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THE EFFECTS OF INTERNAL FACTORS ON NON
FINANCIAL PERFORMANCE OF TRUCKING FIRMS IN
KENYA: A CASE OF DAKAWOU TRANSPORT LTD
BY
ALI FARHAN ABDI
UNITED STATES INTERNATIONAL UNIVERSITY-
AFRICA
SPRING 2018
THE EFFECTS OF INTERNAL FACTORS ON NON
FINANICIAL PERFORMANCE OF TRUCKING FIRMS IN
KENYA: A CASE OF DAKAWOU TRANSPORT LTD
BY
ALI FARHAN ABDI
A Research Project Report Submitted to the School of Business
in Partial Fulfillment of the Requirement for the Degree of
Masters in Business Administration
UNITED STATES INTERNATIONAL UNIVERSITY-
AFRICA
SPRING 2018
ii
STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other institution, or university other than the United States International University –
Africa in Nairobi for academic credit.
Signed Date
Ali Farhan Abdi (ID: 649972)
This research project has been presented for examination with my approval as the
appointed supervisor.
Signed Date
Dr. Paul Katuse
Signed Date
Dean, Chandaria School of Business.
iii
COPYRIGHT
All rights reserved. No part of this project report may be photocopied, recorded, or
otherwise reproduced, stored in retrieval system or transmitted in any electronic or
mechanical means without prior permission of USIU-Africa or the author.
Ali Farhan Abdi © 2018
iv
ABSTRACT
The general purpose of the study was to analyze the effects of internal factors on non
financial performance of trucking firms in Kenya, using Dakawou Transport LTD as a
case study. The research was guided by the following research objectives: To examine the
effect of information Technology on performance of Dakawou Transport LTD, to
determine the effect of organizational structure on performance of Dakawou Transport
LTD, to evaluate the effect of employee competence on performance of Dakawou
Transport LTD.
This study adopted a descriptive research design, descriptive approach was applied since
it enabled the researcher, to use quantitative data so as to find common characteristics
about the population or phenomena being studied. The target population for this study,
comprised of 105 top management, middle level management and subordinate staff across
the organization. Stratifying the entire population ensured, a sample that accurately
reflects the population being studied. From the initial target population of 105, this being
more than 100 but less than 500 and guided by the rule of thumb, a quota of 50% was
drawn from each strata. Structured questionnaire was used as a data collection tool to
collect both qualitative and quantitative data.
The findings indicated that, majority agreed that Information technology is a major
contributor to organizational performance. It was also established that Information
technology offers organizations, competitive and effective communication. The results
also showed that information technology have an influence on the firm’s effectiveness
and efficiency. The results showed that 68.8% of the variation in performance was
explained by the variations in internet accessibility.
The results also indicated that, organizational structure supports effective control.
Organizational structure provides a visual explanation of decision making process and
resource allocation. It was also established that, organizational structure assists
management in determining departments and functions in an organization.. The results
showed that 64.1% of the variation in performance was explained by the variations in
structure.
The study revealed that, employee skills is a major contributor to organizations’ success.
Employee skills also offer organizations competitive and effective communication
v
channel. It was also established that employee skills have an influence on the firm’s
effectiveness and efficiency. Size of the firm had an influence on the level of application
of employee skills. A majority also agreed that employee skills is a backbone of firms’
operational activities, while employee skills offer support services to business operations.
The study concluded that Information technology plays a major role in the performance
of organizations in the trucking sector. This is due to the fact that, it offers to the
organization, competitive and effective communication channels. Secondly,
organizational structure supports, effective controls as well as, it offers a visual
explanation of decision making process and resource allocation. Thus, the organizational
structure assists management in determining departments and functions within the firm.
Employee skills are a major contributor to organizations success by offering competitive
and effective communication channels. This also plays a crucial role in influencing the
firms’ effectiveness and efficiency and, the level of competence varies with the size of the
firm.
The study recommended that, trucking firms need to ensure that they maintain their
position in the market, by ensuring they adopt the latest technology, in order to maintain a
competitive edge over its’ competitors. Secondly, trucking firms need to have in place, a
well-functioning structure, that supports effective controls, this will ensure that there is an
effective decision-making process and resource allocation. Lastly, trucking firms should
ensure that, their employees have the necessary skills, so as to maintain competitiveness
and effective communication channels.
The study recommended that, further studies needs to be done, to determine how other
factors such as; organizational leadership, organizational culture and resource allocation
affect the sector.
vi
ACKNOWLEDGEMENT
A final thesis project, like this is never the work of a lone ranger. The contributions of
many different people, in their different capacities and influence, have made this possible.
Sincere credit is hereby extended to the following who never stopped in helping until this
thesis was structured.
Thanks to ALLAH (SWT) for the wisdom and perseverance that he bestowed upon me
during this thesis, and indeed, throughout my life: “I can only do anything through your
grace,”
I hereby would like to acknowledge the immense financial and emotional support from
my family and friends during this undertaking.
Thanks to Dr. Paul Katuse, for making this thesis possible. Your support, guidance and
advice in the development of the five chapters, as well as your pain-staking effort in proof
reading it, is greatly appreciated. Indeed, without your guidance, I would not be able to
put this topic together. Thank you very much.
Finally, I wish to acknowledge the immense support from my friend; Michael Kawiti
vii
DEDICATION
I dedicate this research report to my family who have encouraged and supported me
throughout the research. I would like to also dedicate this research report to my future
spouse and children, IN-SHA-ALLAH.
viii
TABLE OF CONTENT
STUDENT’S DECLARATION ....................................................................................... ii
COPYRIGHT ................................................................................................................... iii
ABSTRACT ...................................................................................................................... iv
ACKNOWLEDGEMENT ............................................................................................... vi
DEDICATION................................................................................................................. vii
LIST OF TABLES ............................................................................................................ x
LIST OF FIGURES ......................................................................................................... xi
LIST OF ABBREVIATIONS ........................................................................................ xii
CHAPTER ONE ............................................................................................................... 1
1.0 INTRODUCTION....................................................................................................... 1
1.1 Background of the study ............................................................................................... 1
1.2 Problem Statement ........................................................................................................ 6
1.3 General Objective ......................................................................................................... 7
1.4 Specific Objective ......................................................................................................... 7
1.5 Justification of the Study .............................................................................................. 7
1.6 Scope of the study ......................................................................................................... 8
1.7 Definition of Terms....................................................................................................... 9
1.8 Chapter Summary ....................................................................................................... 10
CHAPTER TWO ............................................................................................................ 11
2.0 LITERATURE REVIEW ........................................................................................ 11
2.1 Introduction ................................................................................................................. 11
2.2 Impact of Information Technology on Firm Performance .......................................... 11
2.3 Impact of Organizational Structure on Firm Performance ......................................... 15
2.4 Employee Competence and Firm Performance .......................................................... 19
2.5 Chapter Summary ....................................................................................................... 23
CHAPTER THREE ........................................................................................................ 24
3.0 RESEARCH METHODOLOGY ............................................................................ 24
3.1 Introduction ................................................................................................................. 24
3.2 Research Design.......................................................................................................... 24
ix
3.3 Population and Sampling Design ................................................................................ 25
3.4 Data Collection Methods ............................................................................................ 27
3.5 Research Procedures ................................................................................................... 27
3.6 Data Analysis Methods ............................................................................................... 27
3.7 Chapter Summary ....................................................................................................... 28
CHAPTER FOUR ........................................................................................................... 29
4.0 RESULTS AND FINDINGS .................................................................................... 29
4.1 Introduction ................................................................................................................. 29
4.2 General Information .................................................................................................... 29
4.3 Impact of Information Technology on Firm Performance .......................................... 31
4.4 Impact of Organization structure on Firm Performance ............................................. 32
4.5 Impact of employee competence on Firm Performance ............................................. 33
4.6 Firm Performance ....................................................................................................... 34
4.7. Inferential ................................................................................................................... 35
4.8 Chapter Summary ....................................................................................................... 39
CHАPTER FIVE ............................................................................................................ 41
5.0 DISCUSSIONS, CONCLUSSIONS АND RECOMMENDАTIONS ................... 41
5.1 Introduction ................................................................................................................. 41
5.2 Summary of the Study ................................................................................................ 41
5.3 Discussion ................................................................................................................... 42
5.4 Conclusion .................................................................................................................. 48
5.5 Recommendation ........................................................................................................ 48
REFERENCES ................................................................................................................ 50
APPENDICES ................................................................................................................. 72
APPENDIX I: INTRODUCTION LETTER ................................................................ 72
APPENDIX II: QUESTIONNAIRE ............................................................................. 73
x
LIST OF TABLES
Table 3.1: Population .............................................................................................................. 26
Table 4.1: Response Rate ........................................................................................................ 29
Table 4.2: Descriptive of Information Technology on Firm Performance ............................. 32
Table 4.3: Descriptive of Organization Structure on Firm Performance ................................ 33
Table4.4: Descriptive of employee competence on Firm Performance .................................. 34
Table 4.5: Firm Performance .................................................................................................. 35
Table 4.6: Multiple Correlation Analysis ............................................................................... 35
Table 4.7: Model Summary of Information Technologies on Firm Performance .................. 36
Table 4.8: ANOVA of Information Technologies on Firm Performance ............................... 36
Table 4.9: Coefficient of Information Technologies on Firm Performance ........................... 37
Table 4.10: Model Summary of Organization structure on Firm Performance ...................... 37
Table 4.11: Anova of Organization structure on Firm Performance ...................................... 37
Table 4.12: Coefficient of Organization structure on Firm Performance ............................... 38
Table 4.13: Model Summary of performance аgаinst co fаctors ............................................ 38
Table 4.14: Anova analysis of Performance аgаinst Co fаctors ............................................. 39
Table 4.15: Coefficients of Performance аgаinst Co fаctors .................................................. 39
xi
LIST OF FIGURES
Figure 4.1: Gender .................................................................................................................. 29
Figure 4.2: Age of Respondents.............................................................................................. 30
Figure 4.3: Education .............................................................................................................. 30
Figure 4.4: Work Experience .................................................................................................. 31
Figure 4.5: Management Level ............................................................................................... 31
xii
LIST OF ABBREVIATIONS
ERP Enterprise Resource Planning
GDP Gross Domestic Product
ICT Information Communication Technology
IS Information Systems
IT Information Technology
KM kilometer
LPI Logistic Performance Index
LTD Limited
NCTTCA Northern Corridor Transit and Transport Coordination Authority
OS Organizational Structure
SCP Supply Chain Performance
SD Standard deviation
SME Small and Medium-sized Enterprise
SPSS Statistical Package for Social sciences
SWT Subhanah wa taala
TEU Twenty-foot equivalent unit
USA United States of America
USD United States Dollars
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the study
Transport has been one of the main drivers of trade globally for many years. Today the
story is no different. With respect to Kenya, cargo volumes handled at the port have been
on the rise, with an increase of about 7.5% from the previous year, according to (Kenya
Ports Authority, 2016). The bulk of these goods are mainly transported by road that is
approximately 94% of goods received at the port (Ministry of Transport and
Infrastructure, 2014). Thus road, as a mode of transport in Kenya handles a considerable
amount of pressure in moving cargo.
Globally in countries such as the United States of America, 70% of cargo is transported
by road and in 2015, 10.49 billion tons of freight was transported by trucks (Reports,
Trends & Statistics,2017). Freight revenues from trucking represent 81.5% of the nation’s
freight bill. As of 2014 the number of registered trucks stood at 31.4 million trucks
(Reports, Trends & Statistics,2017). These trucks managed to cover a total distance of
about 279.1 billion miles in 2014 (Reports, Trends & Statistics, 2017). Thus trucking is
referred to as the backbone of the American economy (Montgomery, 2013).
According to the American Trucking Association, the industry consists of approximately
1,477,965 companies as of 2015 (Reports, Trends & Statistics,2017). While these
companies may seem many, they serve different segments such as interstate carriers and
private carriers. The above figures thus provide enough emphasis on the magnitude of
task, the trucking sector handles for the general USA’s economy. Thus performance of
this sector quite crucial for the general health of the country’s economy (Montgomery,
2013).
According to American Transportation Research Institute, (2016) issues cited in the
American trucking sector include: Electronic logging device mandate, Hours of service,
truck parking, slow economy, driver shortage, driver retention, congestion and driver
distraction. On the other hand, Montgomery (2013) also sighted aging workforce and a
shortage of diesel technicians as an industry wide concern.
2
A brief look at Myanmar shows that lack of access to finance has meant that operators are
forced to stick with their old trucks, this has contributed to high operating costs, with their
fuel consumption, averaging 2.8km per liter, which is considerably high. Trucks are also
underutilized, since they average between 15,000km to 80,000 km per year. Port
congestion has also further affected efficiency of trucking. On average it takes between
6.5 to 10 days to clear goods from the port (WorldBank, 2016).
In Pakistan, the logistics sector accounts for 14% of the country’s GDP, with a great
reliance of logistics, on road transport. Trucking is mostly informal and is characterized
by an outdated fleet, (Pakistan Institute of trade and development & International Trade
Centre, 2016). Road freight rate in Pakistan is among the lowest in the world, with an
average cost of USD 0.01 to 0.03 USD per ton per kilometer, although precise data
regarding freight rate was hard to obtain, it is still a major challenge to the trucking
sector, aside from which competition is quite high. Thus trucking firms are working
purely on a survival mode.
In Greece, the country is heavily reliant on road, for freight transport. Transport of
freight, by road, accounts for 98% of land transport by volume and value. The Greece
trucking sector is mainly dominated by operators, who use their trucks for subsistence
purpose, these account for 90% of the trucking sector. The commercial side of trucking is
small, with 66% of the operators, operating on “one truck one owner model”. Inefficiency
in the Greece trucking sector is quite high, courtesy of strict legal regulations by the
government, this can be attested by the period, it takes to register a transport firm which
cost approximately 4,000 Euros and takes between three and eight months, aside from
that, Greece haulers have a hard time maintaining profitability internationally
(WorldBank, 2014).
Regionally looking at the South African logistics sector, categorized as a developing
economy, with a heavy dependence on bulk industry and a fast growing service sector
(Arvis, 2016). The country’s logistic cost stood at 11.2% of its GDP, signaling an
increase of 9.2% from the previous year, it is estimated to have grown by 9.5% in 2015
and is forecasted to grow by 6.3% in 2016, (Havenga, 2016). Bulk of the logistic cost in
South Africa is mostly because of transport cost, while 40% of transport cost in 2014 was
fuel. Road transport contributed to 83% of the total transport cost (Havenga, 2014).
3
According to Havenga (2014), The South Africa’s logistics costs are on the rise and
improvements in this sector are pointing towards transport’s supply and demand. The
three important recommendations are; efficient trucks, efficient logistics and modal shift
(Havenga, 2014).
An insight into Namibia’s logistics sector provides a further emphasis on the importance
of logistics sector as one of the main delivery vehicles to economic growth. While the
country’s performance with regards to logistics is quite good with respect to its region, as
it scored 69 out of 155 in 2014 (logistic performance index Survey, 2014). The country
was still seeking to improve its capacity with an additional 500,000 twenty equivalent
units at its port, with a target of reaching one million TEU in the future (Savage, 2014).
The Namibian logistic sector, like other logistic sectors of the world, also experiences
some level of issues and challenges. Some of the issues experienced include, but are not
limited to: infrastructure, corruption, training, strong communication and information
technology system (Savage, 2014). While a number of opportunities exist for Namibia,
such as servicing land locked countries like Zambia and Botswana, its huge size and low
population poses a problem in terms of the cost of maintaining infrastructure (Savage,
2014).
There exist a huge gap between large and small-medium sized transport firms in Namibia.
Thus the transport market is controlled by big industry players who are able to leverage
on economies of scale, while small-medium sized companies are left to struggle
(Elizabeth, 2013). In Namibia, all trucks are fitted with tracking system to monitor
progress of deliveries. Security as a challenge in the Namibian trucking sector, has also
been cited as a serious issue, theft of fuel through siphoning, vehicle parts theft and theft
of goods. This has been greatly attributed to lack of truck stops hence drivers are forced
to sleep in their trucks by the road side (Elizabeth, 2013).
A look in to the sub-Saharan Africa with a focus on logistics almost certainly confirms,
several issues experienced globally as factors affecting performance of logistics. A report
by the Food and Agricultural Organization of United Nation on logistics in sub-Saharan
Africa, focused on four sub-Saharan countries that is; Ghana, Cameroon, Uganda and
Tanzania. The report recognized some of the issues affecting logistics in sub-Saharan
Africa as: Infrastructure, Communication Network and Information technology, Training,
4
Financial Support and policy implementation (Joseph, 2015). Some of these issues have
also been highlighted by Kunaka (2016), and Hartman, (2013) in their respective reports.
In West and Central Africa, inefficiencies in the logistic sector are characterized by: port
congestion, long cargo processing delays and poor performance of road transport. A
comparison between the West and Central Africa corridors and the northern corridor in
East Africa revealed that there exist a more competitive and active trucking market in
East Africa with moderate congestion at the port of Mombasa (Nathan Associates Inc,
2013).
Since logistics is responsible for the overall movement of material and information flow
throughout the world, it is important to utilize benchmarking tools such as Logistics
Performance Index courtesy of World Bank to have a better view of the integration of the
various parties involved. Currently Kenya’s LPI stands at 3.33 (Arvis, 2016). According
to Arvis, (2016) logistics is the core pillar of economic development and as such policy
makers should foster seamless supply chain operations as a driver of economic growth.
Logistic performance index as a tool in gauging logistics focuses mainly on
infrastructure, service quality, supply chain reliability and border procedure and time
(Arvis, 2016).
Drawing from LPI, it is certainly clear that external factors such as infrastructure and
legal procedures have quite an impact on the logistics efficiency of a nation. Though,
firms borrow this external factors in their service delivery, service quality as an internal
factor has not been left out and specifically competence of service providers (Arvis,
2016). The report further states that; “predictable, reliable supply chains are central to
good logistic performance” (Arvis, 2016).
Among the hindrance to logistic performance are delays and unexpected cost (Arvis,
2016). This can be further affirmed by Kunaka (2016) for the case of the East African
market which is quite affected by hidden cost, although it has been greatly reduced
recently, together with delays, given that there has been considerable change among East
African nations with respect to LPI from 2014 to date (Kunaka, 2016). There is still room
for improvement and further streamlining of the sector.
5
Locally the Kenyan governments has tried to improve state of roads in the country, this
could be attested by the improvement in budgetary allocation of the road sector from 4.9
billion Kenya shilling in 2002 to 80 billion Kenya shillings in 2013 (Ministry of
Transport and Infrastructure, 2014).
Aside from improving the budgetary allocation of road development, the Kenyan
transport ministry has sought for a faster and efficient way of road development and this
has been through a private public partnership model to ensure a level of responsiveness
(Ministry of Transport and Infrastructure, 2014). From the above statements, it is certain
that the Kenyan government is committed to improving infrastructure and to further
emphasize this point is that, aside from roads, the government has also invested in a
standard gauge railway from Mombasa to Nairobi and is expected to be operational by
June 2017, (Ministry of Transport and Infrastructure, 2014). Among the beneficiaries of
improved infrastructure are trucking firms. While trucking firms stand to benefit from
improved infrastructure, they are also at the same time faced with the challenge of
competition from other modes of transport and specifically rail transport.
The standard gauge railway has been designed to carry up to a maximum of 22 million
tons annually with freight trains having a maximum carrying capacity of 216 twenty
equivalent units approximately 4000 tons (Oirere, 2017). Once the railway is operational,
a reduction of truck traffic along the Mombasa-Nairobi is expected and hence truckers
along this route are expected to feel a considerable amount of business loss. The Kenyan
trucking industry is characterized by a number of factors, while currently competition is
quite intense, with 5% of trucking firms controlling 45% market share, small and large
firm compete and co-exist in the market (Hartman, 2013). Small market players consist of
firms with less than four trucks while large firms consisting of firms operating 200 trucks
and above (Kunaka, 2016).
Trucking firms are mainly family owned with subsidiaries of international logistic firms
being mostly medium players in the market (Hartman, 2013). The average age of trucks
in Kenya is about 7.5 years with their acquisition being mainly financed by company cash
flow or short term loans of up to 3 years (Hartman, 2013).
While competition from the standard gauge railway is yet to be realized, trucking firms
have for a long time been faced with a myriad of challenges in Kenya (Kunaka, 2016).
Although there have been a number of improvements in the trucking industry such as
6
reduction in delays along the borders and weighbridges, prices of transport service have
reduced considerably up to 30% (Kunaka, 2016). On the other hand, the number of trucks
have been increasing, hence a further increase in competitive pressure in the market
(Northern Corridor Transit and Transport Coordination Authority, 2015).
Currently in Kenya there is wide embracing of the global positioning system for fleet
management, with over 50% of firms using the technology (Hartman, 2013). This has
brought about improved performance and efficiency in planning truck operations
(Kunaka, 2016). With the embracing of technology, improvement of infrastructure and
reduction of delays at border points Kenyan truckers are now able to do truck mileages of
approximately 10,000 kilometers a month and generally efficient truck usage (Kunaka,
2016). Truck population in Kenya currently stands at about 17,066 as of 2015 (Kunaka,
2016).
1.2 Problem Statement
The performance of many firms is pegged on a number of factors. These factors may
come from both the external environment and internal environments the firm operates in.
A study by Mohammed (2015) on the determinants of firm performance in developing
countries. Acknowledged that, different researchers use different variables that influence
firm performance and that some use variables that really capture performance. He
therefore suggested that future researchers should make use of variables that serve as
determinants of firm performance in developing countries.
A review of determinants of firm performance by Ben (2014) did a comparison of
European countries. The study looked into; growth opportunities, firm size, cash ratio and
firm age. The results showed that all variables affect significantly firm performance, with
the exception of age of Swedish firms.
An examination of the factors affecting performance of firms listed in the Shanghai stock
exchange by Mou (2015) looked into; liquidity, asset utilization, leverage and firm size.
The study found out that asset utilization and leverage are factors that affect financial
performance of listed firms in shanghai stock exchange.
On the part of transport sector, several studies have been conducted on the factors
affecting performance of transport firms. A study by Badenhorst-Weiss (2015) obtained
an insight into, the business environmental risks, from a logistics perspective of the South
7
African logistics market. The study found out that increasing transportation cost,
operational management of infrastructure and human resource related problems posed the
biggest challenges in the logistics industry.
A study by Jacinta (2017) performed a survey of courier companies in Kenya in an
attempt to getting and insight and understanding of factors affecting performance of
courier service industry. The study found out that, firms had invested heavily in training
their employees and thus the reason behind good reliable service. Another factor sighted
was the use information technology. Although there is evidence of poor infrastructure,
firms turned this into an opportunity by investing in motorbikes, thereby favoring their
growth.
From the above discussions, it is evident that no research has been conducted on the
effects of internal factors on non-financial performance of trucking firms in Kenya.
Therefore this study aims to bridge this gap of knowledge, by providing the relevant
information needed to effectively and efficiently communicate the effects of internal
factors on non-financial performance of trucking firms in Kenya. This study will rely on
previous studies in the transport sector, aiming to improve on what has already been done
and further recommend other areas that need to be researched on.
1.3 General Objective
To investigate the effects of internal factors on non-financial performance of trucking
firms in Kenya.
1.4 Specific Objective
1.4.1 To determine influence of information technology on firm performance
1.4.2 To assess the influence of organization structure on firm performance
1.4.3 To examine the relationship between employee competence and firm performance
1.5 Justification of the Study
1.5.1 Management of Trucking Firms
The findings and recommendations of this study will help the top management of
trucking firms, make informed decisions with regards to their day to day operations and
long term sustainability. The study will also highlight the effects of internal factors on the
general performance of the firm. It will also serve to enlighten new management
8
personnel on how general trucking operations is managed and the various challenges that
exist in this particular industry. In addition, it will highlight the various areas that
management may need to increase or reduce effort as far as investment is concerned.
1.5.2 Academicians and Researchers
This study will highlight the various current issues in the Kenyan trucking industry. It
will also serve to provide new researchers, with specific areas that may need further
review or further investigation. The study will not only showcase current issues faced in
the industry but will also review previous research in this field thereby providing
consistency. By focusing specifically on internal factors, the research will ensure provide
a more in depth analysis of the situation.
1.5.3 Government
The study will serve to dispense information to various government officials and
legislators on the current performance and practices in the Kenyan trucking industry and
therefore put necessary measures to ensure Kenyan truckers enjoy undisrupted
performance. It will also serve as a good document from which new policies and
regulation could be drawn from. The document will add insight on the internal factors
affecting generally all Kenyan firms. The study will enable the Kenyan government make
informed judgements on how to regulate Kenyan firms without affecting the general
performance.
1.5.4 Investors
The study will serve to furnish current investors on what specific areas to improve on,
with respect to internal factors affecting firm performance. The research will also
highlight the various issues the Kenyan trucking industry is facing and how to go about
them. The study will also serve to attract the attention of future investors by highlighting
the various occurrence and condition of the Kenyan trucking industry.
1.6 Scope of the study
The study seeks to investigate the internal, non-financial factors affecting performance of
the trucking firms in Kenya, with a specific focus on Dakawou Transport Limited. The
researcher thus intends to collect relevant data from Dakawou Transport Limited.
Therefore, data will be obtained from the intended target population at the operational
level. The study will be carried out between January 2018 and April 2018.
9
1.7 Definition of Terms
1.7.1 Performance
Performance is the outcome or the end results of activities of an entity of a business,
usually measured at the end of each financial period to determine how successful it has
been (Fan, 2013)
1.7.2 Firm
An integrated and durable organization devoted to the production of goods and services
that are owned as property under law by the firm (Geoffrey, 1998)
1.7.3 Trucking
According to the Mariam Webster dictionary, a truck’s definition is a wheeled vehicle for
moving heavy goods American Version, (2017) in the British version, the definition states
that it is an open railroad freight car. Therefore the act of transporting goods via trucks
would mean trucking.
1.7.4 Organization Structure
Henry Minterzberg defines organizational structure as, a framework of the relations on
jobs, system, operating process, people and groups making effort to achieve the goals.
(Mintzerberg, 1972).
1.7.5 Information Technology
According to Attaran (2003) information technology is defined as “capabilities offered to
firms by computers, software applications and telecommunication to deliver data,
information and knowledge to individuals and processes”
1.7.6 Employee
According to Mitchell (2012) an employee by definition is, someone who is hired for a
wage, salary, fee or payment to perform work for an employer.
1.7.7 Competence
There exist many definitions for the term competence but according to Stephan, (2012) it
simply means, a special form of knowledge in the sense of action-enabling knowledge.
10
1.8 Chapter Summary
This chapter gave a description of the issues involved in the trucking industry and
highlighted the main focus points. It compared operations from different geographic
locations to give a more comprehensive overview of the scenario. By so doing it
unearthed several factors that may need attention going forward.
The chapter also sets stage, for the development of the next chapters that is two, three,
four and five. Thus the next chapter which is two will now focus on the critical issues
highlighted in this chapter, this will entail expounding on the objectives, deeply, through
literature review, in order to understand their interplay with objectives so identified in this
chapter, within the industry.
11
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This section of the study, looks into works conducted by other scholars within the realm
of this topic in hand. It looks into each objective acknowledged in chapter one
comprehensively, with a critical view of the findings of other researchers. While
analyzing the findings of other researchers, it also looks at the methodology behind the
findings. Thus the chapter expounds on the topic further, with a view of better supporting
and giving the research concrete foundation.
2.2 Impact of Information Technology on Firm Performance
A review of the effect of ICT on firm performance by Timothy (2016) found out that the
effects of ICT on performance is not homogenous. According to Janusz (2014), there
exist more or less advanced technologies apart from telematics such as; detectors and
sensors, making possible the remote measurement of the state of means of transport,
satellite communication systems that enable transmission of information over longer
distances, database and data warehouse make possible information storage as well as
rapid processing (Janusz, 2014).
Information system can bring benefits in form of better financial results, more efficient
coordination and improving the quality of transport (Janusz, 2014). Zeynep (2015) states
that: “sustainable supply chains are not only essential to delivering long- term
profitability, but are also crucial environmental and social responsibility for organizations
in the global market place”.
According to Kitheka (2014), firms today are in great need of information for
performance as it enables managers to make more informed decision and generally better
decisions. Kitheka (2014) also found out that; it is important for organizations to consider
the interest of all stake holders to fully realize the benefits of implementing technology.
Kitheka, (2014) also acknowledged that technology can lead to process efficiency and
effectiveness, not forgetting improved customer satisfaction.
A study conducted by Haewoon (2016) reviewed the investment on information
technology by firms. It categorized those investments into; basic infrastructure, security,
wireless, collaboration and data-center. The study found out that wireless technology is
12
the main I.T driver in terms revenue growth. Furthermore the investigation showed that
there exist some paradox in some of the investment because of the time lag before full
realization of the investments.
A review on the impact of information technology capability on firm performance by
Ahmad (2014) focused on employee-customer profit chain. According to Ahmad (2014)
one of the guidelines in organization success is employee-customer profit chain. In his
study he also states that, strong relationships have been found between, employees’
attitudes and behaviors, employees’ behaviors and customer impression, and customer
impressions and revenue growth. One of the factors that can influence this process is
information technology. The results of study showed that I.T capability tends to enhance
this relationship and thus firm performance.
Another study was conducted on relationship among information technology investment,
firm performance, innovation and firm growth by (Mahdi, 2012). The study focused on
large Iranian manufacturer. The researched assed whether, innovation is moderated by
firm growth and also mediation effects of innovation on I.Ts impact on firm performance.
The results of the study indicated that I.T increases the innovation of the firm. Innovation
improves performance of the firm in financial and operational terms. Thus firms should,
consider I.T investments that improve firm’s capabilities in order to achieve a significant
impact on firm performance
2.2.1 Information Technology
According to Aziati (2013) management information system is a system that converts
data into information, conveyed in an appropriate form to managers. Mohammad (2012)
States that management information system provides information that is required to
manage organizations effectively and efficiently.
An exploratory study on the information and communication technology adoption on the
Italian road was conducted by Evangelista (2014), with the aim of having an insight of the
current and future practices of information technology in the Italian road haulage
industry. A questionnaire survey was carried out on a sample of companies operating in
the Campania region of southern Italy.
The area was chosen because it has a potential to play an important role by acting as
interlink between European industrial and consumer areas, Northern Africa and the
13
Middle East and the significance of road usage is anticipated to rise. The questionnaire
was structured into three main sections, the first part gathers information about the
operating characteristics of firms, the second section was aimed at investigating the
current and future usage of information technology and the third part aimed at identifying
main factors influencing adoption of information technology. The sampling frame was
described using a database provided by the Italian federation of road haulers (Evangelista,
2014).
The study excluded small firms operating less than 4 trucks sighting marginal impact of
the potential of ICT. This point was reinforced by interviews conducted by authors in an
attempt to test the questionnaire, it was noted that these firms with less than 4 trucks
could employ cheaper and easily accessible technologies to effectively manage their
respective operations, such as mobile phones. Thus the sample size was effectively
reduced to 688 from 1,133. The total number of questionnaire received was 39. To ensure
data reliability and completeness, respondents were contacted to clarify unclear responses
(Evangelista, 2014). It was found out that majority of firms (82%) have between 10-50
employees, majority of firms offer general and less than truck load services (44.8%).
The importance attached to information technology was assessed by examining ICT cost
as a percentage of the firm’s total cost. 25 out of the 39 surveyed firms spent less than 1%
of their total cost on information technology, just three companies spent more than 10%,
while 11 spent between 3% and 10%. Thus in terms of financial resources, the
significance attributed is low in the sampled firms (Evangelista, 2014).
Among the information technology practices unearthed include: tracking and tracing is
mainly by traditional paper based system (61.5%), while the system used for
communication with drivers was by voice through mobile phones (89.7%) of respondents.
In terms of proof of delivery system, there was clear evidence of a widespread usage of
paper based system (78%). Although there was a lot of anticipation of a change from
paper based system in the future in favor of electronic system. On the part of routing and
scheduling for the surveyed firms, most used manual planning (36%) or carried out by
voice through mobile phones (27%). On internet utilization, majority of the respondents
were found to operate websites (61.5%). Website utilization was mainly for advertising
purposes rather than for transactions (Evangelista, 2014).
14
Using information technology in supply chain is considered a significant tool to
enhancing organizational performance as it helps firms accumulate knowledge (Al-
Fawaeerl, 2013). A study by Al-Fawaeerl (2013) on the impact of information technology
in enhancing supply chain performance on the textiles companies in Jordan found out that
textile firms in Jordan acknowledged the benefits and positive impacts of information
technology that support supply chain performance.
A study on factors affecting information technology acceptance, willingness and adoption
in logistics industry from supply chain perspective was performed by (Tsan-Hwan, 2014).
The study was conducted on the Taiwanese logistics industry from a cross-organizational
perspective, the research found out that, perceived easiness, perceived usefulness and
social norms do not have a substantial, direct correlation with the actual adoption, but
supply chain relationship does. Thus to make technology adoption to be a success,
logistics firms should learn together and share resources with their partners through
strategic alliance (Tsan-Hwan, 2014).
According to Galin (2012), ICT system may change the structure of the logistics industry.
He found out in his study that most important benefits of ICT systems adoption are cost
reduction, improved competitiveness, business control, error reduction and customer
integration for small road transport businesses. Issues undermining adoption of ICT were
cited as high cost, lack of management initiative and lack of ICT system that fulfill the
firm’s needs.
2.2.2 Organizational Performanc
Performance is the outcome or the end results of activities of an entity of a business
usually measured at the end of each financial period to determine how successful it has
been (Fan, 2013). A firm is an integrated and durable organization devoted to the
production of goods and services that are owned as property under law by the firm
(Geoffrey, 1998).
In her study Joanne (2016) found out that, capital and resources influence performance of
independent fuel dealers positively, together with marketing and management skills.
Marketing skills was able to provide a competitive edge for firms in general and was able
to place a firm in a better position to face the competition.
A look into succession planning of executive directors and its effect on organizational
performance by Lucy (2014) found out that, succession planning is beneficial in:
15
improving and addressing key issues such as employee’s management, organizational
growth and sustainability. Her disquisition also highlighted that, majority of firms do not
have a succession plan, due to laxity by the board members and senior management. In
other cases, the succession plan is developed but is not finalized thus leading to poor
leadership transition within the firm.
The effects of information technology on performance of logistics firm in Nairobi was
studied by Macharia (2015), his studied acknowledged the positive influence of
information technology on firm performance. Among the areas investigated by the study
include: level of IT usage among firms, security and tracking and customer service
delivery.
In his search for determinants of financial performance of a firm, he focused on corporate
governance, ownership structure, capital structure and risk management. The study
acknowledged that corporate governance, ownership structure, capital structure and risk
management have a major effect in determination of financial performance of firms in
Pakistan, with either return on equity or shareholder return as financial performance
measure.
2.3 Impact of Organizational Structure on Firm Performance
A study on impact of decentralized decision making on firm performance was established
by Bashir (2015), the study was conducted in Pakistan and took the example of Honey
well, Google, Toyota and other different sectors of Pakistan. The study found out that,
ultimate performance of a firm increases with decentralization. Thus as the
communication and cooperation of the top level management with middle and lower
management increases, the organizational performance increases.
A study was administered by Nedal (2013) on defining and solving organizational
structure problems to improve the performance of ministry of state for environmental
affairs in Egypt. The study aimed at providing more acuity on organizational issues and
their solution for the ministry of state for environmental affairs. The author defined
organizational structure as the way an organization arranges people and jobs so that its
work can be performed and its goals met. In conclusion the writer found out that
structured problem solving is the most useful way to improving the performance of
organization.
16
A study developed by Margareth (2017) on organizational structure, service capability
and its impact on business performance of logistics providers in the B2B Context. The
inquiry was done in South Brazil and it aimed at verifying what aspects related with
organizational structure and service capability contribute to the performance of logistic
providers in the business to business context with client companies in supply chains. The
study found out that technical quality and capacity of operations of logistic firms
generated direct and reciprocal impacts on their performance and performance of client
companies as well.
A review of organizational structure and performance of large manufacturing firms in
Kenya was carried out by Zachary (2015), her paper aimed at determining the influence
of organizational structure on performance of large manufacturing firms. The author
found out that organizational structure positively influences the firm’s performance. A
study was carried out on the impact of organization structure on organization performance
by (Sylvia, 2015). The findings revealed that organization structure has an impact on
organization performance, it also indicated that there is a relationship between
specialization of work process and labor productivity. Thus organizational structure affect
the behavior of employees in the organization. In general performance of a firm largely
depends on its structure through defining task clearly.
A review on the effect of information technology on organizational structure and firm
performance in Tehran, Iran was performed by (Ali, 2013). The study employed a causal
and descriptive research design to determine the cause and effect relationships among IT,
OS and FP based on previous studies. The findings showed that information technology
has an indirect and direct impact on firm performance. Organizational structure was
found to have a direct impact on firm performance, information technology was also
found to have a direct effect on organization structure.
A study was conducted by Adeleye (2016) on the impact of organizational structure on
the performance of the Nigerian securities exchange commission. The study found out
that, the Nigerian securities exchange commission structure is mechanistic, a kind of
bureaucratic set up that hinders responsiveness to changes in a rapidly changing business
environment. It was also found out that the existing structure accounts for the weakness
and failures of NSEC in effective sanctioning of saboteurs and defaulters, capital market
efficiency and stable growth. The study recommended that the current organization
17
structure needs to be changed to match the current pace and intensity of the business
environment.
A review on the effect of organizational structure on financial performance of commercial
state corporations in Kenya was conducted by (John, 2014). Specifically the study
focused on the effect of organization size on the financial performance of commercial
state corporations. The study found out that, organizational structure affected the financial
performance of commercial State Corporation. The study thus recommended that,
organizational size, structure formalization, structure complexity and structure
centralization should be considered to be very important, when corporation management
is developing their organizational structure that will achieve their strategic objective.
A study by Ju-Yeon (2012) focused on the effect of customer centric structure on firm
performance. The study found out that, increases in structural alignment, enhances
performance by increasing customer satisfaction, but damage it by increasing
coordinating costs. The study also found out that restructuring around customer groups
pays off when the firm already has relatively large business units or serves many diverse
end markets.
2.3.1 Organizational structure
An inquiry on flat organizational structures was conducted by (Julie, 2012). The focus of
her study was to show that flattened firms can exhibit more control and decision making
at the top thus going against their intended purpose. In conclusion Julie (2012) states that
the flattened firm has fewer levels and broader spans of control. The flattened firm also
appears to rely on more coordination among the top team. She also states that, it is a
complex phenomenon that in the end it looks more like centralization.
A research was determined by Rishipal (2014) on the analytical comparison of flat and
vertical organizational structures. The main focus of his study was on the structure of
modern organizations in the context of a fundamental change in organization structure
which is currently taking place in the way firms view their organizations and the inherent
requirements and results. In conclusion, the author found out that the age of flat
organizations is becoming a reality and that the traditional framework is increasingly
proving itself incapable of satisfactorily dealing with the new market reality.
18
The role of organizational design in 21st century organizations was studied by (Michael,
2014). The author tries to inspire leaders to understand the mortality of the organizations
they lead and consider the role organizational design in the health of that firm. In
conclusion the author demonstrates that they is need to develop a holistic understanding
of the organization’s design as it is the likely discriminator of whether a company
continues in the future.
A study on organization structure using the Mintzberg framework was conducted by
(Fred, 2012). Henry Mintzberg suggests that organizations can be differentiated along
three basic dimensions include: the key part of the organization, that is, the part of the
organization that plays the major role in determining its success or failure; the prime
coordinating mechanism, that is, the major method the organization uses to coordinate its
activities; and the type of decentralization used, that is, the extent to which the
organization involves subordinates in the decision-making process. Mintzberg suggests
that the strategy an organization adopts and the extent to which it practices that strategy
result in five structural configurations: simple structure, machine bureaucracy,
professional bureaucracy, divisionalized form, and adhocracy.
A review on organization structure and innovation performance in different environments
was carried out by (Andy, 2012). The study was conducted on small and medium sized
firms in the United Kingdom. The study focused on whether the choices over the
combination of the centralization of decision making and the formality of structure
influence innovation performance and whether different combinations perform better in
technically turbulent environments and at different stages of a firm’s development. In
conclusion the author states that organizational form matters in for innovation success and
that the decentralized, formal structure works best in most circumstances. The only
exceptions is of young firms operating in high tech sectors which benefit from informal
structure.
A study was performed on the relationship between organizational structure factors and
personnel performance by (Hadi, 2016). It was found out that there is a positive
relationship between organization structure factors and personnel performance. The firm
structure emphasizes on omission of repetitive task thereby increasing efficiency.
A study on structure and strategy in the Kenyan banking industry was conducted by
(Anastasia, 2016). The focus of her study was on understanding the interrelationship
19
between strategy and structure. It was deduced from the study, that between strategy and
structure, either can come first, but both are interrelated and interdependent therefore
none supersedes the other. It was also determined that firms may begin as simple
structures but will evolve in to more complex structures.
An inquiry on the impact of organizational structure and business strategy on
performance and risk-taking behavior in insurance industry was carried out by (Gene,
2015). The main focus was on the impact of organizational structure and business strategy
on company efficiency, profitability risk-taking behavior in the Taiwanese life insurance
industry. The insurance industry in Taiwan provides an interesting environment for
studying this issue because different organizational forms coexist in the insurance
industry. The results show that organizational structures and business strategies have
significant impact on efficiency, profitability, and risk-taking behavior. In addition, firm
size, lines of business, leverage ratio, and market share have significant impact on
efficiency, profitability, and risk-taking behavior.
2.4 Employee Competence and Firm Performance
A research on the effect of core competence on competitive advantage and organizational
performance was performed by (Sabah, 2012). The study was conducted on paint industry
in the United Arab Emirates. The findings of the research indicated that while core
competence has a strong and positive impact on competitive advantage and organizational
performance, competitive advantage has also a significant impact on organizational
performance.
A study on the effect of individual competencies on performance in services industries in
Turkey was reviewed by (Halil, 2013). The research was limited to banking, cargo,
communication, food and catering, finance, publishing, retail, I.T and tourism companies.
The findings indicate that there is a positive relationship between competencies and
individual performance. Core competencies appeared to have the most significant effect
on individual performance. A surprising result of the findings showed that when it comes
to organizational performance, managerial competence appeared to be the most
significant factor.
An examination of the relationship between human capital and business performance was
conducted by (Sarminah, 2013). The study was done on managerial staff in Malaysian
logistics companies. The findings unveiled that all aspects of human capital contributed
20
significantly to business performance. The results also showed that competency and
creativity as the main factors that influenced business performance.
A study on determining the importance of competency and person-job fit for the job
performance of service SMEs employees in Malaysia was performed by (Sethela, 2013).
The main objective of the research was to investigate on the relationship that may exist
between: competency, person-job fit and employee’s job performance. The results
showed significant relationship between competency, person-job fit and employee’s job
performance. Thus in order to improve performance of employee’s job performance,
serious attention must be given to issues related to employee’s competency.
An inquiry was conducted by Aidah (2013) on effects of training on employee
performance. The research was conducted on the telecommunications industry in Uganda.
The investigation discovered that training and development have an impact on the
performance of employees. A coordinated study Antwi (2015) on employee’s
competency and organizational performance in the pharmaceutical industry. The inquiry
was done in Ghana. The results showed that employee’s competence contributed
immensely to performance of the entire organization.
2.4.1 Significance of Employee Competence
A study on human resource practices and employee competence was carried out by
(Mohammed, 2014). The focus of the study was on proving the viability of general
system theory when applied to the relationship between human resource practices and
employee competence. In conclusion the application of the theory illustrated the
effectiveness of human resource practices in enhancing employee’s competence at the
firm level.
A study was orchestrated by Petra (2013), on management competencies and
organizational performance in CEE. The study entailed a comparison between Austria
and Slovenia. The findings did not show a clear answer to the question “which
managerial competencies are crucial” for the case of Slovenia, which was attributed to
structural reforms in the Slovene economy. The Austrian samples however revealed a link
between leadership, turnover and human resource. Leadership was emphasized as the key
competency in management for the case of Austria.
A study was performed by Havidz (2017) on the model of employee performance. The
study aimed to analyze the effect of competency and work motivation on employee
21
performance. A case study of atPT. Bank.Bukopin, Tbk Center. The results showed
competency and work motivation simultaneously had a significant positive impact on
performance. A study was established on the effect of employee training on employee
performance by (Ramya, 2016). The aim of the inquiry was to understand the importance
of training on employee performance, identify significance of employee performance and
provide suggestions on how firm can improve its employee performance.
The findings indicated that training plays a vital role in the building of competencies of
new as well as current employees to perform their job in effective way. Firms thus must
design the training programs with clear goals and objectives while keeping in mind the
particular needs of both the individual and the firm.
An inquiry on the impact of human resource management on the competitiveness of
transport companies was conducted by (Nijolė, 2017). The study was carried out in
Lithuania’s transport sector. The study found that human resource management
determines organizations’ performance and its position in the market. Employees were
also found to be the main link between organization’s strategy and its implementation. An
assessment on the impact of managerial competencies on the performance of immigrant –
owned enterprises in South Africa was conducted by (Olawale, 2014). The results
indicated that there is a relationship between owner’s education and performance.
Business owners with experience prior to starting business significantly perform better
than those without.
A study on the relationship between competency and performance was developed by
(Kolibáčová1, 2014). The study was conducted in one firm over a period of two years.
The findings of the study established that there a positive relation between competency
and performance. Thus the research paper went further and recommended that it makes
sense to invest time and finances in increasing employee competence. An inquiry on the
role of core competencies on organizational performance was performed by (Nada, 2014).
The study took place in the Iraqi private banking sector. The results of the inquiry
indicated that there is significant correlation among core competencies and organizational
performance. The paper further recommended that bank management should develop core
competencies for human resource as a strategic tool to enhance organizational
performance.
22
An examination on the impact of training and development on employee performance and
productivity was performed by (Abdulrahman, 2016). The study was conducted in a form
of a case study on the Jordanian private sector transportation companies. The findings
showed that training and development are positively correlated and claimed statistically
significant relationship with employee performance and productivity. Thus the study
concluded that training and development have important impact on employee
performance and productivity.
Looking at a study conducted by Mercy (2015), on human capital, employee
empowerment and performance of commercial banks and insurance firms in Kenya, the
article reviewed whether the influence of human capital on the performance of banks and
insurance firms in Kenya was moderated by employee empowerment. The findings
revealed that employee empowerment does not moderate the influence of human capital
on firm performance but that it has a mediating effect.
Small and medium size enterprises play quite a substantial role in a developing economy.
A study was conducted by Sanda (2011) in Ghana, on managerial competence and non-
performance of small firms in a developing economy. The research found out that SME
executives in Ghana possess the requisite competence and discretionary behavior to
enhance the performance of theirs firms. Although, their inability to make such
competence reflect in the performance of their firms might be due to their inability to
simultaneously attain efficiency and effectiveness in the management of their work
places.
A look at a study conducted by Ovidiu-Iliuta (2013) on employee motivation and
organizational performance, show that a motivated and qualified workforce is essential
for any company that needs to increase productivity and customer satisfaction. It is until
this needs are met that people will focus more on job performance. Thus he suggests that
firms should use employee suggestion schemes and use the feedback from the workforce
to improve the organizational environment.
A research by Genç (2014), on the impacts of core employees on the performance of
SME’s, showed that there is no positive relationship between the expertise of core
employees, whose superior characteristic are firm specific and organizational
performance. The study further suggested that, value, uniqueness and non-sustainability
23
of core employees and organizational performance should be searched in different regions
and sectors.
Another insight on managerial competencies and small business growth by Syamsuriana,
(2014) indicated that all managerial competency dimensions had a positive and
significant impact on growth of small business. The study was conducted in Kelantan and
Terengganu regions, with a focus mainly on technical, generic and conceptual skills of
managers. A review by Reza (2013) on supply chain management competence and
performance in the Iranian I.T SME’s, found out that SME’s should develop unique
competencies that are inimitable to maximize their utility in the supply chain and to
improve their performance.
2.5 Chapter Summary
This chapter presented literature review on the three highlighted objectives of the study in
chapter one. These objectives include: influence of organizational structure on firm
performance, influence of information technology on firm performance and finally the
relation between employee competence and firm performance. The next chapter that is,
chapter three will comprehensively cover research methodology, which will be on mainly
how the actual data collection, analysis and research design was conducted.
24
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
This chapter describes the methodology that was applied while conducting the research. It
is segmented into different parts including the research design, the population and
sampling design, data collection methods, research procedures and instruments, and data
analysis methods. The adopted research methods were found to be appropriate in terms of
effectiveness, time, cost and information accuracy.
3.2 Research Design
Research design refers to a framework which acts as the blueprint for data collection,
measurement, and analysis which explains the procedure necessary for obtaining the
information needed to solve a research problem (Cooper & Schindler, 2014). Hence,
research design is a layout of the research project which determines the most suitable
method of investigation, nature of instruments, sampling plan and different data types
(Saunders, Lewis, & Thornhill, 2015).
There exists a number of research designs but the main ones are descriptive, exploratory,
correlation design and causal (Collis & Hussey, 2009).
Descriptive research is usually used in obtaining information in regards to the current
status of the phenomena and explains what exists with respect to variables or conditions
in a situation. The major objective of a descriptive research is to provide a valid and
accurate representation of the variables that are relevant to the research questions and
objectives Creswell, (2014). This study adopted a descriptive research design, descriptive
approach was also applied since it enabled the researcher to use quantitative data so as to
find common characteristics about the population or phenomena being studied (Zikmund,
Babin, Carr, & Griffin, 2010).
In addition, the study adopted the correlation approach in order to describe the dependent
and independent variables relationship. Correlation research represents a general
approach to research that focuses on examining the co-variation among natural occurring
variables (Creswell, 2014).
25
The major objective of correlation research was mainly to identify predictive relations
using correlations or other statistical techniques (Cooper & Schindler, 2014).
Furthermore, the study employed both quantitative and qualitative research approaches.
Quantitative approach entails the use of tools such as questionnaires, or data analysis
procedure including graphs, that use numerical data. Whereas, qualitative approach
assisted in analysis of non-numerical data such as interviews (Saunders, Lewis, &
Thornhill, 2015).
3.3 Population and Sampling Design
3.3.1 Population
Population is described as the total collection of elements about which the researcher
wishes to make reference Cooper & Schindler, (2014). It is basically the universe of
people, place or things to be investigated (Saunders, Lewis, & Thornhill, 2016). The
targeted population for this study comprised of top management, middle level
management and subordinate staff across the organization. The top management
consisted of a total of ten people, middle management comprised of up to fifteen
individuals and finally the subordinates consisting of eighty people.
3.3.2 Sampling Design
Sampling design is described as that part of research plan that indicates how many cases
are to be carefully chosen for observation (Cooper & Schindler,2014). Hence, the design
gives a blue print of the process to be followed to draw the study’s sample based on the
sample size (Saunders, Lewis, & Thornhill, 2016). The study shall adopt this design as
the sample shall be inferred to the population.
3.3.2.1 Sampling Frame
Sampling frame is described as the physical representation of all the elements of the
population from which the sample size is drawn (Sekaran & Bougie,2013). Other studies
posit that sampling frame is the detailed presentation of population of study outlined in a
table or figure (Oladipo, Ikamari, & Kiplang'at,2015). According to Cooper and Schindler
(2011), sampling frame has been defined as a list of elements from which the sample is
drawn and closely related to the population. The sample of the study constituted of the top
management, middle level management and subordinate staff at Multiple Haulers.
26
3.3.2.2 Sampling Technique
Sampling technique entails the method that is used to select the members of a sample
(Cooper & Schindler,2011). A study by Sekaran and Bougie (2013), explains the various
sampling designs types which include; probability and nonprobability. The study findings
was assumed to be a true representative of the study population (Cooper &
Schindler,2014). Since the population is divided into the various categories of top
management, middle level management and subordinate staff, a stratified random
sampling was used to collect data from the various strata of the respondents. This
technique ensured full representation of all respondents and eliminated the aspect of
biasness. Stratifying the entire population helped ensure a sample that accurately reflects
the population that was being studied (Zinkmund et al., 2012).
3.3.3.3 Sample Size
Sample size is described as the number of items to be selected from the universe to
constitute a sample (Oladipo, Ikamari, & Kiplang'at,2015). The sample size is an
important element of any empirical study in which the objective is to make inferences
about a given population from a sample. Basically the sample size utilized in a study is
determined based on the expense of data collection and needs to have sufficient statistical
power (Creswell, 2014).
A good sample should be accurate, precise, ensure to have a good representation of the
population, and be at least 20% of the population Cooper & Schindler, (2011). From the
initial target population of 108, this being more than 100 but less than 500, and guided by
the rule of thumb, the study used stratified random sampling and a quota of 50% shall be
drawn from each strata.
Table 3.1: Sample Size
Unit Of Analysis Target
Population
% Of Sample Sample Size
Top Management 10 50 5
Middle Level Management 15 50 8
Subordinate Staff 80 50 40
TOTAL 105 50 53
27
3.4 Data Collection Methods
This study used a structured questionnaire as a data collection tool to collect both
qualitative and quantitative data. The questionnaires issued consisted of both closed and
open ended questions. The decision to use a questionnaire was based on the fact that the
tool is considerably easy to understand and use for the respondents (Burns & Ryman,
2008).
Furthermore, it offers a high rate of response as it is less tasking in comparison to other
tools such as focus groups. In addition, a likert scale was also used with options ranging
from strongly agree to strongly disagree on a 5 point scale. This scale was used because it
has proven to be effective in other studies (Bryman & Bell, 2011). The questionnaire was
divided into four main segments. The first section of the questionnaire will include
questions on the respondents’ general information. The second, third and fourth parts will
entail questions based on the research objectives. The researcher obtained a letter from
Chandaria School of Business to facilitate the authorization to collect data from Dakawou
Transport LTD.
3.5 Research Procedures
The research utilized a developed questionnaire as the data collection tool and ensured
that the questions were appropriate for the study. The questionnaires were tuned in
accordance to the research objectives. A pretest was also conducted before administering
the questionnaire to the study population. A study by Cooper and Schindler (2014), posits
that pretests aid in improvement of instrumentation and design.
Pretest is said to helpful in refining information contained in the questionnaire which in
turn increases efficiency and identifies any shortcomings in the questionnaire (Bryman &
Bell, 2011). This enabled the researcher make changes based on suggestion from the
pretest participants and eliminate errors and improve on validity. The researcher obtained
permission from Chandaria School of Business to facilitate the data collection process.
Time was given for respondents to fill in the questionnaires and phone calls was used as a
measure to follow up. The researcher both delivered and emailed the questionnaires and
feedback from respondents was treated with high degree of confidentiality.
3.6 Data Analysis Methods
Data analysis entails the process of analyzing, cleaning, transforming, and modeling data
collected in a research with the objective of identifying useful information (Cooper &
28
Schindler,2014). The information collected was used to make decisions. The data
collected was edited and keyed into Statistical Package for Social Sciences (SPSS) tool
for analysis. The main purpose of the analysis was to consolidate the observations so as to
provide solutions to the research objectives or questions. Quantitative and qualitative data
analysis tools was used, which will comprise of descriptive analysis and, in particular
cross-sectional analysis. A cross-sectional analysis basically entails a study carried out
once and represents a snapshot of one point in time (Bryman & Bell,2011). Finally, the
data collected was presented in form of tables and figures which will facilitate
interpretation of information obtained. Both descriptive statistics and inferential statistics
was used in order to draw as much information as possible from the data to enable
comprehensive decision making from the data collected.
The following equation was established
Y = β0 + β1X1 + β2X2 + β3X3 + ε
Y = 0.238 + 0.481X1 + 0.396X2 + 0.105X3 + 0. 29245
Where:
Y is the dependent vаriаble (Consumer sаving);
β0 is the regression constаnt;
β1, β2, β3 аnd β4 аre the coefficients of independent vаriаbles;
X1 is information technology;
X2 is organization structure;
X3 is competence; аnd
ε is the error term.
3.7 Chapter Summary
The chapter clearly described the methodology that the study used to reach its objectives.
The research methodology was explained in sections including; research design,
population, sampling frame, sampling technique, sample size, data collection and data
analysis. Chapter four will discuss data analysis and presentation of study findings.
29
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
This chapter brings forth the results as acquired from the data analysis done. This
included results relating to the demographical features of the respondents and the specific
research objectives aimed at establishing the internal factors affecting performance of
trucking firms in Kenya
4.1.1 Response Rate
The research issued a total of 53 questionnaires and a total of 50 were filled and returned
giving a response rate of 93%. This was sufficient for the study as indicated in table 4.1
Table 4.1: Response Rate
Variable Frequency Percentage
Filled and returned 50 93
Non-response 3 7
Total 53 100
4.2 General Information
4.2.1 Respondents Gender
On analysing the gender of the respondents revealed that male had the highest
representation at 60%, while female had a 40% representation as shown in figure 4.1.
Figure 4.1: Gender
60.0
40.0
male
female
30
4.2.2 Age of Respondents
On analysing the ages of the respondents only 2% were aged above 50, those of 26-35
were the majority and represented 48%, those aged 36-45 were 14%, and those above 46
of 50 represented 20%, while respondents of 18-25 years represented 14%. This implies
that at trucking firms the employees are young hence have many years to serve however,
the if they choose to seek better options, the firms might collapse.
Figure 4.2: Age of Respondents
4.2.3 Education
With regard to education degree holders were 48%, diploma holders were 18% while
master holder were 8% while those with professional certificates representing 26% as
indicated. This implies that the employees are well educated to work well in their
respective departments as indicated in figure 4.3
Figure 4.3: Education
18-25 26-35 36-45 46-50 Above 50
Frequency 7 24 7 10 2
Percentage 14 48 14 20 4
0
10
20
30
40
50
60
Frequency
Percentage
Diploma Degree MastersProfessional
Courses
Frequency 9 24 4 13
Percentage 18 48 8 26
0102030405060
Frequency
Percentage
31
4.2.4 Work Experience
An analysis of the respondents work experience indicated that 42% have worked for the
firms in a period less that 5 years, 22% on the other hand represented 6-10years. On the
other hand 16% have worked for 11-15 years. Those who have worked for 16-20 years
represented 12% and the oldest group (above 20) were 8% as shown in figure 4.4
Figure 4.4: Work Experience
4.2.5 Management Level
To analyse management levels, the findings revealed that top level managers accounted
for 8% of the total, middle level was 16% while subordinate was 76% as indicated.
Figure 4.5: Management Level
4.3 Impact of Information Technology on Firm Performance
The first objective sough to determine impact of information technology on firm
performance. To achieve this objective respondents were asked to base their argument on
a five scale rating where; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree and
(5) Strongly Agree.
Below 5 6-10 11-15 16-20 Above 20
Frequency 21 11 8 6 4
Percentage 42 22 16 12 8
0
10
20
30
40
50
Frequency
Percentage
Top Level Middle level low level
frequency 4 8 38
Percentage 8 16 76
01020304050607080
frequency
Percentage
32
4.3.1 Descriptive of Information Technology on Firm Performance
The finding indicated that majority agreed that Information technology is a major
contributor organizational performance (m=4.41, sd =0.92). It was also established that
Information technology offer organizations competitive and effective communication
channels (m=4.35, sd=0.818). Results also show that information technology have an
influence on the firms effectiveness and efficiency (m=4.3, sd =0.84). The findings also
indicated that level of application of information technology has an impact on
organizational performance (m=4.05, sd=0.964). It was also agreed that information
systems is a backbone of firms operational activities (m=3.89, sd=1.142). Finally,
information systems offer support services to business operations (m=4.38, sd=0.789).
Table 4.2: Descriptive of Information Technology on Firm Performance
Statement N Mean SD
1 Information technology is a major contributor organizational
performance
50 4.41 0.92
2 Information technology offer organizations competitive and
effective communication channels
50 4.35 0.818
3 Information technology have an influence on the firms
effectiveness and efficiency
50 4.3 0.84
4 Level of application of information technology has an impact on
organizational performance
50 4.05 0.964
5 Information systems is a backbone of firms operational activities 50 3.89 1.142
6 Information systems offer support services to business
operations
50 4.38 0.789
4.4 Impact of Organization structure on Firm Performance
The second objective sought to determine impact of organization structure on firm
performance. To achieve this objective respondents were asked to base their argument on
a five scale rating where ; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree.
4.4.1 Descriptive of Organization Structure on Firm Performance
The results indicated that organizational structure supports effective controls (m=4.22,
sd=0.781). Organizational structure provides a visual explanation of decision making
process and resource allocation (m=4.14, sd= 0.849). It was also established that
33
organizational structure assists management in determining departments and functions in
an organization. (m=4.43, sd= 0.795). There was however uncertainty of
organizations shifting from traditional (one rigid structure) organizational structures to a
hybrid structure. (2 or more organizational structure synchronized to work as ones)
(m=3.76, sd=0.791). The findings also revealed that organizations are redefining and
adjusting their organizational structures to match their strategic activities (m=4.16,
sd=0.794). Also an appropriate organizational structure is crucial in the achievement of
the organization goals and objectives (m=4.38, sd=0.789). In addition, changes in
organizational structure has an effect on organizational performance (m=4.11, sd=1.015).
Table 4.3: Descriptive of Organization Structure on Firm Performance
Statement N Mea
n
SD
1 Organizational structure supports effective controls. 50 4.22 0.78
1
2 Organizational structure provides a visual explanation of
decision making process and resource allocation.
50 4.14 0.84
9
3 Organizational structure assists management in determining
departments and functions in an organization.
50 4.43 0.79
5
4 Organizations are shifting from traditional organizational
structures to a hybrid structure. (2 or more organizational
structure synchronized to work as ones)
50 3.76 0.79
1
5 Organizations are redefining and adjusting their organizational
structures to match their strategic activities.
50 4.16 0.79
4
6 Appropriate organizational structure is crucial in the
achievement of the organization goals and objectives.
50 4.38 0.78
9
7 changes in organizational structure has an effect on
organizational performance
50 4.11 1.01
5
4.5 Impact of employee competence on Firm Performance
The third objective sough to determine impact of employee competence on firm
performance. To achieve this objective respondents were asked to base their argument on
a five scale rating where ; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree.
4.5.1 Descriptive of employee competence on Firm Performance
The study revealed that Employee skills is a major contributor organizations success
(m=4.65, sd = 0.481). Employee skills also offer organizations competitive and effective
34
communication channels (m=4.24, sd =0.755). It was also established that employee
skills have an influence on the firms effectiveness and efficiency (m=4.59, sd =0.547).
Size of the firm has an influence on the level of application of employee skills (m=3.92,
sd = 0.947). Also majority agreed that employee skills is a backbone of firms
operational activities (m=4.59, sd= 0.595) while employee skills offer support services
to business operations (m=4.65m, sd=0.481).
Table4.4: Descriptive of employee competence on Firm Performance
Statement N Mean SD
1 Employee skills is a major contributor organizations success 50 4.65 0.481
2
Employee skills offer organizations competitive and effective
communication channels 50 4.24 0.755
3
Employee skills have an influence on the firms effectiveness
and efficiency 50 4.59 0.547
4
Size of the firm has an influence on the level of application of
employee skills 50 3.92 0.947
5 Employee skills is a backbone of firms operational activities 50 4.59 0.595
6 Employee skills offer support services to business operations 50 4.65 0.481
4.6 Firm Performance
To analyze the performance respondents were asked a set of questions which they were to
rate based on the rating of five; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4)
Agree and (5) Strongly Agree. The findings revealed that competition has an effect on the
firm’s market position (m=4.41, sd=.920). On the other hand, the level offirms efficiency
affects firms internal business processes (m=4.11, sd=1.015). On the other hand,
profitability has an effect on firms financial health (m=4.65, sd=.481).
35
Table 4.5: Firm Performance
Statement N Mean SD
1 Competition has an effect on the firm’s market position 50 4.41 .920
2
Level of firms efficiency affects firms internal business
processes 50
4.11 1.015
3 Profitability has an effect on firms financial health 50 4.65 .481
4.7. Inferential
4.7.1. Multiple Correlation Analysis
A Pearson correlation analysis was done to establish the relationship between the
dependent variable (Firm Performance) against other core factors and the result
established a strong positive relationship between firm performance and Information
Technology (r=0.830, P<0.01), Organization structure (r=0.800, P<0.01), competence
(r=0.175, P>0.05) as indicated in table 4.6. This implies that an increase in IT, structure
and competence led to an increase in firm performance
Table 4.6: Multiple Correlation Analysis
performance IT structure competence
performance Pearson Correlation 1
Sig. (2-tailed)
IT Pearson Correlation .830** 1
Sig. (2-tailed) .000
structure Pearson Correlation .800** .738
** 1
Sig. (2-tailed) .000 .000
competence Pearson Correlation .175 .052 .211 1
Sig. (2-tailed) .136 .657 .071
N 50 50 50 50
**. Correlation is significant at the 0.01 level (2-tailed).
4.7.2 Regression
4.7.2.1 Regression between Information Technology on Firm Performance
The research analyzed relationship between the dependent variable (performance) against
Information Technology. The results showed that the R2 value was 0.688 hence 68.8% of
36
the variation in performance was explained by the variations in internet accessibility as
illustrated in table 4.7.
Table 4.7: Model Summary of Information Technologies on Firm Performance
Model R R Square
Adjusted R
Square
Std. Error
of the
Estimate
Change Statistics
R Square
Change
F
Change df1 df2
Sig. F
Change
1 .830a .688 .684 .33564 .688 158.845 1 48 .000
a. Predictors: (Constant), IT
ANOVA analysis result of the regression between performance against Information
Technology at 95% confidence level, the F critical was 158.845 and the P value was
(0.000) therefore significant the results are illustrated below in table 4.8
Table 4.8: ANOVA of Information Technologies on Firm Performance
Model Sum of Squares df Mean Square F Sig.
1 Regression 17.895 1 17.895 158.845 .000b
Residual 8.111 48 .113
Total 26.006 49
a. Dependent Variable: performance
b. Predictors: (Constant), IT
The regression equation illustrated in Table 4.9 established that taking information
technology into account and other factors held constant firm performance increased by
1.259 and both variables were significant.
Y = β0 + β1X1 + ε
Y = 1.259+ 0.740X1
Where:
Y is the dependent variable (performance)
β0 is the regression constant;
β1 coefficients of independent variables;
X1 information technology, and ε is the error term.
37
Table 4.9: Coefficient of Information Technologies on Firm Performance
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) 1.259 .251 5.009 .000
IT .740 .059 .830 12.603 .000
a. Dependent Variable: performance
b. Predictors: (Constant), IT
.4.7.2.2 Regression between Organization structure on Firm Performance
The research analyzed relationship between the dependent variable (performance) against
organization structure. The results showed that the R2 value was 0.641 hence 64.1% of
the variation in performance was explained by the variations in structure was illustrated in
table 4.10.
Table 4.10: Model Summary of Organization structure on Firm Performance
Model R
R
Square
Adjusted
R Square
Std. Error
of the
Estimate
Change Statistics
R Square
Change
F
Change df1 df2
Sig. F
Change
1 .800a .641 .636 .36022 .641 128.421 1 48 .000
a. Predictors: (Constant), structure
ANOVA analysis result of the regression between performance against organization
structure at 95% confidence level, the F critical was 128.421 and the P value was (0.000)
therefore significant the results are illustrated below in table 4.11.
Table 4.11: Anova of Organization structure on Firm Performance
Model Sum of Squares df Mean Square F Sig.
1 Regression 16.664 1 16.664 128.421 .000b
Residual 9.343 48 .130
Total 26.006 49
a. Dependent Variable: performance
b. Predictors: (Constant), structure
The regression equation illustrated in Table 4.12 established that taking organization
structure into account and other factors held constant firm performance increased by
0.992 and both variables were significant.
38
Y = β0 + β1X1 + ε
Y = 0.992+ 0.814X1
Where:
Y is the dependent variable (performance)
β0 is the regression constant;
β1 coefficients of independent variables;
X1 structure, and ε is the error term
Table 4.12: Coefficient of Organization structure on Firm Performance
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) .992 .303 3.278 .002
structure .814 .072 .800 11.332 .000
a. Dependent Variable: performance
b. Predictors: (Constant), structure
4.7.2.3 Multiple Regression Model
The reseаrch аnаlyzed relаtionship between the dependent vаriаble (performance) аgаinst
co fаctors (information technology, organization structure, and employee competence).
The results showed thаt the R2 vаlue wаs 0.770 hence 77% of the vаriаtion in
performance wаs explаined by the vаriаtions in information technology, organization
structure, and employee competence аs illustrаted in tаble 4.13.
Table 4.13: Model Summary of performance аgаinst co fаctors
Model R R Square
Adjusted R
Square
Std. Error of
the Estimate
Change Statistics
R Square
Change
F
Change df1 df2
Sig. F
Change
1 .877a .770 .760 .29245 .770 78.026 3 47 .000
a. Predictors: (Constant), competence, IT, structure
ANOVA analysis result of the regression between performance against co factors at 95%
confidence level, the F critical was 78.026 and the P value was (0.000) therefore
significant the results are illustrated below in table 4.14.
39
Table 4.14: Anova analysis of Performance аgаinst Co fаctors
Model Sum of Squares df Mean Square F Sig.
1 Regression 20.019 3 6.673 78.026 .000b
Residual 5.987 46 .086
Total 26.006 49
a. Dependent Variable: performance
b. Predictors: (Constant), competence, IT, structure
The regression equаtion illustrаted in Tаble 4.15 estаblished thаt tаking information
technology, organization structure, and employee competence into аccount аnd other
fаctors held constаnt performance increased by 0.238 units.
Y = β0 + β1X1 + β2X2 + β3X3 + ε
Y = 0.238 + 0.481X1 + 0.396X2 + 0.105X3 + 0. 29245
Where:
Y is the dependent vаriаble (Consumer sаving);
β0 is the regression constаnt;
β1, β2, β3 аnd β4 аre the coefficients of independent vаriаbles;
X1 is information technology;
X2 is organization structure;
X3 is competence; аnd
ε is the error term.
Table 4.15: Coefficients of Performance аgаinst Co fаctors
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) .238 .460 .517 .607
IT .481 .077 .539 6.263 .000
structure .396 .089 .389 4.426 .000
competence .105 .097 .064 1.085 .282
4.8 Chapter Summary
The chаpter presents the results аnd findings attained from the dаtа analysis done. The
first section presents the demogrаphy dаtа, in the subsequent section the findings are
outlined in line with the specific research objectives which sought to determine influence
of information technology on firm performance; to assess the influence of organization
40
structure on firm performance; and to examine the relationship between employee
competence and firm performance. Chаpter five will present the discussions, conclusions
аnd findings of the study.
41
CHАPTER FIVE
5.0 DISCUSSIONS, CONCLUSSIONS АND RECOMMENDАTIONS
5.1 Introduction
This section seeks to аnаlyse the findings and this will be done by comparing previous
literature related firm’s performance. This will be organized based on the specific
research questions which sought to determine the influence of information technology,
influence of organization structure and the relationship between employee competence
and firm performance.
5.2 Summary of the Study
The general objective of this study was to investigate the internal factors affecting
performance of trucking firms in Kenya. To achieve this, the study was guided by specific
objective which sought to determine influence of information technology on firm
performance; to assess the influence of organization structure on firm performance; and to
examine the relationship between employee competence and firm performance.
This study adopted a descriptive research design, descriptive approach was also applied
since it enabled the researcher to use quantitative data so as to find common
characteristics about the population or phenomena being studied. The target population
for this study comprised of 105 top management, middle level management and
subordinate staff across the organization. Since the population is divided into the various
categories of top management, middle level management and subordinate staff, a
stratified random sampling was used to collect data from the various strata of the
respondents. This technique ensure full representation of all respondents and eliminate
the aspect of biasness. Stratifying the entire population ensured a sample that accurately
reflects the population being studied. From the initial target population of 105, this being
more than 100 but less than 500, and guided by the rule of thumb a quota of 50% was
drawn from each strata. The study used a structured questionnaire as a data collection tool
to collect both qualitative and quantitative data.
The first objective sought to determine impact of information technology on firm
performance. The finding indicated that majority agreed that Information technology is a
major contributor to organizational performance. It was also established that Information
technology offer organizations competitive and effective communication. Results also
show that information technology have an influence on the firm’s effectiveness and
42
efficiency. The findings also indicated that level of application of information technology
has an impact on organizational performance. It was also agreed that information systems
is a backbone of firm’s operational activities. Finally, information systems offer support
services to business operations. The research analyzed relationship between the
dependent variable (performance) against Information Technology. The results showed
that the R2 value was 0.688 hence 68.8% of the variation in performance was explained
by the variations in internet accessibility.
The second objective sought to determine impact of organization structure on firm
performance. The results indicated that organizational structure supports effective control.
Organizational structure provides a visual explanation of decision making process and
resource allocation. It was also established that organizational structure assists
management in determining departments and functions in an organization.. The findings
also revealed that organizations are redefining and adjusting their organizational
structures to match their strategic activities. Also an appropriate organizational structure
is crucial in the achievement of the organization goals and objectives. In addition,
changes in organizational structure has an effect on organizational performance. The
research analyzed relationship between the dependent variable (performance) against
organization structure. The results showed that the R2 value was 0.641 hence 64.1% of
the variation in performance was explained by the variations in structure.
The third objective sough to determine impact of employee competence on firm
performance. The study revealed that Employee skills is a major contributor organizations
success. Employee skills also offer organizations competitive and effective
communication channel. It was also established that employee skills have an influence on
the firm’s effectiveness and efficiency. Size of the firm has an influence on the level of
application of employee skills.
Also majority agreed that employee skills is a backbone of firms operational activities
while employee skills offer support services to business operations.
5.3 Discussion
5.3.1 Impact of information technology on Firm performance
The finding indicated that majority agreed that Information technology is a major
contributor organizational performance. A review of the effect of ICT on firm
performance by Timothy (2016) found out that the effects of ICT on performance is not
43
homogenous. According to Janusz (2014) there exist more or less advanced technologies
apart from telematics such as; detectors and sensors, making possible the remote
measurement of the state of means of transport, satellite communication systems that
enable transmission of information over longer distances, database and data warehouse
make possible information storage as well as rapid processing (Janusz, 2014).
It was also established that Information technology offer organizations competitive and
effective communication. According to Kitheka (2014) firms today are in great need of
information for performance as it enables managers to make more informed decision and
generally better decisions. Kitheka (2014) found out that; it is important for organizations
to consider the interest of all stake holders to fully realize the benefits of implementing
technology. Kitheka (2014) also acknowledged that technology can lead to process
efficiency and effectiveness, not forgetting improved customer satisfaction.
Results also show that information technology have an influence on the firm’s
effectiveness and efficiency. Using information technology in supply chain is considered
a significant tool to enhancing organizational performance as it helps firms accumulate
knowledge (Al-Fawaeerl,2013). A study by Al-Fawaeerl (2013) on the impact of
information technology in enhancing supply chain performance on the textiles companies
in Jordan found out that textile firms in Jordan acknowledged the benefits and positive
impacts of information technology that support supply chain performance.
A study on factors affecting information technology acceptance, willingness and adoption
in logistics industry from supply chain perspective was performed by Tsan-Hwan, (2014).
The study was conducted on the Taiwanese logistics industry from a cross-organizational
perspective, the research found out that, perceived easiness, perceived usefulness and
social norms do not have a substantial, direct correlation with the actual adoption, but
supply chain relationship does. Thus to make technology adoption to be a success,
logistics firms should learn together and share resources with their partners through
strategic alliance (Tsan-Hwan, 2014).
The findings also indicated that level of application of information technology has an
impact on organizational performance. A review on the impact of information technology
capability on firm performance by Ahmad (2014) focused on employee-customer profit
chain. According to Ahmad (2014) one of the guidelines in organization success is
employee-customer profit chain. In his study he also states that, strong relationships have
44
been found between, employees’ attitudes and behaviors, employees’ behaviors and
customer impression, and customer impressions and revenue growth. One of the factors
that can influence this process is information technology. The results of study showed that
I.T capability tends to enhance this relationship and thus firm performance.
The research analyzed relationship between the dependent variable (performance) against
Information Technology. The results showed that 68.8% of the variation in performance
was explained by the variations in internet accessibility. The effects of information
technology on performance of logistics firm in Nairobi was studied by Macharia (2015),
his studied acknowledged the positive influence of information technology on firm
performance. Among the areas investigated by the study include: level of IT usage among
firms, security and tracking and customer service delivery.
5.3.2 Impact of organization structure on Firm performance
The results indicated that organizational structure supports effective control, similar
results have been established before for instance, a study on impact of decentralized
decision making on firm performance was established by Bashir (2015), the study was
conducted in Pakistan and took the example of Honey well, Google, Toyota and other
different sectors of Pakistan. The study found out that, ultimate performance of a firm
increases with decentralization. Thus as the communication and cooperation of the top
level management with middle and lower management increases, the organizational
performance increases.
Organizational structure provides a visual explanation of decision making process and
resource allocation. A study developed by Margareth (2017) on organizational structure,
service capability and its impact on business performance of logistics providers in the
B2B Context. The inquiry was done in South Brazil and it aimed at verifying what
aspects related with organizational structure and service capability contribute to the
performance of logistic providers in the business to business context with client
companies in supply chains. The study found out that technical quality and capacity of
operations of logistic firms generated direct and reciprocal impacts on their performance
and performance of client companies as well.
It was also established that organizational structure assists management in determining
departments and functions in an organization. A study carried out on the impact of
organization structure on organization performance by Sylvia (2015) also indicated the
45
same. The findings revealed that organization structure has an impact on organization
performance, it also indicated that there is a relationship between specialization of work
process and labor productivity. Thus organizational structure affect the behavior of
employees in the organization. In general performance of a firm largely depends on its
structure through defining task clearly.
The findings also revealed that organizations are redefining and adjusting their
organizational structures to match their strategic activities. A study was administered by
Nedal (2013) on defining and solving organizational structure problems to improve the
performance of ministry of state for environmental affairs in Egypt. The study aimed at
providing more acuity on organizational issues and their solution for the ministry of state
for environmental affairs. The author defined organizational structure as the way an
organization arranges people and jobs so that its work can be performed and its goals met.
In conclusion the writer found out that structured problem solving is the most useful way
to improving the performance of organization.
Also an appropriate organizational structure is crucial in the achievement of the
organization goals and objectives. Adeleye (2016) study on the impact of organizational
structure on the performance of the Nigerian securities exchange commission. The study
found out that, the Nigerian securities exchange commission structure is mechanistic, a
kind of bureaucratic set up that hinders responsiveness to changes in a rapidly changing
business environment. It was also found out that the existing structure accounts for the
weakness and failures of NSEC in effective sanctioning of saboteurs and defaulters,
capital market efficiency and stable growth. The study recommended that the current
organization structure needs to be changed to match the current pace and intensity of the
business environment.
The research analyzed relationship between the dependent variable (performance) against
organization structure. The results showed that 64.1% of the variation in performance was
explained by the variations in structure. An inquiry on flat organizational structures was
conducted by Julie (2012). The focus of her study was to show that flattened firms can
exhibit more control and decision making at the top thus going against their intended
purpose. In conclusion Julie (2012) states that the flattened firm has fewer levels and
broader spans of control. The flattened firm also appears to rely on more coordination
among the top team. She also states that, it is a complex phenomenon that in the end it
46
looks more like centralization. A review of organizational structure and performance of
large manufacturing firms in Kenya was carried out by Zachary (2015), in his paper
aimed at determining the influence of organizational structure on performance of large
manufacturing firms. The author found out that organizational structure positively
influences the firm’s performance.
5.3.3 Impact of Competence on Firm performance
The study revealed that employee skills is a major contributor organizations success. A
study on the effect of individual competencies on performance in services industries in
Turkey was reviewed by (Halil, 2013). The research was limited to banking, cargo,
communication, food and catering, finance, publishing, retail, I.T and tourism companies.
The findings indicate that there is a positive relationship between competencies and
individual performance. Core competencies appeared to have the most significant effect
on individual performance.
Employee skills also offer organizations competitive and effective communication
channel. A research on the effect of core competence on competitive advantage and
organizational performance was performed by (Sabah, 2012). The study was conducted
on paint industry in the United Arab Emirates. The findings of the research indicated that
while core competence has a strong and positive impact on competitive advantage and
organizational performance, competitive advantage has also a significant impact on
organizational performance. A surprising result of the findings showed that when it
comes to organizational performance, managerial competence appeared to be the most
significant factor. It was also established that employee skills have an influence on the
firm’s effectiveness and efficiency. A study on determining the importance of
competency and person-job fit for the job performance of service SMEs employees in
Malaysia was performed by (Sethela, 2013). The main objective of the research was to
investigate on the relationship that may exist between: competency, person-job fit and
employee’s job performance. The results showed significant relationship between
competency, person-job fit and employee’s job performance. Thus in order to improve
performance of employee’s job performance, serious attention must be given to issues
related to employee’s competency.
Also majority agreed that employee skills is a backbone of firm’s operational activities.
An examination of the relationship between human capital and business performance was
47
conducted by (Sarminah, 2013). The study was done on managerial staff in Malaysian
logistics companies. The findings unveiled that all aspects of human capital contributed
significantly to business performance. The results also showed that competency and
creativity as the main factors that influenced business performance. An inquiry was
conducted by Aidah (2013) on effects of training on employee performance. The research
was conducted on the telecommunications industry in Uganda. The investigation
discovered that training and development have an impact on the performance of
employees. A coordinated study Antwi (2015) on employee’s competency and
organizational performance in the pharmaceutical industry. The inquiry was done in
Ghana. The results showed that employee’s competence contributed immensely to
performance of the entire organization.
The finding also revealed that employee skills offer support services to business
operations.. A study on human resource practices and employee competence was carried
out by (Mohammed, 2014). The focus of the study was on proving the viability of general
system theory when applied to the relationship between human resource practices and
employee competence. In conclusion the application of the theory illustrated the
effectiveness of human resource practices in enhancing employee’s competence at the
firm level. Petra (2013) on management competencies and organizational performance in
CEE. The findings did not show a clear answer to the question “which managerial
competencies are crucial” for the case of Slovenia, which was attributed to structural
reforms in the Slovene economy. The Austrian samples however revealed a link between
leadership, turnover and human resource. Leadership was emphasized as the key
competency in management for the case of Austria. On the other hand, study performed
by Havidz (2017) on the model of employee performance. The study aimed to analyze the
effect of competency and work motivation on employee performance. The results showed
competency and work motivation simultaneously had a significant positive impact on
performance. A look at a study conducted by Ovidiu-Iliuta (2013) on employee
motivation and organizational performance, show that a motivated and qualified
workforce is essential for any company that needs to increase productivity and customer
satisfaction. It is until this needs are met that people will focus more on job performance.
Thus he suggests that firms should use employee suggestion schemes and use the
feedback from the workforce to improve the organizational environment.
48
5.4 Conclusion
5.4.1 Impact of Information Technology on Firm performance
Information technology plays a major role in the performance of organizations in the
banking sector. This is due to the fact that it offers to the organizations competitive and
effective communication channels. Results also show use of information technology has
an influence on the firm’s effectiveness and efficiency based on the level of application of
information technology. In addition, information systems form that backbone of firm’s
operational activities and offers support services to business operations.
5.4.2 Impact of organization structure on Firm performance
Organizational structure supports effective controls as well as offers a visual explanation
of decision making process and resource allocation. Thus the organizational structure
assists management in determining departments and functions within the firm. Despite the
shift from traditional to hybrid structure there is still uncertainty. Due to trends in the
sector, organizations are now redefining and adjusting their organizational structures to
match their strategic activities.
5.4.3 Impact of competence on Firm performance
Employee skills are a major contributor organizations success by competitive and
effective communication channels. This also plays a crucial role in influencing on the
firms effectiveness and efficiency and the level of competence varies with the size of the
firm has an influence on the level of application of employee skills which is considered
backbone of firms operational activities as it offer support services to business operations.
5.5 Recommendation
5.5.1 Recommendation for Improvement
5.5.1.1 Impact of information technology on Firm performance
Trucking firms needs to ensure they maintains their position in the market by ensuring
they adopt the latest technology use in order to maintain a competitive edge over
competitors. This need to be done by ensuring employees have the right skills and know -
how of operating the systems. The trucking industry also needs to ensure effectiveness
and efficiency by use of this systems.
49
5.5.1.2 Impact of organization structure on Firm performance
Trucking firm’s need to have in place, a well-functioning structure that supports effective
controls, this will ensure that there is effective decision-making process and resource
allocation. For firms to remain efficient, organizational structure should be well
structured in order to assists management in determining the functioning in the
organization.
5.5.1.3 Impact of Competence on Firm Performance
Trucking firms should ensure that their employee have the necessary skills so as to
maintain competitiveness and effective communication channels. There is also a need for
the firms to maintain skills sets that support the day to day operations so as to positively
influence the firms effectiveness and efficiency.
5.5.2 Recommendations for Further Research
This study looked at how research aimed to determine how information systems,
organizational structure, and employee competence influenced performance of trucking
firms. There is a need to undertake a similar study to determine how other factors such as
organizational leadership, organizational culture and resource allocation affect the sector.
50
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APPENDICES
APPENDIX I: INTRODUCTION LETTER
Ali Farhan Abdi
United States International University
P.O. BOX 14634-00800
Nairobi, Kenya
Date: 07/02/2018
Dear Respondent,
RE: FACTORS AFFECTING PERFORMANCE OF TRUCKING FIRMS: A CASE
OF DAKAWOU TRANSPORT LIMITED
I am a graduate student at United States International University pursuing a Master’s
degree in Business Administration (MBA) with a concentration in Strategic Management.
In partial fulfillment of the requirement for the degree, I am conducting a study to
determine the factors affecting of performance of trucking firms: A Case Study of
Dakawou Transport Limited.
Your participation is of great importance for the accomplishment of this study and it will
be highly appreciated. The information provided by the respondents will be protected by
the principle of confidentiality and a high degree of anonymity will be maintained.
Should you have any questions or concerns with regards to the questionnaire, kindly do
not hesitate to contact me through the contact provided below. I would like to express my
sincere gratitude and appreciation for your cooperation in advance.
Thank you in advance.
Yours Sincerely,
Ali Farhan Abdi
Tel: +254-729 310 209
Email: [email protected]
73
APPENDIX II: QUESTIONNAIRE
SECTION A: GENERAL INFORMATION
Kindly Respond to the questions below by ticking in the boxes provided
1. What is your Gender?
Male
Female
2. What is your age range in years?
Less than 25
26-35
36-45
46 and over
3. What is your highest level of education?
Diploma
Degree
Masters
Other
4. Number of years worked in the organization
Less than 5
5-10
15-20
More than 20
5. Management Level
Top Management
Middle level Management
Subordinate Staff
74
SECTION B: Influence of Information Technology on Performance
Basing on the rating of five; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree, share your opinion by putting a tick
Statement 1 2 3 4 5
1 Information technology is a major
contributor organizational performance
2 Information technology offer organizations
competitive and effective communication
channels
3 Information technology have an influence on
the firms effectiveness and efficiency
4 Level of application of information
technology has an impact on organizational
performance
5 Information Technology is a backbone of
firms operational activities
6 Information Technology offer support
services to business operations
What other organizational information system factors affects performance in your
organization______________________________________________________________
________________________________________________________________________
________________________________________________________________________
75
SECTION C: Influence of Organizational Structure on Firm Performance
Basing on the rating of five; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree, share your opinion by putting a tick
Statement 1 2 3 4 5
1 Organizational structure supports effective controls.
2 Organizational structure provides a visual explanation of
decision making process and resource allocation.
3 Organizational structure assists management in
determining departments and functions in an
organization.
4 Organizations are shifting from traditional (one rigid
structure) organizational structures to a hybrid structure.
(2 or more organizational structure synchronized to work
as ones)
5 Organizations are redefining and adjusting their
organizational structures to match their strategic
activities.
6 Appropriate organizational structure is crucial in the
achievement of the organization goals and objectives.
7 changes in organizational structure has an effect on
organizational performance
What other organizational structure factors affect performance in your organisation
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
76
SECTION D: The Relationship between Employee Competence and Firm
Performance
Basing on the rating of five; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree, share your opinion by putting a tick
Statement 1 2 3 4 5
1 Employee skills is a major contributor
organizations success
2 Employee skills offer organizations
competitive and effective communication
channels
3 Employee skills have an influence on the
firms effectiveness and efficiency
4 Size of the firm has an influence on the level
of application of employee skills
5 Employee skills is a backbone of firms
operational activities
6 Employee skills offer support services to
business operations
What other skill factors affects performance in your
organization______________________________________________________________
________________________________________________________________________
________________________________________________________________________
77
SECTION E: Firm Performance
Basing on the rating of five; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree, share your opinion by putting a tick
Statement 1 2 3 4 5
1 Competition has an effect on the firm’s
market position
2 Level of firms efficiency affects firms
internal business processes
3 Profitability has an effect on firms financial
health
