Mediating Effect of Competitive Strategy Between Entrepreneur Characteristics and the Performance of Non‑timber Forest Product SMEs in Kenya

Abstract

Although entrepreneur characteristics and competitive strategy are dominant constructs within business studies, there is still no consensus about how they act jointly to influence firm performance. The paper, therefore, tries to expand the understanding of the joint and individual effects of entrepreneur characteristics and competitive strategy on firm performance in the context of resource-based view advancing that sustainable competitive advantage can be obtained by being in possession of strategically relevant resources and capabilities. The sample units are selected using stratified random sampling procedures and data collected by administering a questionnaire to 314 entrepreneurs dealing with non-timber forest products in Kenya. The data is analyzed using multiple linear regression analyses. The results reveal that: (1) a significant relationship exists between entrepreneur characteristics and firm performance before the introduction of competitive strategy in the relationship; (2) a non-significant relationship prevails between entrepreneur characteristics and firm performance after the introduction of competitive strategy; (3) entrepreneur characteristics influence competitive strategy; and (4) competitive strategy influences firm performance. The observations meet conditions defined for mediating effect. It is concluded that the relationship between entrepreneur characteristics and firm performance is indirect and hidden requiring mediation of strategy. Thus, an integrated fit between the entrepreneur and strategy improves firm performance. The findings strengthen arguments advanced by the resource-based view that firms can obtain sustainable competitive advantage through their strategically relevant resources. The theoretical contribution of the study is the integrated approach and review of the multidimensional alignment of strategy with entrepreneur characteristics of education, skills and experience that depict the knowledge capital and entrepreneur’s age and gender to improve performance. The study provides entrepreneurs/managers with insights on the importance of aligning their strategies to resources possessed for better performance. It is important that entrepreneurs strengthen their knowledge capital to formulate and implement successful strategies for better performance.