a pre-test study where 5 board members from Menany Sacco in Maua were considered. They were selected through simple random sampling method. The reliability of the instruments was determined by Cronbach's alpha while content validity was determined through expert reviews on the quality of questions in the questionnaires. Data analysis was done using SPSS software which analyzed the data using means, percentages, and frequencies, and inferential statistics. The presentation of the data was done using frequency distribution tables. Data was tested to ensure conformity with regression assumptions.

Results: The results proved that Saccos were able to recognize the emerging external information assimilates and applied the same to increase competition. Dynamic capability had an average mean of 3.7422 and standard deviation of 1.0566. The R-square value of 0.239 indicated that 23.9 percent of variations in performance in matatu sector could be explained by dynamic capabilities in the matatu Saccos. Hence, dynamic capability significantly influenced the performance of matatu Saccos.

Unique contribution to theory, policy and practice: This study was able to add into the field of strategic management when it was known that dynamic capability significantly influenced the performance of matatu Saccos. It was also discovered that pursuing dynamic capability results in a substantial disruptions and changes, and processes that can affect the performance. Pursuing dynamic capability without taking into considerations of organizations processes and changes may not necessarily lead to improved performance. Also, executing dynamic capability requires significant investment in new technologies, models and training; hence it is important for the management to understand that the benefits associated with dynamic capability may not be realized in the short-term. This meant that Management should also embrace the concept of dynamic capability. Dynamic capability is associated with the organization's ability to recognize emerging external information and use it to achieve competitive advantage. Therefore, organizations should promote learning to ensure that the external knowledge can be used to enhance the performance. In the theory, the dynamic capability enables the organization to achieve agility because it provides a framework that the managers should follow in pursuit of agility.  For the organization to achieve agility, it must sacrifice the technical competencies. Failure to sacrifice the technical competencies will result in failures to achieve organizational agility. Thus, due to the costs associated with this tradeoff, the management needs to establish the ways to manage the risks by using various measures such as hedging