ABSTRACT
In the global economy of the 21st century competition is complex and intense. Without effective strategic leadership, manufacturing firm‟s efforts to achieve and sustain competitive advantage are greatly constrained. Organizational effectiveness emanating from strategic change is significant for an organization to achieve competitive advantage. Effective strategic leadership guides organizations to enhance strategic change whilst competing in turbulent and unpredictable environment. However, past results had demonstrated the importance of strategic leadership on strategic change; but few had empirically examined its effects on its effectiveness on organization processes with its distinctive strategic significance indicating consistence results. This study therefore, sought to examine the effect of strategic leadership on strategic change in the paper and board manufacturing firms in Kenya. The study was guided by Upper Echelon Theory. The objectives of the study were; to determine the effect of transformational leadership on strategic change, effect of transactional leadership on strategic change and the joint effects of both transactional and transformational leadership on strategic change in the paper and board manufacturing firms in Kenya. The target population comprised 84 paper and board manufacturing firms in Kenya with a sample of 70 firms used for the study. To achieve the objectives of the study, primary data was collected using a closed-ended structured questionnaire which was administered to the chief executive officers of the firms. The relationship between transformational and transactional leadership on strategic change was tested using Pearson„s correlation and the effect of strategic leadership on strategic change was tested using multiple regression analysis. The findings were presented using charts, graphs and tables. The results revealed a significant positive relationship between transformational leadership and strategic change (r=0.330, p<0.01). There was also significant relationship between transactional leadership and strategic change (r=0.348, p<0.01). The study also demonstrated that transactional leadership were more effective on strategic change (β = 0.314) followed by transformational leadership on strategic change (β = 0.287). The study concluded that transformational and transactional leadership exploits and maintains core competencies on the paper and board manufacturing firm‟s strategic change implementation. Strategic leaders to initiate strategic change they need to know when and how to apply either transformational or transactional leadership. From the conclusion, the study recommends that executives in organizations need to engage employees when introducing strategic change. The approach ensures the achievement of strategic competitive advantage and reduces resistance to strategic change. The study, also recommended skill enhancement for strategic leadership, coaching and mentorship plans to enhance strategic leadership capacity to initiate strategic changes in their organizations.
CHAPTER ONE
INTRODUCTION
Background of the Study
This chapter provides information about the background of the study, strategic change, strategic leadership, paper, and board firms manufacturing firms in Kenya, objectives of the study, the statement of the problem, research hypothesis, the significance of the study, scope, and limitation of the study and the assumptions of the stud. The background to the study provides a brief overview of the paper and board firms in Kenya. It helps clarify the cause of the issue and indicate the improvement of the research problems stresses the existence of the problem investigation and how should be addressed.
In the global economy of the 21st-century business environment is competitive, complex, intense and challenging. Strategic leadership poses characteristics such as ability in anticipation, visionary, flexibility, and thinking more strategically to initiate and implement strategic changes in order to create a competitive advantage for organizations. According to Daft (2011), there is a revelation that despite the long history of research on leadership, only recently organization behavior scholars have started to single out strategic leadership as a focus of attention in strategic management as a discipline of study.
According to Narayanan and Zane (2009), strategic leadership is a central theme in today‟s organizations in transforming strategic objective intentions and strategic change initiations and has been considered as one of the principal factors face the business units in the 21st century. Nevertheless, little empirical evidence has been emerging on the effectiveness of strategic leadership on strategic change implementation in organizations with distinct strategic importance. Elenkov, Judge and Wright (2008) in examining the impact strategic leadership play on strategic change, they suggested that top management team leaders who wish to influence creativity and innovations should possess certain characteristics critical in determining a strategic direction that firm intents to take.
A study conducted by Boal and Hooijberg (2001), on the role strategic leadership play in strategic change implementation within firms; found out that the importance of strategic leadership is experienced-based on the prevailing market conditions of uncertainty. In the same study, they concluded that strategic leadership influences strategic change processes. The successful implementation of strategic changes is majorly associated with uncertain economic challenges and some impediments. Wheeler, McFarland, and Kleiner (2007) contend that the quality of individual strategic leadership really matter and evidence has been emerging that reinforces these advancing views. Strategic leadership in firms is likely to scan the environment to increase shareholders‟ returns through enhancement of strategic leadership capabilities in order to achieve superior organizational strategic change. However, they identified a gap between the effective implementation of strategic change and further suggested that the effectiveness of strategic leadership on strategic change initiation really matter in uncertain environmental conditions that manufacturing firms encounter.
A study by Sanders and Davey (2011) on the effect of strategic leadership on strategic change in the competitive firms revealed that strategic leadership contributes positively to the organization's effectiveness. To effectively manage strategic change initiation in the new paradigm shift, firms require certain characteristics regarded as important influencers of strategic change considered useful to navigate firms during intense competition. Consequently, the changing economic dynamics requires strategic leaders gifted in managing strategic changes at the top. They further suggested that the reason for the difficulties in achieving and maintaining strategic leadership effectiveness was due to ill-preparedness in strategic leadership (Sanders et al., 2011). The importance of strategic leadership is acknowledged infirm; however, the question of the criteria for strategic leadership successes and how it manifests itself into superior strategic change implementation in the organizations has not been established empirically by past research.
Strategic Change
Pearce and Robinson, 2009, strategic change is transformative and is usually disruptive in nature but successful execution lead to increased competitive advantage since firms differentiate and position themselves in the market to enjoy the benefits associated with a competitive advantage (Gilley, Gilley, & McMillan, 2009).
Armstrong (2012) viewed strategic change as a relationship between systems, procedures, and technological progress which has greater or immediate impact on the working arrangements within the organization. The ability to initiate strategic changes involve others stakeholders who bring about key success and motivational using reward based on the strategic change (Elenkor, 2002). The reshaping of the organizational product lifecycle occupies the leaders time by giving opportunities to clarify on strategic intents in building high strategic change to create a better fit between strategy and product. The processes of product developments bring close alignment between customers and the sales personnel in an organization (Yabs, 2010). The organizations have to respond appropriately and in a proactive manner to realign with the environment.
Edgar, 2002 opined that some firms seem to thrive in strategic change implementation by being proactive in strategic thinking and planning, they continuously engage subordinate in a way that they do not only survive but also excel. Similarly, Gilley, Gilley, and McMillan (2009) argue that organizations remain competitive when they support and implement strategic changes continuously in a transformational manner. However, strategic change literature suggests that firms endowed with strategic leadership competencies or skills tend to report greater satisfaction for both customer and employee thus earning superior returns back to the shareholders. Research conducted by Laboritz and Ronansky (2007) contend that firms properly aligned with the environment were likely to achieve above-average profits with their ability to satisfy employees, re-engineer the production processes, customers and innovate new products.
Strategic changes in products development are one way to identify success factors against which executives evaluate firm's competencies in relative to how its product is measured (Peace & Robinson, 2013). The product development move in sequence or steps in profitability returns, hence the growing needs to continuously evaluate and match firms with the environmental demands. Product development may take place owing to changing customer preferences. In this regard, strategic changes become critical where enterprises have to achieve synergies through business and support units that embrace strategic leadership (Kaplan & Norton, 2006). An enterprise's key focus is on changing the business strategies to meet the challenges of emerging new technologies. The changes in strategic direction and the demands require firms to meet market expectations in the attainment of better fit by properly aligning with corporate strategic objectives. In a study by Labovitz and Rosansky (2004) study on the alignment of firms in processing enterprises revealed that even if the organization's strategies were aligned and integrated with all organization's units, little will be achieved unless employees were motivated to help the organization implement strategic changes continuously by its strategic leadership. According to Fonvielle and Carr (2001), strategic changes involve common agreements about goals and means of achieving the agreed goals.
Gilley, Gilley, and McMillan (2009) argued that organizations remain competitive when they support and implement strategic changes in a more transformational manner. Researchers have thus sought to explain the fundamental of strategic change, how to manage strategic changes and why is it difficult to be managed during the implementation phase. The management of strategic changes is required where there is intense pressure for example during the introduction of the new executive officers as well as making structural changes in the composition at the top echelon. The growing need by firms to gain stakeholder support in strategic change management initiation calls for strategic leaders who are of paramount importance to bring about strategic changes to the extent to which they implement the required changes by providing strategic thinking mindset (Gilley, Gilley, & McMillan, 2009).
Strategic Leadership
There is extended literature on strategic leadership adequateness since 2000‟s. One of the assumptions is strategic leadership which stands out is the theories and hypotheses (Aslan, Dicken, & Aslan 2009). Researchers have different opinions and definition of strategic leadership which remains to be a contentious issue amongst strategic management practitioners and scholars. According to Atwater, Copeland, and Hunt (2010), strategic leadership influences organizations directly by inspiring teamwork to initiate strategic change. They motivate team members through designing a participatory approach in setting vision and mission statement considered useful in guiding the employees perform their work in fullness and also implementing strategic changes accordingly. Thus, strategic leadership has a positive effect on the achievement of long-term strategic objectives.
A study by Rowe (2001) who examined how successful companies attain their strategic goals by comparing their strategic leadership capabilities and organizational success concluded that strategic leadership creates the most wealth for the firms than managerial leadership. By providing strategic leadership firm‟s chief executive's officers‟ role is considered critical in identifying alternative causes of action by the top management teams in creating a sense of direction and realign mission drift. In recent years, the attention of strategic leadership scholars has shifted to top executive management teams who are considered to be in a better position to exert a strong influence on the firm's strategic direction and the overall strategic change initiatives of the organizations (Sosik, Jung, Berson, Dionne, & Jaussi 2005).
A study by Duane and Hitt‟s (2001) on characteristics of strategic leadership, found out that the leadership has good abilities in anticipating, envisioning, maintaining flexibility and empowering of the subordinate to create and initiate strategic changes as determined by environmental forces. According to Serfontein‟s (2009) revealed that the concept strategic leadership emerged from the discipline of strategic management which involves the determination of strategic direction; exploring and maintaining unique core competencies by the development of human capital; the sustaining of an effective organizational culture; emphasizing ethical practices, and establishing of balanced organizational controls. Other scholars like Vera and Grossan (2004) jointly refer strategic leadership as the executive work of the top management teams in an organization who majorly determines organization‟s strategic direction.
A study by Barney (2007) on the influence of strategic leadership on strategic change in organizations found out that leadership is one of the influencers in the organization's success whether for profit or not. It is important for the top management teams to understand how strategic leadership influences organizations strategic decision. This will enable firms to take steps in initiating desirable strategic changes that are required to continuously empower strategic leadership with the capacity to transform firms positively in terms of identity and direction. However, in defining, conceptualizing, and measuring the strategic change initiatives, success in implementation of strategic changes has not been an easy task.
Chong and Chong (2008) suggested that strategic leadership facilitates strategic change initiatives in the organization. The leadership guide organizations to meet corporate objectives by way of creating a vision, energizing the team through transformative leadership, and To outperform other competitors, modern firms are rapidly deploying strategic leadership skills to enter uncontested markets and measure the extent to which they guide and initiate strategic changes by providing strategic thinking mindset. (Pearce & Robinson 2006). Strategic leadership aligns firms to match and initiate broader strategic changes in order to attain effectiveness and efficiency in the way they allocate resources and establishment of structures to enable the initiation of strategic changes in business operations. Their capacity to marshal resources makes strategic leadership more competitive in preparing adequately for strategic change when faced with the ever-growing external pressure that includes globalization, deregulation and technological innovation (Chong & Chong, 2008).
Paper and Board Manufacturing Firms in Kenya
The paper and board manufacturing sector in Kenya (KAM, 2014) is classified under private firms. To succeed in the operations and increase returns to stakeholders, firms have to respond to environmental uncertainty by initiating broader strategic changes continuously using strategic leaders. These firms in the sector consider strategic leadership as one of the broader schemes deployed to enhance superior strategic changes and attain competitive advantage to survive firms have to monitor the environment they operate in, in order to initiate strategic changes and remain relevant in the achievement of competitive advantage (Mathura, 2009).
As a result of globalization, the sector in Kenya has been under intense pressure to improve on the quality of the products and at the same time reduce production costs by the deployment of skillful strategic leaders who initiate strategic changes in the achievement of the strategic objectives that have been emerging. The sector is regulated by the government through state agencies like Kenya forestry research institute (KEFRI) and Kenya forestry services (KFS) which are mandated by the Act of Parliament to manage forestry resources. The responsibilities of these agencies are to conserve, sustain forestry development and ensure proper utilization of the country‟s forestry resources for both present and the future generations.
Republic of Kenya (2009) report on the paper and board firms, the sector is divided into primary production that includes poles, logs, timber, paper, and board whilst secondary production that includes furniture, fixtures, charcoal, briquettes, fuel, and joinery products. The paper and board products firms (GOK, 2005) export processing zones (EPZ) provides general information on the sector‟s opportunities for investment with some requirements for both local and foreign investors. The private companies exist with profit maximization mindset through proper deployment of resources in the most strategic manner and promoting of foreign trade (GOK, 2005).
Paper and Board manufacturing firms were identified amongst those undergoing strategic changes from the time the county governments were constitutionally promulgated way back in 2010. As part of the measures to increase the county governments resources, the firms had been considering deploying strategic leadership to initiate emerging strategic changes more strategically to align with strategic changes in the environment. The regulations and demands from the external environment justify the need for the management of strategic changes as a critical element that requires the attention of strategic leadership to address. To achieve a better fit, firms have to plan ahead and prepare themselves for increased global competition from either, the new entrants in the market or other emerging firms with superior technologies (the Republic of Kenya, 2009).
Kenya Association of the manufacturer, (2014) the firms in the sector are not fully developed to full potential to meet the market export demand, but the industry envisages some good prospects for expansion to a modern technology in the near future for increased outputs. The current status of hectares covered by the industry is estimated at one hundred and fifty-nine thousand eight hundred widely distributed in Central, Coast, Rift Valley, Western and Eastern. There are 84 paper and board firms in Kenya (KAM, 2014). The Government encourages the use of appropriate technology aimed at cutting down on the production costs, reduction of wastages by making high-quality products which can be exportable to the world market. According to (KAM, 2014) the sector plays a key role in national development and contributes five to six percent of Kenya's gross national product (GDP). At the time of this study, the sector had directly and indirectly employed over two hundred and seventy thousand people (the Republic of Kenya, 2015). Thus, the sector was considered suitable in the context of the study because the firms are expected to adopt strategic leadership to initiate and enhance strategic changes for superior strategic change actions.
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Item Type: Kenyan Topic | Size: 66 pages | Chapters: 1-5
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