strategic capabilities influencing - USIU-A Digital Repository

STRATEGIC CAPABILITIES INFLUENCING

SUSTAINABLE COMPETITIVE ADVANTAGE OF

FOREIGN-BASED SUPERMARKETS IN NAIROBI

COUNTY, KENYA

BY

ATONI AZIBAYAM GIFT

UNITED STATES INTERNATIONAL UNIVERSITY –

AFRICA

SPRING 2021

STRATEGIC CAPABILITIES INFLUENCING

SUSTAINABLE COMPETITIVE ADVANTAGE OF

FOREIGN-BASED SUPERMARKETS IN NAIROBI

COUNTY, KENYA

BY

ATONI AZIBAYAM GIFT

A Research Project Report Submitted to the Chandaria

School of Business in Partial Fulfillment of the Requirement

for the Degree of Masters in Business

Administration (MBA)

UNITED STATES INTERNATIONAL UNIVERSITY-

AFRICA

SPRING 2021

ii

STUDENT’S DECLARATION

I, the undersigned, declare that this is my original work and has not been submitted to any

other college, institution or university other than the United States International

University in Nairobi for academic credit.

Signed: __________________________ Date: ________________________

Atoni Azibayam Gift (639208)

This research project report has been presented for examination with my approval as the

appointed supervisor.

Signed: __________________________ Date: ________________________

Dr. Joyce Ndegwa

Signed: __________________________ Date: ________________________

Dean, Chandaria School of Business

iii

COPYRIGHT

All rights reserved. No part of this project may be reproduced or transmitted in any form

or by any means, electronic or otherwise, without prior written permission from the

author.

© Atoni Azibayam Gift, 2021.

iv

ABSTRACT

The purpose of the study was to investigate the effect of strategic capabilities on

sustainable competitive advantage among foreign retail firms in Kenya with a focus on

foreign supermarket chains in Nairobi City County. To fulfil this purpose, the study was

guided by the following research questions; How do technology capabilities affect retail

firm’s sustainable competitive advantage? What is the effect of marketing capabilities on

firm’s sustainable competitive advantage? Lastly, how do supplier management

capabilities affect retail firm’s sustainable competitive advantage?

The study adopted descriptive survey design. The study targeted foreign owned

supermarket chains, registered in Nairobi City. The National Chamber of Commerce

indicate that there are five foreign owned supermarket chains in Nairobi: Carrefour,

Choppies Enterprises Kenya, Game Stores, Shoprite Kenya, and Village Supermarket.

For this study, the population comprised of the 124 employees at the management level as

per the human resource records of each of the five foreign-based supermarkets operating

in Nairobi City as at February 2020. This study then adopted a stratified sampling

technique to derive a sample size of 114 participants. Questionnaires were used to obtain

primary data. Questionnaires were administered to all the sampled respondents within the

chosen firms. Descriptive statistical tools such as frequencies, percentages, mean and

standard deviations aided the researcher to describe the characteristics of the target

population in relation to the objectives of the study. Inferential statistics entailed Pearson

Correlation, ANOVA, and Simple Linear Regression. The output of the analysis was

presented in form of tables, charts, and figures.

The first research question aimed to understand the effect of technology capabilities on

retail firm’s sustainable competitive advantage. Majority of the respondents agreed that

retail firms had consistently posted positive cash flow. It was also noted that retail firms

had continuously accepted new proposals and recommendations from employees. In

addition, more than three quarter of the respondents agreed that streamlining of internal

processes had ensured high efficiency and interdepartmental collaboration or not.

Similarly, it was highly agreed that the application of technology had translated into cost

cutting leading to higher profit margin.

The second research question sought to determine the effect of marketing capabilities on

the retail firms’ sustainable competitive advantage. Three quarters of the respondents

agreed that retail firms were constantly in contact with those who could influence end

v

users’ purchases. It was further revealed that the retail firms adopted market research

skills to develop effective marketing programs. In addition, it was slightly agreed that

retailers collected industry information through informal means. Sales associates were

empowered with mobile tools to ensure continuous customer engagement. It was further

established that customer’s personal initiatives were frequently supported by the retailers.

Similarly, it was revealed that retail firms constantly engaged in research to develop

product quality and standards.

The last research question sought to establish the effect of supply chain capability on

sustainable competitive advantage of retailers. It emerged that retail firms always paid

their suppliers on time. Furthermore, it was noted that suppliers provided the right

quantity and quality of goods and services. On the same note, suppliers made timely

deliveries. In addition, procurement costs of suppliers’ products were highly competitive.

Besides, retailers freely discussed on the type of contract to be employed for a particular

purchase or sale. Finally, whenever unexpected situations arose, suppliers always acted

in a manner that was favorable to the retailers.

The study concludes that technology that reinforces on advanced analytics in meeting

changing consumer expectations is vital for sustainable competitive advantage. The study

concludes that marketing capability that reinforces strong market sensing, active customer

engagement, and product innovation propels sustainable competitive advantage in

supermarkets. Finally, the study concluded that supplier relationships harnessed through

open and transparent communication, balanced trust, and enduring commitment are

antecedent to sustainable competitive advantage in supermarkets.

It was suggested that foreign-based supermarkets capitalize on big data analytics to

streamline their production efficiency. Secondly, the study recommended that foreign-

based supermarkets put adequate efforts and resources to market research in order to tap

into a set of processes needed to discover information about customer needs and broad

market information, and design marketing programs to meet and exceed these needs and

foreign market conditions. Lastly, the study recommended that foreign-based

supermarkets should adopt an open and frequent communication between their personnel

and their suppliers so as to increase both parties understanding and encourage conflict

resolution between both parties.

vi

ACKNOWLEDGEMENT

I would like to thank all the persons who have been a part of this study. First and

foremost, I want to express my deepest gratitude to the Almighty God for it is by His

grace that has acted as a catalyst towards completion of this study. My greatest

intellectual indebtedness is to Dr. Joyce Ndegwa of Chandaria School of Business whose

wide-ranging managerial thoughtfulness has tremendously contributed to this work. Not

forgetting my nuclear family members for the endeavoring moral and financial support

throughout the course of my graduate school. Finally, my wife Mrs Susan Langat Atoni

for her unequivocal support that she has bestowed me through consistent encouragements

while undertaking this study.

vii

DEDICATION

This research project is wholeheartedly dedicated to God my creator, My late father

Pastor Goodnews Atoni who has been my source of academic inspiration, My family for

their encouragement and support and my elder sister Joy Atoni she has always been there

for me in times of dire needs.

viii

TABLEOF CONTENTS

STUDENT’S DECLARATION ........................................................................................ ii

COPYRIGHT ....................................................................................................................iii

ABSTRACT ....................................................................................................................... iv

ACKNOWLEDGEMENT ................................................................................................ vi

DEDICATION.................................................................................................................. vii

LIST OF TABLES ............................................................................................................. x

LIST OF FIGURES .......................................................................................................... xi

LIST OF ACRONYMS ................................................................................................... xii

CHAPTER ONE ................................................................................................................ 1

1.0 INTRODUCTION........................................................................................................ 1

1.1 Background of the Problem ........................................................................................... 1

1.2 Statement of the Problem ............................................................................................... 5

1.3 Purpose of the Study ...................................................................................................... 6

1.4 Research Questions ........................................................................................................ 6

1.5 Significance of the Study ............................................................................................... 6

1.6 Scope of the Study ......................................................................................................... 7

1.7 Definition of Terms........................................................................................................ 7

1.8 Chapter Summary .......................................................................................................... 9

CHAPTER TWO ............................................................................................................. 10

2.0 LITERATURE REVIEW ......................................................................................... 10

2.1 Introduction .................................................................................................................. 10

2.2 Technological Capabilities and Sustainable Competitive Advantage ......................... 10

2.3 Marketing Capabilities and Sustainable Competitive Advantage ............................... 14

2.4 Supplier Relationship Management Capabilities and Sustainable Competitive

Advantage .......................................................................................................................... 21

2.5 Chapter Summary ........................................................................................................ 27

ix

CHAPTER THREE ......................................................................................................... 28

3.0 RESEARCH METHODOLOGY ............................................................................. 28

3.1 Introduction .................................................................................................................. 28

3.2 Research Design........................................................................................................... 28

3.3 Population and Sampling Design ................................................................................. 29

3.4 Data Collection Methods ............................................................................................. 32

3.5 Research Procedures .................................................................................................... 32

3.6 Data Analysis ............................................................................................................... 32

3.7 Chapter Summary ........................................................................................................ 33

CHAPTER FOUR ............................................................................................................ 34

4.0 RESULTS AND FINDINGS ..................................................................................... 34

4.1 Introduction .................................................................................................................. 34

4.2 General Information ..................................................................................................... 34

4.3 Effects of Technology Capabilities on Sustainable Competitive Advantage .............. 38

4.4 Effects of Marketing Capabilities on Sustainable Competitive Advantage ................. 43

4.5 Effects of Supplier Relationship Capabilities on Sustainable Competitive

Advantage………………………………………………………………………………...49

4.6 Chapter Summary ........................................................................................................ 54

CHAPTER FIVE ............................................................................................................. 55

5.0 DISCUSSION, CONCLUSION, AND RECOMMENDATIONS ......................... 55

5.1 Introduction .................................................................................................................. 55

5.2 Summary ...................................................................................................................... 55

5.3 Discussion .................................................................................................................... 56

5.4 Conclusion ................................................................................................................... 64

5.5 Recommendation ......................................................................................................... 65

REFERENCES ................................................................................................................. 68

APPENDICES .................................................................................................................. 82

APPENDIX I: INTRODUCTION LETTER ................................................................. 82

APPENDIX II: QUESTIONNAIRE .............................................................................. 83

APPENDIX III: NACOSTI RESEARCH PERMIT .................................................... 87

x

LIST OF TABLES

Table 3.1: Study Population Distribution .......................................................................... 29

Table 3.2: Sampling Frame ................................................................................................ 30

Table 4.1: Sustainable Competitive Advantage ................................................................. 38

Table 4.2: Descriptive Statistics For Technological Capabilities ...................................... 41

Table 4.3: Correlation test Between Technological Capabilities and Sustainable

competitive Advantage ...................................................................................................... 42

Table 4.4: Model Summary Between Technological Capabilities and Sustainable

Competitive Advantage ..................................................................................................... 42

Table 4.5: ANOVA Between Technological Capabilities and Sustainable Competitive

Advantage .......................................................................................................................... 43

Table 4.6: Coefficients Between Technological Capabilities and Sustainable Competitive

Advantage .......................................................................................................................... 43

Table 4.7: Descriptive Statistics For Marketing Capabilities ............................................ 46

Table 4.8: Correlation test Between Marketing Capabilities and Sustainable Competitive

Advantage .......................................................................................................................... 47

Table 4.9: Model Summary Between Marketing Capabilities and Sustainable Competitive

Advantage .......................................................................................................................... 47

Table 4.10: ANOVA Between Marketing Capabilities and Sustainable Competitive

Advantage .......................................................................................................................... 48

Table 4.11: Coefficients Between Marketing Capabilities and Sustainable Competitive

Advantage .......................................................................................................................... 48

Table 4.12: Supplier Relationship Capabilities ................................................................. 51

Table 4.13: Correlation test Between Supplier Relationship Capability and Sustainable

Competitive Advantage ..................................................................................................... 52

Table 4.14: Model Summary Between Supplier Relationship Capability and Sustainable

Competitive Advantage ..................................................................................................... 52

Table 4.15: ANOVA Between Supplier Relationship Capability and Sustainable

Competitive Advantage ..................................................................................................... 53

Table 4.16: Coefficients Between Supplier Relationship Capability and Sustainable

Competitive Advantage ..................................................................................................... 53

xi

LIST OF FIGURES

Figure 4.1: Highest Level of Education ............................................................................. 34

Figure 4.2: Years of Experience ........................................................................................ 35

Figure 4.3: Position in the Firm ......................................................................................... 36

Figure 4.4: Number of Outlets ........................................................................................... 36

Figure 4.5: Number of Employees ..................................................................................... 37

Figure 4.6: Entry into Kenya ............................................................................................. 37

xii

LIST OF ACRONYMS

APA American Psychological Association

BELF English as the Business Lingua Franca

BOPIS Buy Online, Pick Up In-Store

BSR Buyer-Supplier Relationship

CAS Customer Appreciation Strategy

CEM Customer Engagement Marketing

CPFR Forecasting, and Replenishment

CRC Cooperative Research Centre

DMU Decision-Making Uncertainty

GDP Gross Domestic Product

IT Information Technology

JIT Just-In-Time

MD Market Driving

MNC Multinational Corporation

MSP Management Service Provider

PI Product Innovation

R & D Research & Development

RFID Radio-Frequency Identification

S & OP Sales & Operations Planning

SCA Sustainable Competitive Advantage

SET Social Exchange Theory

SME small and medium sized enterprises

SPSS Social Package for Social Sciences

TICs Technological Investment Capability

1

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the Problem

The expansion into the international arena for the company is characterized with

unpredictable and unique business environments (Wambua, Namusonge, Waema &

Ngonzo, 2015). In the realm of retail globalization, retailers must make tough choices as

to which markets to enter (Deloitte, 2019). This presents a challenge to the strategic

leadership of these organizations. The changing consumer buying patterns, the ever

advancing technology, the unpredicted political risk, the economic uncertainties, and the

shifting social behavior are all evident in modern business world. Organizational

performance may get affected because of these developments and may cause competitive

advantage to lose its sheen and may even cause it to become redundant. Therefore, the

onus lies on the management of business organizations to reexamine capabilities and

reposition them for long-term survival (Banerjee, Farooq & Upadhyaya, 2018).

Firm based capabilities view suggests that the extent to which capabilities contribute to

competitive advantage depends on the environment in which firms operate (Schilke,

2014). As argued by Wilden and Gudergan (2015) in dynamic environments firms change

more frequently, offering more opportunities to exercise dynamic capabilities and

recuperate the costs of developing them. Khoshnood and Nematizadeh (2017) indicate

that strategic capabilities have had significant impact on the performance of the private

banks in Iran. In Turkey, Seyhan and Ayas (2017) observed that marketing capabilities,

market-linking capabilities, information technology capabilities and management related

capabilities as dimensions of strategic capabilities have a positive effect on competitive

performance. Besides, internal cooperation has moderate only the relationship between

management related capabilities and competitive performance.

In the context of retail business, strategic capabilities are ideal for sustainable competitive

advantage. In both developing and emerging economies, the retail sector has been

predicted as the most dynamic. For instance, Research by a global consulting giant

Deloitte (2019) point that the German retail market has been traditionally characterized

with low margins, intimidating foreign investors. Another factor shaping sustainability of

retailers is the adoption of technology. Technological disruption in the retail sector has

2

positioned technology as the crucial competitive capability for better performance. A

2016 US retail survey found that, for the first time, consumers had made more purchases

online than they did in stores. Retailers who lag behind in online experience have suffered

dire consequences (Rudansky-Kloppers, 2014). Engaging features like ratings and

reviews, social sharing, detailed product images and videos, and enticing discounts and

promotions are now common, and consumers expect them everywhere they shop

(Boerschinger, Pansch & Lupini, 2017).

Unlike in most countries, Chinese firms are exploiting the technological capabilities to

their competitive advantage (Lau, Yam & Tang, 2019). Chinese tech infrastructures can

be easily tailored to meet a diverse set of client needs. Chinese platforms are also more

scalable, open, customizable, and flexible compared to their MNC counterparts.

Considering the fusturisti Alibaba’s Hema supermarket offline grocery store, which is a

benchmark of new retail (Saiidi, 2018). First of all, Hema choose their sites by analyzing

the number of active users of Alipay and their purchasing power, which was quite

different from traditional site selecting processes. Hema also establishes customer

information through Wi-Fi probe and RFID, obtaining customers’ age, gender, shopping

preference and shopping frequency. And this information will be reflected to the offline

store operating system and purchasing team, who will have a better understanding of

customer demands and replenishment frequency.

In line with technological capabilities, global firms are now strengthening open

innovation. The overall purpose of implementing an open innovation strategy is for

companies to take advantage of external ideas, resources, and market channels in order to

advance their own technology and products (Zhang et al., 2018). It essentially enhances a

firm’s technological capabilities and industry competitiveness by combining the internal

and external ideas available to them. L’Oréal again provides a great example of how

product making companies have implemented an open innovation strategy using research

centers in China. The company opened a Research and Innovation center in Pudong

district, Shanghai to better adapt its global strategy to the specific features of the Chinese

market. Allison (2018) carried out a study, “Portraits of Chinese Women” to unveil and

better understand the beauty rituals of Chinese women. This study portrays L’Oréal’s

China customer-centric approach with its research department focusing on the specific

aesthetic features of Chinese women.

3

Another source of sustainable competitive advantage among retailers is marketing

capabilities. Supermarkets also have market advantages over small retailers since they

invest in logistics, distribution centres, networks and inventory maintenance more than

independent retailers do (Das Nair, 2018). Makhitha and Wright (2019) observe that

information sharing influence the performance of small retailers. Moreover, the age of the

owners of small enterprises did not influence their relationship marketing practices, while

their level of education was found to do so.

According to a report by Van Hoek (2019) building relationship with the supplier is vital

ingredient to sustainability of any retailer that aims to remain competitive in the modern

market. Thus, global retailers must understand that the best prices through strategic

sourcing are no longer perceived as a strategic capability of the procurement function.

Further outsourcing of non-core competencies, organizations are starting to realize that

they have become more reliant on suppliers in terms of innovative power, security of

supply, corporate social responsibility, and on-going cost savings. Kavale and Olendo

(2016) assert that Supplier Relationship Management (SRM) plays a pivotal role in

reduction of costs and increased efficiency in the supply chain function. Strydom (2015)

elucidates that smaller retailers are positioned to effectively benefit from supplier

relationships than large retailers. The ability of small retailers to build long-lasting and

collaborative relationships with their suppliers could enhance their standing in the market,

and enable them to be competitive.

Building relationship with the supplier is vital ingredient to sustainability of any retailer

that aims to remain competitive in the modern market. As a result, many retailers are

trying to find tools for enhancing competitive advantage measures in response to

turbulent business markets and for efficiently controlling their business activities. In the

United Kingdom, retailers, who have significant supply chain power, are starting to

acknowledge the importance of suppliers in the gaining of gaining retail market share

(Hingley, Lindgreen & Casswell, 2016). In a comparative study of Chinese and

Taiwanese retailers, Hsiao, Purchase and Rahman (2017) asserts that there two factors

affecting current retail supply chains, buyer-supplier relationships and purchasing

processes. Thus, it is the obligation of the management of retailers to focus on supplier-

relationship capability as a route to sustainable competitive advantage.

4

Zidan (2015) state that Egyptian consumers are beginning to expect cleanliness, quality

and a wider variety of products. Consumers are currently asking for convenience and

shopping at supermarkets is becoming a leisure activity. Consumers depend less on

neighborhood grocery and convenience stores except for last minute spur of the moment

food needs. Thuo, Karanja and Muathe (2014) recommend that firms should improve

their marketing capabilities through training in areas of marketing research, effective

pricing, new product and range extension, channel relationship management and

promotions to boost MSP Intermediary Organisation performance.

According to Asuzu (2020), the most rapid growth rates in retail revenues over the

coming five years will be in less-developed markets and economies, where entertainment

and media spending on a per capita basis is generally quite low. Kikuchi, Haneishi,

Tokida and Maruyama (2015) observe that South African retailers are looking to expand

northwards, while companies such as Zambian-based Zambeef Retailing Ltd are

searching for opportunities in high growth markets and are investigating the strategies

being employed by their larger South African competitors. Together these retailers

highlight the opportunities provided by the countries in question but also the different

methods being used to excel in the target markets.

For the case of food retailers in Tanzania, Nadonde and Kuada (2016) show that the

criteria used by modern food retailers in the selection of local food suppliers are

reliability, quality, trade credit and legal certification. The task is further complicated by

the overlapping food certification requirements of various government agencies, which

impose limitations on the buyers’ decision. Mkwizu, Wilbard, Mbilinyi and Maliva

(2018) suggest that for the retail shops to be competitive in the market they should

consider location, salesperson, products layout and customer services which influence

shopping convenience.

Wholesale and retail trade compose 8.1 per cent of the total Kenya’s GDP (KNBS, 2019).

This places Kenya’s retail sector among the most attractive for long-term investors in

Sub-Saharan Africa with an expansion rate of 30% (Chesula & Nkobe, 2018). Presently,

the retail sector in Kenya is dominated by a few large supermarkets and many small-scale

retailers. Supermarkets offer a more conducive environment for shopping, compared to

roadside sellers. Yet in the recent years, the retail sector has been characterized by mixed

fortunes. For the case of the once regional giants Nakumatt and Uchumi Supermarkets;

5

massive debts, dwindling sales and rising competition have forced them to rethink their

regional strategies and concentrate on safeguarding their local market. This has presented

a supply vacuum that foreign retailers are seeking to fill.

Today, many new foreign as well as local investors are establishing retail chains or

supermarkets in Kenya (Njoroge, 2015). Market studies rank Kenya as the country in

Sub-Saharan Africa with the largest shopping centre space after South Africa, and with

the largest development pipeline. Foreign retailers have in the past few years expanded

generously in a tight race for shoppers that have wound up in areas initially dominated by

traditional channel-like shops and small’s supermarkets in small towns. In Nairobi, the

new foreign entrants are squaring it out with local based newer and smaller entrants like

Chandarana, East Matt, and Stage Matt. As a result, foreign-based retailers are entangled

in the scramble for consumers (Waiswa, Nduhura, Mugerwa Settumba, Wanume, &

Businge, 2016); some opting to develop markets beyond Nairobi and considering online

distribution and setting up outlets in towns such as Mombasa, Kisumu, and Nakuru.

1.2 Statement of the Problem

In the recent years, Kenya and Nairobi in particular has increasingly attracted

multinational corporations in the retail sector (Cytonn, 2018). According to Bostelmann

(2019), foreign retailers are taking keen interest in the country’s growing population and

positive economic outlook. Already, foreign retailers Carrefour, Massmart, Game, Jet and

Edgars have entered the market. The United Kingdom’s (UK) retail giants, Marks &

Spencer and Clarks are also eyeing the market (Kamau, 2015). With the growing number

of foreign retailers penetrating the Kenyan market, it is anticipated that competition will

intensify among these firms (Kimotho, 2017).

Locally, countable studies have been conducted on strategic capabilities of retail sector.

Kanja and Mwangangi (2017) researched the influence of logistics management on

supply chain performance in retail chain stores in Kenya focusing on Nakumatt Holdings

Limited. In this study, data was provided by a single respondent in each store, creating

room for biasness. Wambugu (2014) studied the competitive strategies adopted by large

supermarket chains in Nairobi City County. The study included only a small portion of

the large population of supermarket chains in the retail industry, igniting the need for a

more representative study population. Musyimi (2016) studied the influence of marketing

6

capabilities on firm performance in fashion retailing in Nairobi County. The research only

studied a single form of capability, which was marketing capability, provoking the need

to examine different types of strategy capabilities and assess their impact sustainable

competitive advantage of the firm. In addition, the study recommended additional

examination of marketing capabilities on both the supply and demand side of the business

since it would provide a more complete picture of the effective contexts of marketing

capabilities within the complex retail sector.

1.3 Purpose of the Study

The purpose of the study was to investigate the effect of strategic capabilities on

sustainable competitive advantage among foreign supermarkets in Kenya with a focus on

foreign supermarket chains in Nairobi City County.

1.4 Research Questions

The study was guided by the following research questions:

1.4.1 How do technology capabilities affect retail firm’s sustainable competitive

advantage?

1.4.2 What is the effect of marketing capabilities on firm’s sustainable competitive

advantage?

1.4.3 How do supplier management capabilities affect retail firm’s sustainable

competitive advantage?

1.5 Significance of the Study

1.5.1 Management of Supermarket Chains

The management of foreign-based supermarket chains could benefit from this study in

making informed decisions on their strategic framework. The information could aid them

in developing reliable strategies that can make effective use of their firm capabilities in

outwitting their immediate competitors.

7

1.5.2 Policy Makers

The study could enable the government and policy makers to adopt rules and regulations

that create a level playing field within the industry and give investors’ confidence to

invest in the industry. The government and policy makers could also be able raise

awareness on the forces that affect the retail industry and adopt solutions to ensure that

companies remain competitive and sustainable.

1.5.3 Future Researchers

The findings from the present study could be valuable in expanding the scope of literature

on strategic decisions within the retail sector. This could act as a case of reference and

hence guide interested parties on the same for details and contemplation. The study

provokes researchers to conduct subsequent studies assessing the role of organizational

capabilities in enhancing firm competitiveness. Furthermore, players in the retail sector

adopted this study in conducting market surveys, which can facilitate better decision

making on competitive nature of their operating environment.

1.6 Scope of the Study

The study focused on foreign-based supermarket chains operating within Nairobi City.

These were: Carrefour, Choppies Enterprises Kenya., Game Stores, Shoprite Kenya, and

Village Supermarket. Data collection was conducted between March 2020 and May 2020.

The variables captured in the study were technology capabilities, marketing capabilities,

and managerial capabilities. The study was limited in respondents due to information

sharing for fear of breaching their organizations' rules and regulations regarding

confidentiality. However, the respondents were assured that the information was strictly

for educational purpose.

1.7 Definition of Terms

1.7.1 Strategic Capabilities

Strategic capability refers to the ability of the foreign retailer to harness its competences

and resources in order to gain competitive advantage, and thus survive and increase its

value over time (Seyhan & Ayas, 2017).

8

1.7.2 Foreign Retailers

These are non-local business firms involved in buying and selling goods to the financial

consumer or non-business use. They majorly include supermarket and hyper chains

(Hameli, 2018).

1.7.3 Sustainable Competitive Advantage

Sustainable Competitive Advantage refers to the ability for retail firms to post superior

performance over a long period of time than their competitors (Mukhezakule & Tefera,

2019). To realize this goal, retail firms must be able to combine skills and resources in

unique and enduring ways.

1.7.4 Technological Capabilities

Technological capabilities are an expression used to encompass the system of activities,

physical systems, skills and knowledge bases, managerial systems of learning and

incentive, and values that generate an extraordinary benefit for a retail company

(Nurazwa, Siti & Halim, 2014). Normally, a retail firm is capable of operating,

maintaining, adapting, and assimilating the transferred technology.

1.7.5 Marketing Capabilities

Marketing capabilities involves market sensing, partner linking, customer capabilities,

functional capabilities, networking capabilities have been linked to various positive retail

organization outcomes (Alharbi, 2015).

1.7.6 Supplier Relationship Management

Supplier relationship management (SRM) is the systematic approach of assessing

suppliers' contributions and influence on success, determining tactics to maximize

suppliers' performance and developing the strategic approach for executing on these

determinations (Lee, Kim & Lee, 2016).

9

1.8 Chapter Summary

This chapter introduced the study by looking at strategic capabilities and their resultant

effect on performance of the firm. Thereafter, the chapter identified the research gap by

stating the problem statement. The study identified three research questions to guide the

study: How does technology capabilities affect retail firm’s sustainable competitive

advantage? What is the effect of marketing capabilities retail firm’s sustainable

competitive advantage? How do supplier management capabilities affect retail firm’s

sustainable competitive advantage? Chapter two covers literature review based on the

research questions and provides insight into what other researchers have done on strategic

capabilities and firm performance. Chapter three informs the methods that were employed

in accomplishing the study, chapter four explained the results and findings of the study

and chapter five presented discussions, conclusions and recommendations.

10

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction

The chapter presents literature on competitive capabilities and sustainable competitive

advantage among organizations. The chapter is organized into three sections as follows;

the first section presents literature related on technological capabilities and sustainable

competitive advantage. The second section regards literature on marketing capabilities on

sustainable competitive advantage, whereas, the third section focuses on supplier

relationship management capabilities and sustainable competitive advantage of firms. The

chapter ends with summary of the key findings from literature.

2.2 Technological Capabilities and Sustainable Competitive Advantage

Under the context of globalization and international economic integration today, business

enterprises’ existence and development depends on technology to attain sustainable

competitive advantage reviews literature related to technological capability in the

dimension of: investment capabilities, production capabilities, and learning mechanisms.

2.2.1 Investment Capabilities

Retail, like any other industry, must leverage technology to minimize the impacts of

disruption (Ismail, 2019). This plays an important role in the management of complex

retail operations. Market knowledge, as well as control of data and information is

essential to obtain a competitive advantage in the retail sector. Essentially, information

technology can speed up processes and increase sales, improve customer retention rates

and deliver cost saving benefits to the company. Global retail sector technology spending

would have grown 3.6% to reach almost USD$203.6bn (£159.9bn) in 2019 (Williams,

2018), with similar growth rates for the next two years, according to the latest forecast

from Gartner (2019). Customer expectations and competition are forcing retailers to

evolve and invest heavily in digital business transformation. Gartner predicts that by 2023

Alibaba and Amazon will have captured 40% market share of global online retail, up

from 33% in 2017 (Williams, 2018).

11

Retail organizations are measuring the success of a new technology investment primarily

through increased revenues and cost savings generated because of the technology. At the

end of the day, it all goes back to the retailer’s bottom line (Reeve, 2018). Retail tech

spending will grow 3.6% globally in 2019, predicts Gartner. Global spending on

technology in the retail sector is set to grow by 3.6% in 2019, according to predictions by

Gartner analysts. Though the retail sector has been slow to adopt digital technologies,

there is set to be an increase in technology investment to better respond to changing

customer habits (McDonald, 2019).

Ming, Hsiang, Truong and Tuong (2012) sought to understand the way in which

investment capability (IT) of the industry on TICs at the level of its firm, affects the

efficiency and the potential of Vietnam enterprises that have to gain their competitive

advantage. Based on a survey of manufacturing firms in Vietnam, the study identified that

Vietnam enterprise are required to invest to enhance seven dimensions of TICs - learning,

R&D, resource allocation, manufacturing, market, organizational, and strategic planning

capabilities. Moreover, the research utilizes a regression analysis to demonstrate that

investment capability can lead directly competitive performance through TICs.

Ruffoni, D’andrea, Chaves, Zawislak, and Tello-Gamarra (2018) aimed at identifying the

different arrangements of technological capabilities for firms with different levels of R&

D investment among Brazilian manufacturing firms. The results clearly show different

arrangements of innovation capabilities for each level of R&D investment. Operations

capability does not generate innovation performance in any level. Development capability

becomes increasingly relevant to performance, as R&D investment increases; on the other

hand, management and transaction capabilities turn to be less prominent.

Rivera and Kurnia (2012) assert that IT has indirect effects on business sustainable

competitive advantage. Moreover, there are many discussions about the capabilities and

mediate the relationship between IT and business performance such as supply chain

performance and supply chain process integration. The integration of dissimilar

supplementary resources can produce interaction that can cause better performance.

However, Williams (2018) who observe that that some of the IT investments did not

actually improve organizational performance make a contradictory observation. These

contradictory findings illustrate that increases in IT investment are not necessarily

associated with increases in productivity, a finding that has been defined as the IT

12

productivity paradox (Brynjolfsson & Yang, 1996). Loveman’s (1994) study is one of the

most influential of those related to this paradox. Using data of manufacturing firms from

U.S. and Europe, the author found that returns from IT investment were lower than

expected.

2.2.2 Production Capabilities

Production capabilities include both process technological capabilities as well as product

capabilities, such as product redesign, product quality improvement and introduction of

new products (Schmidt, 2013). In addition, production capabilities also cover monitoring

and control functions included under industrial engineering. Production capabilities are

the skills and knowledge needed for the operation and improvement of a plant. They

range from routine functions to intensive and innovative efforts to adapt and improve the

technology (Szalavetz, 2018). Their classification by degree of complexity, being purely

relative, may be misleading. Acquisition of even “basic” capabilities such as quality

control, maintenance, scheduling, or reaching prescribed levels of machine efficiency,

generally requires considerable expenditure of time and effort. The more advanced

capabilities, for adaptation and innovation, generally require higher (or different) skills,

more time and greater investment.

Topley (2015) investigated Generation Y’s opinions and attitudes towards technology in

the retail industry and the main drivers responsible for this shift in attitudes. A common

theme was discovered whist conducting this research – Generation Y are now in fact

using both online and offline methods complementary of each other primarily in the form

of Webrooming and Showrooming with price being the main driving factor. The research

also confirmed that retailers in different countries are using similar techniques to provide

a seamless shopping experience with ease of use, convenience, efficiency and price being

the priority in gaining competitive advantage. Retailers like Eloquii have been heading in

that direction for a while, and brands such as Adidas have experimented with on-demand,

3D-printed apparel. But Amazon's recent acquisition of body scanning firm Body

Labs and new funding for scanning technology developers like Naked labs stoked new

excitement in the concept. Furthermore, companies such as On Point Manufacturing can

now enable the production process allowing shoppers to obtain apparel in fits and size

combinations that even wider rack selections don't provide (O’ Shea, 2019).

13

Gannon (2018) illustrates how buy online, pick up in-store (BOPIS) is a good example of

an area of innovation that is not new to retail. Several large retailers adopted BOPIS early

on, and have continued to refine their approaches and develop new ideas for how stores

should be designed and store operation transformed around the concept. Walmart, for

example, has placed pick-up towers in stores and explored how BOPIS can be enhanced

when paired with other technology innovations, like driverless vehicles that could bring

customers to stores for order pick-up.

Other major developments that have facilitated production within the retail sector include:

The shopping search increasingly means visual or voice search, very likely through a

mobile smartphone or another device that is not a desktop computer. Secondly,

augmented reality and virtual reality find homes in narrow spaces (Grewal, Noble &

Roggeveen, 2020). Retailers may be tired of hearing what these technologies potentially

can do for them, as it's a sales pitch they have been hearing for years (Alcañiz, Bigné &

Guixeres, 2019). In late 2017 and early 2018, an initial round of AR features in mobile

apps targeted buyers of furniture and home decor, giving them a way to visualize those

items in their own home environments. Thirdly, the Automated checkout or Cashierless

stores- The sector has heard a lot about Amazon Go and its cashierless convenience

stores, but what about other technology companies enabling automated checkout, as well

as other forms of expedited self-checkout and mobile checkout? Amazon may be poised

for a more rapid expansion of Amazon Go if reports are correct that it's seeking airport

space and mulling a plan to open 3,000 stores by 2021 (Soper, 2018).

2.2.3 Learning Mechanisms

Scholars from the strategic management field have also been largely interested in the

relationship of organizational learning and organizational performance (Arh, Blažič &

Dimovski, 2012). According to Hoffmann and Meusburger (2018), an organization has to

handle a great variety and quantity of information in order to adapt to the environment.

This ability to process varied information can be developed through organizational

learning (Zollo 2009). Organizational learning can be described as an intentional or

unintentional process through which an organization develops new knowledge and

insights. Therefore, for an organization to learn, it has to engage in several different

activities, such as the acquisition, storage, dissemination and application of knowledge.

Consequently, it can be argued that an organization learns if the new insights become

14

embodied in the organization’s behavior. In the modern era, managers, rather than

focusing on building skills to recognize patterns and take action, will need to focus on

designing the curricula, to direct which patterns computers should focus on learning and

to what ends their actions should serve (Gao, Liu & McKinney, 2019).

Abduljabbar, Dia, Liyanage and Bagloee (2019), observed that self-learning systems

systems through AI and cognitive modelling has enabled feedback from past experiences

to optimize the shopping experience for consumers and hence impacting satisfaction and

loyalty to be enhanced. Altinay, Gokmen and Altinay (2016), focused on the role of

information technology in becoming a learning organization. The results revealed that

collaboration, transparent management, team work are enhanced through information

technology. Schools are becoming a learning organization that shows how they adapt

transformation in education through information technology.

Gann, Dodgson and Phillips (2013), examine how and why organizational learning is

affected by virtualization technologies. The literature on organizational learning has

identified its many constraints, and the influence of information technologies on

overcoming these restraints has also received attention. The study organizational learning

results from the interrelated processes behind the adoption of the technology and its

application. Canessa-Terrazas,Morales-Flores, and Maldifassi-Pohlhammer (2018) based

on data of Chilean organizations, we found that there exists a positive impact of using IT

for exploitation on organizational performance; and that the use of IT for exploration has

a positive impact on organizational change.

2.3 Marketing Capabilities and Sustainable Competitive Advantage

Marketing capabilities such as market sensing, partner linking, customer capabilities,

functional capabilities, networking capabilities have been linked to various positive

organizational outcomes (Mitrega, 2011). Such capabilities can either be used to form a

marketing strategy that would lead to sustainable competitive advantage or may be of

tactical or operational use, thus contributing to the value chain. In order to effectively

perform a review of literature, marketing capabilities are assessed in the context of market

sensing, customer engagement, and product innovation.

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2.3.1 Market Sensing

Market sensing is critical for sustainable competitive advantage allowing firms to become

aware of opportunities and threats (Dias, 2013; Ndambuki, 2018). A study by Alharbi

(2015) supports a four dimensional scale: analytical processes for market sensing,

organizational articulation supporting market sensing, business knowledge sensing

capabilities, and customer relational sensing capabilities. Findings also reveal that all four

dimensions are positively and significantly associated with product development.

Lindblom, Olkkonen and Kajalo (2008), sought to shed light on the market-sensing

capabilities of retail entrepreneurs and the effect of these capabilities on their business

performance of 226 K-retailers from the Finnish K-alliance. The study reveals that most

of the studied retail entrepreneurs have relatively well-developed market-sensing

capabilities. A weak positive relationship was found to exist between market-sensing

capability and company growth. However, no positive relationship was found between

market-sensing capability and profitability. Factors other than market-sensing capability

were not considered in the present study. Kubo (2015) examines the effects, which

organizational capabilities exert on firm’s marketing strategy and performance, and

classifies organizational capability concepts “activity-based capability” for each

marketing activity to were defined, and “market orientation”, in which firm activity is

fitted to the turbulent market environment. Results of analysis shows that activity-based

capability and market sensing capability give a positive effect to firm performance, and

that market orientation effects change with the degree of competitiveness of the industry.

Alshanty, Emeagwali, Alrwashdeh and Ibrahim (2019), examine the nexus between

market-sensing capability, knowledge creation, strategic entrepreneurial-orientation and

innovation in small and medium sized enterprises (SME). SEM result illustrates a positive

effect of market-sensing capability on knowledge creation, and firm innovation.

Knowledge creation process has positive effect on firm innovation. Knowledge creation

process mediated the link between market-sensing capability and firm innovation.

Strategic entrepreneurial-orientation moderates the link between knowledge creation and

firm innovation; such that the positive relationship became weaker when strategic

entrepreneurial-orientation is high.

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Lindblom, Olkkonen, Kajalo and Mitronenn (2008), reveal that most of the studied retail

entrepreneurs have relatively well-developed market-sensing capabilities. A weak

positive relationship was found to exist between market-sensing capability and company

growth. However, no positive relationship was found between market-sensing capability

and profitability. Factors other than market-sensing capability were not considered in the

present study. However, other factors that might affect business performance in the

present research context are identified and discussed. Sugiyart, Ferdinand and Nurchayat

(2018), mediated the influence of market sensing capabilities on the marketing

performance by proposing acculturative products uniqueness that mediate the gap

between market sensing capabilities and improvement of marketing performance. The

statistical tests in our model used four variables: market sensing capabilities, product

innovation, acculturative products uniqueness, and marketing performance. The results of

the data show that acculturative products uniqueness has an important role in improving

marketing performance.

Dentonia, English and Schwarz (2014), explored when public Research & Development

(R&D) has an impact on small farms’ market sensing capabilities. Qualitative and

quantitative data was collected from five cases of public-private R&D projects funded by

the Australian Seafood Cooperative Research Centre (CRC). One “typical” in-depth case

study of an R&D project in the oyster sector provide empirical evidence for cross-case

comparison and structural equation modeling (SEM). Findings highlight the provision of

R&D market information on estimated prices and quantities, end users’ lower initial

capabilities and higher discipline clarity, and the absence of industry associations

undertaking marketing roles for farmers to enhance the impact of public R&D on small

farmers’ market sensing.

2.3.2 Customer Engagement

Customer engagement includes all the messaging and resources it takes to maintain

ongoing relevant and valuable communication with customers (Melewar, Foroudi, Gupta,

Kitchen & Foroudi, 2017). The level of engagement represents satisfaction and loyalty

customers feel about your brand; in a Forrester (2018) survey, 72% of consumers agreed

that they are likely to shop more frequently with retailers that send them relevant

communications (Carter, 2019). It is easier to focus on trying to get people to make a

purchase, but altering your viewpoint to providing value to customers to improve their

17

experience and encourage them to return will result in more long-term revenue. It's been

proven that increasing retention rates by five percent can increase profits by anywhere

between 25 and 95 percent. Puccinelli, Grewall and Pric (2014), opine that retailers

recognize that greater understanding of customers can enhance customer satisfaction and

retail performance.

Customer engagement is about inspiring customers, as well as encouraging them to

partake in the experiences retailers create for them – when they want to engage, and

giving them the space to interact with you on their terms when they’re not ready to

engage (Seng, 2017). Customer experience is also about customer loyalty – an especially

important element that can help retailers mitigate disruptive forces during difficult retail

periods. Ulta Beauty sets a fine example in using customer profiling and experience as a

competitive differentiator (Danziger, 2019). To better serve its customers, Ulta Beauty

gleaned consumer insights, which it translated into a customer experience formula that

helped drive stock growth by more than 3,000% between 2009 and 2016, at a time when

the S&P 500 grew 250%. The company’s loyalty program now has 24.5 million

members that account for 90% of Ulta’s sales (Milnes, 2018).

The customer engagement focus has shifted from selling products to selling experiences.

A study by Kulbyte (2019) a customer intelligence consulting firm, reveals that customer

experience will overtake price and product as the key brand differentiator by the year

2020. The key to success is building a blended customer experience, and retailers can no

longer afford to ignore it. As customers use more and more connected devices to shop,

retailers have to find a way to tie all the channels together to create a unified and

personalized experience for the customer. They can no longer focus on just one channel

for their business.

According to Heimgartner (2019) customers tend to stick with brands that make their

experience as seamless and enjoyable as possible. The goal of any successful business is

to not only attract customers, but to retain them and encourage them to return and

continue making purchases. So how can you do it? The key to customer engagement is

to not just provide products and services to people, but to also provide them with content

that will keep them connected with your brand. Continue reading to discover what

customer engagement is, why it is important, and what you can do now to improve your

plan.

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Drawing on social exchange theory (SET), Alvarez-Milan, Felix, Rauschnabel, and

Hinsch (2018), explores customer engagement (CE) as a firm-initiated resource. Based on

interviews with 41 managers from 34 companies, a five-facet, strategic customer

engagement marketing (CEM) decision-making framework emerges. CE

Conceptualization differentiates between behavioral and psychological engagement. CE

Target refers to who is engaged with the firm through CE (end-users or intermediaries

such as retailers or distributors). CE Domain distinguishes between online and offline

contexts. CE Experiential Routes differentiates absorption (controlled by the firm) from

appropriation (controlled or transformed by the customer). Finally, CE Value demarcates

customer interactional value from customer multiplier value. The decision options

identified for each facet are interrelated and firms are advised to follow an integrative

approach to CEM. However, acknowledging SET’s emphasis on cost-benefit ratios and

opportunity costs, suggestions for potential moderators to the CEM framework are

provided.

Gubíniová and Bartáková (2018) develop a four critical area framework for attaining

sustainable competitive advantage through customer engagement. The Respond-to-

Desire connected customer experience starts at the point in the journey when a customer

knows precisely what he or she wants. Thus, respond-to-desire really smoothens the

"Respond" part of the customer journey. The Curated Offering customer experience acts

further upstream in the journey by helping the customer find the best possible option that

would fulfill his or her needs; it helps with the request. Both respond-to-desire and

curated offering experiences can only work if customers are aware of their needs. Firms

creating a Coach Behavior customer experience help their customers at exactly that part

of their journey: they raise awareness of needs and nudge the customer into action,

essentially helping with the Recognize stage of the customer journey. Lastly, when the

firm becomes aware of a customer need even before the customer is aware of it, it is

possible to create an Automatic Execution customer experience, where the firm solves the

need of the customer proactively. In this case, the company can short-cut the customer

journey tremendously.

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2.3.3 Product Innovation

Yasil, Koska and Buyukbese (2013) assert that organizations must use the production and

marketing technology to produce new product, service to consumers and attributes new

products to consumers. Pellegrini (2017) equates innovation in the retail process to

“technology push” and product innovation to “market pull” within the mainstream

literature on innovation. Innovation is seen as possible on the two dimensions of product

and process or on both simultaneously. New technology and product-based innovation are

an important catalyst for new markets (Wang, Anderson & Zehr, 2016). However, as

nascent markets mature, imitation becomes rampant, products become more

commoditized, and firms must shore-up their value proposition to avoid strictly cost-

based (scorched earth) competition.

Epstein, Friedl and Yuthas (2008) employed the model of British food retailing sector to

suggest that a decline in a retailer's fortunes results from imitative or innovative

competitive actions, and that repeated product innovations should be considered to retain

the requisite level of differentiation. The results of the study showed that the effect of

Product innovation (PI) on sustainable competitive advantage (SCA) was positive and

significant, the effect of Product innovation (PI) on Market Driving (MD) was positive

and significant, the effect of Market driving (MD) on sustainable competitive advantage

(SCA) was positive and significant. The implication of the study was that product

innovation and market driving significantly affected sustainable competitive advantage.

Yogyakarta (2018) studied influence of marketing capabilities on competitive advantage

and marketing performance among Batik SMEs in Central Java province. The results of

this study showed that marketing capability had insignificant effect on marketing

performance. Marketing capability significantly effect on competitive advantage; market

orientation had significant effect on marketing performance. Market orientation also gave

significant effect on product innovation. Product innovation significantly effect on

competitive advantage. Competitive advantage had significant effect on marketing

performance and product innovation has significantly effect on marketing performance.

De Conto, Antonio and Vaccaro, (2016) aimed at recognizing how innovation contributes

to competitive advantage achievement in a company which processes organic juice and

wine. It was observed that the innovation is presented as an incremental form in the

20

profile, not replacing other income sources, but with impacts on the productive process.

This strategy is positive as far as the new competitors also launched products in the

organic juice market, lowering the competitive advantage of the cooperative. It is also

observed the use of partnerships and technological transfer as innovation facilitators.

For the case of Ghana, Quaye and Mensah (2019) established how small- and medium-

sized enterprises (SMEs) in water, beverage, soap, detergent, metal fabrication, wood and

furniture manufacturing industries can sustain or improve their competitive advantage by

integrating specific resources and capabilities among SMEs. The study found that product

design and packaging innovations, promotion innovations, retail innovations and pricing

innovations provide sustainable market advantage for water, beverage, detergent and

metal fabrication SMEs. Besides, physical resources may result in market advantage but

integrating physical resources with dynamic marketing capabilities provided sufficient

competitive sustainability in a competitive market (Roach, Ryman, Jones & Ryman,

2018). Na, Kang, and Jeong (2019) investigated relationships among the market

orientation of sharing economy business, marketing innovation, sustainable competitive

advantage (SCA), and performance. The results are as follows. First, functional

coordination of the cultural market orientation of sharing economy business with

consumer orientation significantly affected product innovation, but competitive

orientation’s effect on product innovation was not significant. Competitive orientation

and functional coordination significantly affected communication innovation, but

consumer orientation’s effect on communication innovation was not significant.

Secondly, market information generation and response to market information of

behavioral market orientation of sharing economy business significantly influenced

product innovation, but market information exchange’s influence on product innovation

was not significant. Even though market information exchange and response to market

information had a significant influence on communication innovation, the influence of

market information generation on communication innovation was not significant. Third,

both product and communication innovation of the marketing innovation of sharing

economy business significantly influenced SCA. Fourth, the SCA of sharing economy

business significantly influenced market dominating power.

21

Mutisya (2015) sought to determine strategic innovation as an approach to sustainable

competitive advantage by Safaricom Limited. The study found that the organization has

optimized strategic innovation for its customers and it understands how to translate the

strategic innovation to business indicators. Moreover, the study found out that the

company has created a unique position in the market through provision of goods and

services, it is therefore recommended that they continue investing in coming up with

unique products so that they can differentiate themselves, should continue innovating

products which will compete with other companies’ products while doing aggressive

marketing.

2.4 Supplier Relationship Management Capabilities and Sustainable Competitive

Advantage

Procurement professionals are starting to recognize that by establishing appropriate

external relationships, their organizations can tap into resources beyond their own four

walls and even find synergies and create new complementary resources (Mena, Van &

Christopher, 2014). This demands them to manage suppliers, thus the more capability to

maintain relations is required (Cox, 2007; Esposito & Passaro, 2009). Hence, this section

reviews literature in the dimension of commitment, communication, and trust between

retailers and suppliers.

2.4.1 Commitment

The future stability of any buyer-supplier relationships depends upon the commitment

made by the interact ants to their relationship. The greater the commitment of the

organization to a specific relationship, the greater the stability of that relationship (Carr &

Kaynak, 2007). According to Daniel (2012) commitment is the desire to develop as Table

relationship, a willingness to make short-term sacrifices to maintain the relationship, and

a confidence in the stability of the relationship. It implies the adoption of a long-term

orientation toward the relationship, short-term sacrifices to realize long-term benefits, an

implicit or explicit pledge of relational continuity between exchange partners. Scholars

have identified various types of commitment.

22

Kingshott (2006) distinguished affective commitment and attitudinal commitment as the

most relevant types of commitment, since these types occur most often in practice.

Affective commitment expresses the extent to which a party likes to maintain a

relationship with the other party. This kind of commitment is based on a general positive

feeling towards the exchange partner. An affective committed partner desires to continue

his relationship because he likes the partner and enjoys the partnership. Attitudinal

commitment is the level to which buyers state that there is just too much time, energy,

and expense involved in terminating our relationship with this supplier.

Mena, Van Hoek and Christopher (2014) explored how resources can be utilised to

maximize sustainable competitive advantage. Organizations seek competitive advantage

through the use of resources at their disposal. These resources allow them to exploit

opportunities or neutralize threats to achieve superior long-term performance.

Lintukangas, Kähkönen and Hallikas (2019) establish that Innovativeness in supply

management and supplier orientation improve firms ‘sustainability. Sensing supply

markets as a part of the business help firms detect new innovation opportunities.

Srivastava, Franklin and Martinette (2013) analyze cross-industrial best practices and

future trends in the context of the contemporary resource based competitive advantage

model of the firm. A qualitative and quantitative assessment is made of how a firm's

leadership, human capital management, organizational culture, design and systems can all

collectively merge to create a more dynamic and responsive organization which is far

more adept at building unique resources and capabilities, which can then be leveraged to

create new market opportunities with high competitive entry barriers.

Lees and Nuthall (2015) identifies what attracts suppliers to be committed to long-term

relationships in New Zealand agri-food supply chains where suppliers are required to

consistently deliver to high product specifications. The research revealed the main factors

that attracted suppliers to these supply chains were; increased price certainty, premium

prices and relationship quality. Many suppliers wanted to break away from the

agricultural commodity cycle, which they saw as disconnected from customer demand,

and characterized by price volatility. They saw themselves as better than average

producers with the ability to produce high quality products.

23

Makhitha and Wright (2019) interrogated the relationship marketing practices of small

retailers in South Africa. The researcher also explores the impact of relationship

marketing practices on the performance of small retailers in South Africa (SA). The

results indicated that small retailers in SA practice relationships marketing and that they

share information with suppliers and are involved in various types of relationships such as

ling-term relationships, collaborative relationships and transactional relationships.

Information sharing was found to influence the performance of small retailers while other

relationship types did not. Moreover, the age of the owners of small enterprises did not

influence their relationship marketing practices, while their level of education was found

to do so.

Hsiao (2006) investigated the impact of retailer-supplier cooperation and retailer or

supplier’s decision-making uncertainty (DMU) on retail supply chain performance from

the perspectives of both the retailer and the supplier in Taiwan. The findings indicated

that both cooperation and DMU are the key determinants of retail supply chain

performance, including financial performance and non-financial performance (i.e., supply

flexibility and customer service). Financial performance was positively affected by

retailer-supplier cooperation and negatively affected by DMU in both the retailer model

and the supplier model. The five dimensions of retailer-supplier cooperation (i.e. trust,

guanxi, dependence, coercive power and non-coercive power) had significant effects on

cooperation. However, apart from guanxi with the retailer/supplier, neither other

relationship dimensions nor retailer-supplier cooperation have any influence on retailer’s

DMU or supplier’s DMU. Lu (2007) adds that differences and similarities exist across

retailers and suppliers with respect to the effects of several relationship dimensions on

cooperation and uncertainty.

Mafini, Vandrys and Loury-Okoumba (2014) investigated the influence of buyer-supplier

commitment, trust and cooperation on business performance in the FMCG industry in

South Africa. The results of the hypotheses tests revealed positive and significant

associations between the three-predictor constructs (buyer-supplier commitment, trust and

cooperation) and business performance. Buyer-supplier cooperation emerged as the most

important construct in influencing business performance. Nandonde (2019) investigates

the establishment of commitment in developing economies between suppliers and

retailers. The study shows that affective and behavioral commitments are important in

24

understanding the level of relationship between retailers and suppliers in Tanzania.

Omondi (2015) establishes the effect of perceived buyer-supplier relationships on

performance among large-scale retail outlets in Kisumu, Kenya. The study findings

confirmed that largest scale retail outlets in Kisumu have embraced the concept of buyer-

supplier relationships. They have incorporated most of the buyer- supplier relationship

variables in their operations and this has contributed to an enhanced performance of the

organizations to a large extent.

2.4.2 Communication

Communication is a basic requirement for cooperation in supplier-buyer relationships

(Oohsterhuis, 2009). The study by Sanders, Autry and Gligor (2011) on the influence of

communication in Buyer-Supplier relationship on maize market performance revealed

that, frequent and timely communication together with credibility of exchanged

information are important parameters in for effective communication because it assists in

resolving disputes and aligning perceptions and expectations of maize actors. The study

showed that, communication can be formal as well as informal sharing of meaningful and

timely information between parties involved in partnership. Moreover, effective

communication is therefore essential for successful collaboration of any relationship

(Mohanty & Gahan, 2012).

Ha (2015) argues that there is an urgent need for a model of the supplier relationship

management process. Furthermore, having a supplier relationship management process

will solve the lack of standardization, the lack of harmonization in information

transmission as well as the lack of strategic overview in the organization. Ha (20115)

adds that the process should also consist of all stakeholders from different functions in the

company, with sourcing in the center of the loop. In addition, it is suggested that the

satisfaction survey method conducted both with suppliers and buyers are necessary to

measure the relationship and the success of the process.

Hou (2013) researched the supplier relationship management in a Finnish buyer

organization and its supplier was a Chinese company in the health food industry. The

findings of the study indicated the challenges of the case supplier relationship. First, the

production time was not fully controlled by the supplier and the information exchange

about the delivery delay cases was not efficient and timely. Secondly, the Chinese buyer's

25

email communication on troublesome issues was indirect. Thirdly, managing the sourcing

quality of product packages was challenging due to the different cultural aesthetics.

Fourthly, BELF was not a barrier for daily communication but the Chinese supplier's

inadequate BELF competence impacted the explanation on technical issues and the

expression of emotions. Fifth, the Finnish buyer committed to the relationship relatively

less than the Chinese supplier.

Msemwa, Ruoja and Kazungu (2017) examined the Buyer-Supplier relationship (BSR)

and the performance of maize markets in Tanzania, taking Kwasadala market in Hai

District as a case in point. The study findings revealed that, communication variables in

BSR that influence the performance of maize markets include: Reliability of Information:

Credibility of information: Timeline of information: Willingness to disseminate

information as well as Responsiveness to share meaningful information. Stephens (2015)

assessed the effectiveness and impact of buyer-supplier relationship on the performance

of small and medium enterprises in Ghana. The study has revealed that majority of the

SME operators receive the products they sell from suppliers and the most common and

predominant existing relationship between buyers and their suppliers is transactional.

Moreover, the study revealed that suppliers were most efficient at supplying goods of

very good quality to the various operators of SME’s as well as delivery of the required

quantities of products to the buyers. Also, SMEs generally had a positive perception

concerning the buyer-supplier relationship. Again, the study had established that buyer-

supplier relationship between the operators of SMEs and their suppliers is satisfactory and

this has improved their performance significantly. Mutio (2015) establish the effect of

buyer – supplier relationships on organizational performance among pharmaceutical

manufacturing firms in Kenya. There was a significant relationship between buyer -

supplier relationships and organizational performance and can be explained by the five

independent variables of trust, communication, co-operation, commitment and mutual

goals. Lack of mutual goals between buyers and suppliers was the major challenge

identified by the respondents.

2.4.3 Trust

Yaqub and Hussain (2013) state that as part of the relational exchange between parties,

trust has always been viewed as critical expectation to enhance the value of relationships.

26

Inayatullah, Narain and Singh (2012) demonstrate that face to face communication and

fair treatment of supplier by buyer is positively related to development of trust,

development of trust has a positive influence on readiness of supplier to invest in the

specific requirements of buyer, strong relationship between buyer and supplier positively

affects supplier performance, and supplier performance is positively related to the

organizational performance.

Wasti and Wasti (2008) tested the effect of initial support, use of just-in-time delivery,

and informal commitment to predict the trust that Turkish automotive suppliers have

towards their buyers. The results support the predictions that soft technologies and

informal commitment increase trust. Stuart, Verville and Taskin (2009) discussed

personal trust and system-based trust affecting supplier relationships in the supply chain

context. Empirical material was collected by means of a survey and interviews. The

results indicated that different aspects and expectation of trust in the case company has

led to the situation where the supplier categorization is unclear in the company’s

organization, which can lead to confusion in supply management. This in turn implies

that organization’s own attitudes and changes in trust may be a source of dynamics that

impedes efficient and effective supply network management.

Johnston, McCutcheon, Stuart and Kerwood (2004) tested a path analytic model of

buyer–supplier relationships, linking the supplier’s level of trust to three categories of

inter-firm cooperative behaviors and these behaviors to the buyer’s perception of the

relationship’s performance. Higher levels of inter-organizational cooperative behaviors

such as shared planning and flexibility in coordinating activities were found to be

strongly linked to the supplier’s trust in the buyer firm. However, not all of the types of

cooperative behaviors, particularly joint responsibility for problem solving, had

significant impacts on the buyer’s perceptions of the relationship’s performance.

Mugarura (2010) examined the relationship between buyer-supplier collaboration and

relationship continuity of private manufacturing firms in Kampala. The results indicated a

significant positive relationship between buyer-supplier collaboration and relationship

continuity. Results also indicated that adaptation, trust and commitment are significant

predictors of relationship continuity and collaboration positively predicts adaptation, trust

and commitment.

27

2.5 Chapter Summary

The chapter reviewed literature regarding strategic capabilities influencing sustainable

competitive advantage of organizations. The first section reviewed literature in line with

technological capabilities, the second section focused on literature related on marketing

capabilities, the last section was about supplier relationship capabilities and how they

impact sustainable competitive advantage of firms. Throughout the analytical review of

literature, research gaps were identified. The next chapter presents the methodology that

was followed in accomplishing the study.

28

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 Introduction

This chapter presents the methodology used in the study. Particularly this entailed

research design, the target population, sample and sampling techniques, data collection as

well as data analysis employed in the study

3.2 Research Design

Research design is intended to provide an appropriate framework for a study. A very

significant decision in research design process is the choice to be made regarding research

approach since it determines how relevant information for a study was obtained; however,

the research design process involves many interrelated decisions (Kumar & Pansari,

2016). Research design therefore means the structure and planning of the entire approach

to a problem for research (Odoh & Chinedum, 2014). According to Bhat (2015),

quantitative research design can be categorized into five: Descriptive research design,

Experimental research design, Correlational research design: Diagnostic research design,

and Explanatory research design.

This study used descriptive survey design. A survey is a systematic method for gathering

information from entities for the purposes of constructing quantitative descriptors of the

attributes of the larger population of which the entities are members. Surveys are

conducted to gather information that reflects population’s attitudes, behaviors, opinions

and beliefs that cannot be observed directly (Chun, Heeringa & Schouten, 2018). They

are particularly useful for non-experimental descriptive designs that seek to describe

reality. Cross-sectional survey was used for the present study. Cross sectional survey

facilitated data collection on different variables, depicting how variation in technological

capabilities, marketing capabilities, supplier relationship management correlate with

sustainable competitiveness within foreign-based supermarkets (Sedgwick, 2014). In

addition, cross-sectional survey provided a snapshot of what is happening with regard to

sustainable competitiveness of supermarkets at the time of undertaking the study. Lastly,

because surveys could use a random sampling technique to recruit participants, relatively

29

small sample sizes could be used to generate findings and draw conclusions about the

whole population.

3.3 Population and Sampling Design

3.3.1 Population

In statistics, a population is an entire group about which some information is required to

be ascertained. The study targeted management level employees of the foreign owned

supermarket chains, registered in Nairobi City. The National Chamber of Commerce

(2020) indicated that there are five foreign-based supermarket chains in Nairobi. The

Table 3.1 shows the five foreign-based supermarket and the population size of the

employees at the management. The population size of the employees was obtained from

the human resource records of each of the supermarket as at February 2020.

Table 3.1: Population Distribution

Supermarket Branches Population of the

Employees at

Management

Level

Source of

Information

Carrefour The Hub Karen, The Village

Market, Galleria Shopping Mall,

The Sarit Centre, The Junction

Mall, Thika Road Mall, Two Rivers

48

Human Resource

Records of the

supermarket

Choppies

Enterprises

Kenya

Embakasi, Southfield Mall,

Westlands, 25

Human Resource

Records of the

supermarket

Game Stores Waterfront Karen, Gardencity

17

Human Resource

Records of the

supermarket

Shoprite

Kenya

Garden City Mall, Westgate Mall,

City Mall 26

Human Resource

Records of the

supermarket

Village

Supermarket

Village Mall Gigiri 8

Human Resource

Records of the

supermarket

Total

124

Human Resource

Records of all the

supermarket

3.3.2 Sampling Design

According to Cooper and Schindler (2014), sampling design entails a working plan that

provides details about the sampling frame, sample size and sampling technique

procedures to make explicit the characteristic of the population. Saunders, Lewis and

30

Thornhill (2016) added that the sampling is the process of selecting units from a

population of interest so that by studying the sample we may generalize the results back

to the population from which they were chosen. For the purpose of this study, the

researcher focused on sampling frame, sampling technique and sample size.

3.3.2.1 Sampling Frame

A sampling frame is simply a list of sampling units from which selection of sample is

made (Martínez-Mesa, González-Chica, Duquia, Bonamigo, & Bastos, 2016). In most

cases presented in form of figure or table, a sampling frame presents detailed information

about the population (Oladipo, Ikamari, Barasa, & Kiplang'at, 2015). For this study, the

sample frame comprises of the 124 management employees drawn from the five foreign-

based supermarkets operating in Nairobi City as illustrated in Table 3.2.

Table 3.2: Sampling Frame

Supermarket Branches List of Units to be

sampled

Source of the List

Carrefour The Hub Karen, The Village

Market, Galleria Shopping Mall,

The Sarit Centre, The Junction

Mall, Thika Road Mall, Two

Rivers

Employees at the

management level

Human Resource

Records of the

supermarket

Choppies

Enterprises

Kenya

Embakasi, Southfield Mall,

Westlands, Employees at the

management level

Human Resource

Records of the

supermarket

Game Stores Waterfront Karen, Gardencity Employees at the

management level

Human Resource

Records of the

supermarket

Shoprite

Kenya

Garden City Mall, Westgate

Mall, City Mall Employees at the

management level

Human Resource

Records of the

supermarket

Village

Supermarket

Village Mall Gigiri Employees at the

management level

Human Resource

Records of the

supermarket

3.3.2.2 Sampling Technique

Sampling is the process of selecting a statistically representative sample of individuals

from the population of interest (Banerjee & Chaudhury, 2010). A different proportion of

each group can then be selected as a subsample either by simple random sampling or

systematic sampling. The study relied on stratified random sampling in selecting the

employees from every foreign supermarket to take part in the survey. The population was

31

segregated into several mutually exclusive subpopulations or strata (foreign

supermarkets). The random sampling techniques were employed, presenting the

opportunity for each of the foreign supermarket with equal chance of being selected

3.3.2.3 Sample Size

A representative sample reflects the various key aspects of the population. The sample

size of a research study should have adequate power and significance (Biau, Kernéis, &

Porcher, 2008), allowing the investigators remain confident that the study findings cannot

be attributed to random variations in the population of interest. Since the population is

large, sample size was derived from the target population for easy accessibility by the

researcher. The SLOVIN’s (1960) formula was applied to determine the exact sample

size:

n = N / (1+Ne2)

Where; n= the required sample size; N= the known population size; and e = the level of

significance, which is = 0.05.

n=N/1+N*0.052

Given a total population of 124 management staff drawn from the five foreign

supermarket chains was extracted into investigated companies; its sample size was 114

foreign supermarket senior employees as calculated in table 3 below;

Table 3.3: Sample Size

Supermarket Management Population

Size (N) Sample Size (n)

Carrefour 48 43

Choppies Enterprises Kenya 25 24

Game Stores 17 16

Shoprite Kenya 26 24

Village Supermarket 8 7

Total 124 114

32

3.4 Data Collection Methods

Data collection refers to the process of collecting primary and secondary information of

the targeted population. In this study, primary data was collected using questionnaire

technique. Data was collected using self-administered structured four-point like scale

questionnaire as the research instrument, where 1- stands for least likely while 4- most

likely a recommended by Sullivan and Artino (2013).

3.5 Research Procedures

After constructing the data collection instrument, the researcher conducted a pilot study

on 10 percent of the sample size as suggested by Whitehead, Julious, Cooper, and

Campbell (2016) in order to minimize the possible instrumentation error and hence help

increase the reliability and validity of the data collected. An ethical clearance letter was

obtained from institutional review board and a research Permit was obtained from

NACOSTI. Permission was then sought from the management of respective foreign

supermarkets to carry out the research. The questionnaires were sent to the respondents

via survey monkey which was an online data collection platform preferred by most

respondents.

3.6 Data Analysis

Research responses were coded, entered, and analyzed using Social Package for Social

Sciences (SPSS) Version 25. Descriptive statistical measures such as percentages were

used to describe the characteristics of the collected data. Inferential statistics was used to

determine the relationship and causal effects between the study variables. The primary

association among the study variables was assessed using correlation analysis which was

tested at 95% confidence level (level of significance, α=0.05). Linear regression and

correlation statistics were used to analyze relationship between strategic capabilities and

sustainable competitive advantage.

33

3.7 Chapter Summary

This chapter presented the research methodology that was used in the study covering the

research design, population and sampling design, data collection methods, research

procedures and data analysis methods. The study used descriptive survey research design

with a questionnaire as the primary data collection tool. A sample of 114 management

employees was drawn from a population of 124 management employees of the five

supermarkets- Carrefour, Choppies Enterprises Kenya, Game Stores, Shoprite Kenya, and

Village Supermarket. The chapter also discussed how data collected was analyzed and

presented. The next chapter focuses on the presentation of results and findings in relation

to the study objectives.

34

CHAPTER FOUR

4.0 RESULTS AND FINDINGS

4.1 Introduction

This chapter presents the findings of the study based on the research questions. The

analysis covers the general information of the respondents, descriptive statistics of each

variable of the study and the inferential analysis that help to answer the research

questions.

4.2 General Information

4.2.1 Response Rate

The study managed to reach 87 respondents who were willing to respond online. This

represent 76% response rate as the study targeted 114 respondents from the supermarkets.

4.2.2 Highest Level of Education

The study sought to investigate the highest level of education of the respondents and the

results showed that 17.4% of the respondents have certificate as the highest level of

education,38.4% had diploma as the highest level of education, 36% have undergraduate

as the highest level of education and 8.1% have masters as their highest level of

education. This is an indication that most of the management employees of the foreign

supermarkets are educated and have diploma and undergraduate certificates as their

highest level of education. The results are as shown in the Figure 4.1.

Figure 4.1: Highest Level of Education

35

4.2.3 Years of Experience

The study sought to investigate the years of experience of the respondents in the

supermarket and the results showed that 14% of the respondents have less than one year

of experience,66.3% had between one to five years of experience, 11.6% have between

six to ten years of experience and 8.1% have more than ten years of experience. This is an

indication that majority of the management level employees of the foreign supermarkets

are experienced and have between one to five years of experience in the supermarkets.

The results are as shown in the Figure 4.2.

Figure 4.2: Years of Experience

4.2.4 Position in the Firm

The study sought to investigate the current position held by the respondents in the

supermarket and the results showed that 9.4% of the respondents are senior managers,

56.5% are middle level managers and 34.1% are supervisors. This reveals that majority of

the respondents who highly responded were middle level managers. The results are as

shown in the Figure 4.3.

36

Figure 4.3: Position in the Firm

4.2.5 Number of Outlets

The study sought to investigate the number of outlets the supermarkets had and the results

showed that 89.5% had between one to three outlets, 2.3% had between four to six

outlets, 3.5% have between seven to nine and 4.7% have 10 and above outlets. This

question was to investigate whether the foreign supermarkets vary much in terms of

outlets or not. The results reveals that most of the foreign supermarkets have between one

to two outlets for their customers. The results are as shown in the Figure 4.4

Figure 4.4 : Number of Outlets

4.2.6 Number of Employees

The study sought to investigate the full time employees in the supermarket and the results

showed that 68.6% of the supermarkets had less than 200 employees,19.8% had between

200 to 400 employees,3.5% had between 401 to 600 employees, 5.8% had between 601 to

37

800 employees, 1.2% had between 801 to 1000 employees and 1.2% had more than 1000

employees. This reveals that more than 60% of the foreign supermarkets have less than

200 employees. The results are as shown in the Figure 4.5.

Figure 4.5: Number of Employees

4.2.7 Entry into Kenya.

The study sought to investigate the year the supermarkets entered Kenyan market and the

results showed that 11.6% of the supermarkets came in less than 12 months ago, 10.5% of

the supermarkets came in between 12 to 24 months ago, 4.7% of the supermarkets came

in between 25 to 36 months ago, 3.5% of the supermarkets came in between 37 to 48

months ago and 69.8% of the supermarkets came in more than 48 months ago. The results

reveals that most of the foreign supermarkets in Kenya have operated for more than 2

years. The results are as shown in the Figure 4.6

Figure 4.6: Entry into Kenya

38

4.3 Effects of Technology Capabilities on Sustainable Competitive Advantage

4.3.1 Sustainable Competitive Advantage

Research sought to investigate whether the firms have consistently posted positive cash

flow or not. Majority of 55.3% agreed and strongly agreed ,32.9% were neutral about it

while 11.7% disagreed and strongly disagreed as shown in the Table 4.1. The question

whether the firms have continuously accepted new proposals and recommendations from

employees or not, majority of 67% agreed and strongly agreed, 22.4% were neutral and

10.6% disagreed and strongly disagreed as shown in the Table 4.1.

The investigation on whether streamlining of internal processes has ensured high

efficiency and interdepartmental collaboration or not. Majority of 84.7% agreed and

strongly agreed ,11.8% were neutral and 3.6% disagreed and strongly disagreed as shown

in the Table 4.1. The investigation on whether suppliers network has strengthened in the

past years or not. Majority of 87% agreed and strongly agreed, 10.6% were neutral and

2.4% disagreed and strongly disagreed as shown in the Table 4.1.

The question on whether the application of technology has translated into cost cutting

leading to higher profit margin or not, majority of 83.6% agreed and strongly agreed with

the statement, 9.4% were neutral and 7.1% disagreed and strongly disagreed with the

statement as shown in the Table 4.1.

Table 4.1: Sustainable Competitive Advantage

Variables Strongly

Disagree

Disagree Neutral Agree Strongly

Agree

Our firm has consistently

posted positive cash flow

3.5% 8.2% 32.9% 41.2% 14.1%

The firm has continuously

accepted new proposals and

recommendations from

employees.

0.0% 10.6% 22.4% 52.9% 14.1%

Streamlining of internal

processes has ensured high

efficiency and

interdepartmental

collaboration.

2.4% 1.2% 11.8% 35.3% 49.4%

Our supplier network has

strengthened in the past

years.

1.2% 1.2% 10.6% 23.5% 63.5%

Application of technology

has translated into cost

cutting hence higher profit

margin.

2.4% 4.7% 9.4% 27.1% 56.5%

39

4.3.2 Technological Capabilities

The investigation on whether the firms have invested in predictive analytics and big data

or not was done and the results showed that majority of 84.6% agreed and strongly agreed

that they have invested in predictive analytics and big data,7.1% were neutral about it and

8.4% disagreed and strongly disagreed with the statement as shown in the Table 4.2.

The study investigated on whether the firms have invested in computer systems to keep

reliable stock data in real time or not. The results showed that 93% agreed and strongly

agreed that they have invested, 2.4% were neutral about it and 4.7% disagreed and

strongly disagreed as shown in the Table 4.2.

The study investigated on whether the firms embraces the concept of ongoing revolution

of the retail industry to increase the speed and flexibility of order fulfillment operations.

The results showed that 93% agreed and strongly agreed they embrace the concepts, 2.4%

were neutral about it and 4.7% disagreed and strongly disagreed with the opinion as

shown in the Table 4.2.

The study investigated on whether the facial recognition technology has been adopted to

proactively battle shoplifting and retail crime by the firms. The results showed that 32.1%

agreed and strongly agreed that they have adopted, 29.8% were neutral about it and

38.1% disagreed and strongly disagreed with the opinion as shown in the Table 4.2.

The study investigated on whether the firms relies on sensor-embedded shelves to track

inventory. The results showed that 35.7% agreed and strongly agreed they rely on sensor-

embedded shelves to track inventory, 26.2% were neutral about this and 38.1% disagreed

and strongly disagreed with the statement as shown in the Table 4.2.

The study investigated on whether the firms provide fresh products home deliveries to

clients. The results showed that 49.4% agreed and strongly agreed that they provide,

18.1% were neutral about it as 32.5% disagreed and strongly disagreed with the statement

as shown in the Table 4.2.

Internet technology is utilized in linking firm headquarters and key suppliers. This was

confirmed by 90.4% of the respondents who agreed and strongly agreed with the

statement, 4.8% were neutral about it and 4.8% disagreed and strongly disagreed with the

statement as shown in the Table 4.2.

40

Firms have taken advantage of IT outsourcing as mechanism of cost control and

improvement of service delivery. This was confirmed by 86.7% who agreed and strongly

agreed with the opinion, 7.2% were neutral about it and 6% disagreed and strongly

disagreed with the statement as shown in the Table 4.2.

Firms utilizes radio frequency identification tagging positions to safeguard its

merchandise by allowing products to be tracked from manufacturer through the entire

supply chain. This was confirmed by 36.9% who agreed and strongly agreed with the

statement, 34.5% were neutral about the it and 28.6% disagreed and strongly disagreed

with the statement as shown in the Table 4.2.

Payment Card Industry (PCI) Security Compliance addresses the firm’s internal security

setup and practices, in order to mitigate payment security risks. This was confirmed by

75.3% who agreed and strongly agreed with the statement, 15.3% were neutral about it as

9.5% disagreed and strongly disagreed with the statement as shown in the Table 4.2.

Firms encourage use of technology to support activities that facilitate critical thinking

among employees. This was confirmed by 84.6% who agreed and strongly agreed with

the statement, 10.7% were neutral about it and 4.8% disagreed and strongly disagreed

with the statement as shown in the Table 4.2. Application of technology has translated

into cost cutting hence higher profit margin. This was confirmed by 82.3% who agreed

and strongly agreed with the statement, 10.6% were neutral about it as 7.1% disagreed

and strongly disagreed with the statement as shown in the Table 4.2.

Managers encourage team members to experiment new technologies in order to improve

work process. This was confirmed by 75.3% who agreed and strongly agreed with the

statement, 17.6% were neutral about it as 7.1% disagreed and strongly disagreed with the

statement as shown in the Table 4.2. Firms have continuously accepted new proposals

and recommendations from employees. This was confirmed by 75.3% who agreed and

strongly agreed with the statement, 17.6% were neutral about it as 10.6% disagreed and

strongly disagreed with the statement as shown in the Table 4.2 below.

Firms have a system that allows staff to learn successful practices from other

organizations. This was confirmed by 71.8% who agreed and strongly agreed with the

statement, 20% were neutral about it as 8.2% disagreed and strongly disagreed with the

statement as shown in the Table 4.2.

41

Table 4.2: Technological Capabilities

Variables

Str

on

gly

dis

agre

e

Dis

ag

ree

Neu

tral

Ag

ree

Str

on

gly

Ag

ree

The firm has invested in predictive analytics and

big data

4.8% 3.6% 7.1% 54.8% 29.8%

The firm has invested in computer systems to

keep reliable stock data in real time.

4.7% 0.0% 2.4% 21.2% 71.8%

The firm embraces the concept of ongoing

revolution of the retail industry to increase the

speed and flexibility of order fulfillment

operations.

4.7% 0.0% 2.4% 42.4% 50.6%

Facial recognition technology has been adopted

to proactively battle shoplifting and retail crime.

14.3% 23.8% 29.8% 20.2% 11.9%

The firm relies on sensor-embedded shelves to

track inventory.

17.9% 20.2% 26.2% 27.4% 8.3%

The firm provides fresh products home

deliveries to clients

9.6% 22.9% 18.1% 28.9% 20.5%

Internet technology is utilized in linking firm

headquarters and key suppliers

4.8% 0.0% 4.8% 24.1% 66.3%

The firm has taken advantage of IT outsourcing

as mechanism of cost control and improvement

of service delivery.

3.6% 2.4% 7.2% 28.9% 57.8%

The firm utilizes radio frequency identification

tagging positions to safeguard its merchandise

by allowing products to be tracked from

manufacturer through the entire supply chain.

10.7% 17.9% 34.5% 16.7% 20.2%

The Payment Card Industry (PCI) Security

Compliance addresses the firm’s internal

security setup and practices, in order to mitigate

payment security risks

7.1% 2.4% 15.3% 32.9% 42.4%

The firm encourages use of technology to

support activities that facilitate critical thinking

among employees

4.8% 0.0% 10.7% 41.7% 42.9%

Application of technology has translated into

cost cutting hence higher profit margin.

4.7% 2.4% 10.6% 28.2% 54.1%

Managers encourage team members to

experiment new technologies in order to

improve work process.

4.7% 2.4% 17.6% 49.4% 25.9%

The firm has continuously accepted new

proposals and recommendations from

employees.

8.2% 2.4% 17.6% 43.5% 28.2%

We have a system that allows staff to learn

successful practices from other organizations.

4.7% 3.5% 20.0% 16.5% 55.3%

42

4.3.3 Correlation test Between Technological Capabilities and Sustainable

Competitive Advantage

A Pearson correlation test was done to investigate if there is a significant relationship

between technological capabilities and sustainable competitive advantage. The results

showed that there is a significant correlation between technological capabilities and

sustainable competitive advantage (r= 0.385, p=0.001). This is an indication that

technological capabilities significantly affect sustainable competitive advantage. The

results are as shown in the Table 4.3.

Table 4.3: Correlation test Between Technological Capabilities and Sustainable

competitive Advantage

Sustainable Competitive

Advantage

Technological Capabilities

Pearson

Correlation .385**

Sig. (2-tailed) .001

N 78

4.3.4 Linear Regression Analysis

A linear regression analysis was done to investigate the extent to which technological

capabilities and supplier relationship affects sustainable competitive advantage. The

results from model summary shows that R square is 0.148, meaning that the independent

variables could only explain 14.8% of the variation in sustainable competitive advantage.

The results are shown in Table 4.4.

Table 4.4: Model Summary Between Technological Capabilities and Sustainable

Competitive Advantage

Model Summary

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 .385a .148 .137 .62950 .148 13.197 1 76 .001

a. Predictors: (Constant), Technological Capabilities

The ANOVA Table further showed that the independent variable, technological

capabilities have a significant linear relationship with the sustainable competitive

advantage (p =0.01). The results are shown in Table 4.5.

43

Table 4.5: ANOVA Between Technological Capabilities and Sustainable

Competitive Advantage

ANOVAa

Model Sum of

Squares

df Mean Square F Sig.

1

Regression 5.230 1 5.230 13.197 .001b

Residual 30.117 76 .396

Total 35.346 77

a. Dependent Variable: Sustainable Competitive Advantage

b. Predictors: (Constant), Technological capabilities

The analysis on the coefficients Table indicates the true effects of the independent

variables on sustainable competitive advantage as below;

Y= 2.715 + 0.349 X1

The model indicates that increasing technological capabilities by one unit, Sustainable

competitive advantage increases by 0.349 units. The t-test further reveals that the positive

effect of technological capabilities on Sustainable competitive advantage is statistically

significant (t=3.633, p=0.001). The results are as shown in Table 4.6.

Table 4.6: Coefficients Between Technological Capabilities and Sustainable

Competitive Advantage

Coefficients

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig. 95.0% Confidence

Interval for B

B Std.

Error

Beta Lower

Bound

Upper

Bound

1

(Constant) 2.715 .379 7.156 .000 1.960 3.471

Technological

capabilities .349 .096 .385 3.633 .001 .158 .540

a. Dependent Variable: Sustainable competitive advantage

4.4 Effects of Marketing Capabilities on Sustainable Competitive Advantage

Firms are constantly in contact with those who can influence their end users' purchases.

This was confirmed by 75% who agreed and strongly agreed with the statement, 20%

were neutral about it as 5.1% disagreed and strongly disagreed with the statement as

shown in the Table 4.7.

44

Firms adopt market research skills to develop effective marketing programs. This was

confirmed by 87.9% who agreed and strongly agreed with the statement, 9.6% were

neutral about it as 2.4% disagreed and strongly disagreed with the statement as shown in

the Table 4.7.

Firms collects industry information through informal means. This was confirmed by

36.1% who agreed and strongly agreed with the opinion, 42.2% were neutral about it as

21.7% disagreed and strongly disagreed with the statement as shown in the Table 4.7.

There are specific mechanisms for sharing lessons learned in the firm. This was

confirmed by 85.6% agreed and strongly agreed with the statement, 6% were neutral

about it and 8.4% disagreed and strongly disagreed with the statement as shown in the

Table 4.7.

Firms send appreciation messages to customers on every shopping. This was confirmed

by 45.8% who agreed and strongly agreed with the statement, 26.5% were neutral about

the it as 27.8% disagreed and strongly disagreed with the statement as shown in the Table

4.7.

Sales associates are empowered with mobile tools to ensure continuous customer

engagement. This was confirmed by 56.1% who agreed and strongly agreed with the

statement, 34.1% were neutral about it as 9.8% disagreed and strongly disagreed with the

statement as shown in the Table 4.7.

Firms have built a consumer community along its brand. This was confirmed by 91.5%

who agreed and strongly agreed with the statement, 3.7% were neutral about it as 4.8%

disagreed and strongly disagreed with the statement as shown in the Table 4.4 below.

Annual contests are held for customers and winners are issued with free shopping

vouchers. This was confirmed by 20.4% who agreed and strongly agreed with the

statement, 44.6% were neutral about it as 35% disagreed and strongly disagreed with the

statement as shown in the Table 4.7.

Customer’s personal initiatives are frequently supported by the firm. This was confirmed

by 60.3%who agreed and strongly agreed with the statement, 24.1% were neutral about

the it as 15.6% disagreed and strongly disagreed with the statement as shown in the Table

4.7.

45

Firms collaborate with suppliers to incorporate changing consumer tastes and preferences

into the final product. This was confirmed by 82% who agreed and strongly agreed with

the statement, 12% were neutral about it as 6% disagreed and strongly disagreed with the

statement as shown in the Table 4.7.

Firms always engage in research to develop product quality and standards. This was

confirmed by 80.9% who agreed and strongly agreed with the statement, 10.7% were

neutral about it as8.4% disagreed and strongly disagreed with the statement as shown in

the Table 4.7.

Firms have adopted food lockers/pods to ensure conformity to high quality food

standards. This was confirmed by 48.8% who agreed and strongly agreed with the

statement, 39.3% were neutral about it as 11.9% disagreed and strongly disagreed with

the statement as shown in the Table 4.7.

Firms use artificial intelligence (AI) to predict and manage the orders of highly perishable

items. This was confirmed by 74.7% who agreed and strongly agreed with the statement,

12% were neutral about it as 13.2% disagreed and strongly disagreed with the statement

as shown in the Table 4.7.

Firms enables grocery retailers to help customers discover new recipes, shop smarter and

increase their revenue. This was confirmed by 45.2% who agreed and strongly agreed

with the opinion, 42.9% were neutral about it as 11.9% disagreed and strongly disagreed

with the statement as shown in the Table 4.7.

Firms always detect changes in customers' product preferences. This was confirmed by

83.4% who agreed and strongly agreed with the statement, 7.1% were neutral about it as

9.6% disagreed and strongly disagreed with the statement as shown in the Table 4.7.

46

Table 4.7: Descriptive Statistics for Marketing Capabilities

Variables

Str

on

gly

dis

agre

e

Dis

agre

e

Neu

tral

Agre

e

Str

on

gly

Agre

e

The firm is constantly in contact with

those who can influence our end users'

purchases (e.g., retailers, distributors)

3.8% 1.3% 20.0% 47.5% 27.5%

The firm adopts market research skills to

develop effective marketing programs

2.4% 0.0% 9.6% 32.5% 55.4%

The firm collects industry information

through informal means (lunch with

industry friends, talks with trade

partners).

13.3% 8.4% 42.2% 26.5% 9.6%

There are specific mechanisms for

sharing lessons learned in the firm

2.4% 6.0% 6.0% 38.6% 47.0%

The firm sends appreciation message(s)

to customers on every shopping.

13.3% 14.5% 26.5% 32.5% 13.3%

Sales associates are empowered with

mobile tools to ensure continuous

customer engagement

4.9% 4.9% 34.1% 25.6% 30.5%

The firm has built a consumer

community along its brand.

2.4% 2.4% 3.7% 36.6% 54.9%

Annual contests are held for customers

and winners are issued with free

shopping vouchers.

18.1% 16.9% 44.6% 12.0% 8.4%

The firm frequently supports customer’s

personal initiatives.

9.6% 6.0% 24.1% 45.8% 14.5%

The firm collaborates with suppliers to

incorporate changing consumer tastes and

preferences into the final product.

1.2% 4.8% 12.0% 38.6% 43.4%

The firm is always engaging in research

to develop product quality and standards.

3.6% 4.8% 10.7% 36.9% 44.0%

The firm has adopted food lockers/pods

to ensure conformity to high quality food

standards.

1.2% 10.7% 39.3% 19.0% 29.8%

The firm uses artificial intelligence (AI)

to predict and manage the orders of

highly perishable items.

3.6% 9.6% 12.0% 32.5% 42.2%

The firm enables grocery retailers to help

customers discover new recipes, shop

smarter and increase their revenue.

3.6% 8.3% 42.9% 21.4% 23.8%

The firm is always detecting changes in

customers' product preferences

3.6% 6.0% 7.1% 29.8% 53.6%

47

4.4.2 Correlation test Between Marketing capabilities and Sustainable competitive

advantage

A Pearson correlation test was done to investigate if there is a significant relationship

between marketing capabilities and sustainable competitive advantage. The results

showed that there is no significant correlation between marketing capabilities and

sustainable competitive advantage (r= 0.211, p>0.05). This is an indication that marketing

capabilities does not significantly affect sustainable competitive advantage. The results

are as shown in the Table 4.8.

Table 4.8: Correlation test Between Marketing Capabilities and Sustainable

Competitive Advantage

Sustainable Competitive

Advantage

Marketing Capabilities

Pearson Correlation .211

Sig. (2-tailed) .065

N 77

4.4.3 Linear Regression Analysis

A linear regression analysis was done to investigate the extent to which marketing

capabilities affects sustainable competitive advantage. The results from model summary

shows that R square is 0.045, meaning that the independent variables could only explain

4.5% of the variation in sustainable competitive advantage. The results are shown in

Table 4.9.

Table 4.9: Model Summary Between Marketing Capabilities and Sustainable

Competitive Advantage

Model Summary

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 .211a .045 .032 .65393 .045 3.500 1 75 .065

a. Predictors: (Constant), Marketing Capabilities

The ANOVA in Table 4.10 further showed that the independent variable, marketing

capability does not have a significant linear relationship with the sustainable competitive

advantage (F=3.500, p >0.05).

48

Table 4.10: ANOVA Between Marketing Capabilities and Sustainable Competitive

Advantage

ANOVAa

Model Sum of

Squares

df Mean Square F Sig.

1

Regression 1.497 1 1.497 3.500 .065b

Residual 32.072 75 .428

Total 33.569 76

a. Dependent Variable: Sustainable competitive advantage

b. Predictors: (Constant), Marketing Capabilities

The analysis on the coefficients in Table 4.11 indicates the true effects of the marketing

on: Sustainable competitive advantage as below;

Y= 3.181 + 0. 233X2

The model indicates that increasing marketing capability strategy by one unit, Sustainable

competitive advantage increases by 0.233 units. However, the t-test reveals that the effect

of marketing capability strategy on Sustainable competitive advantage is not statistically

significant (t=1.871, p=0.065). The results are as shown in Table 4.11.

Table 4.11: Coefficients Between Marketing Capabilities and Sustainable

Competitive Advantage

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig. 95.0% Confidence

Interval for B

B Std.

Error

Beta Lower

Bound

Upper

Bound

1

(Constant) 3.181 .480 6.628 .000 2.225 4.137

Marketing

Capabilities .233 .124 .211 1.871 .065 -.015 .481

a. Dependent Variable: Sustainable Competitive advantage

49

4.5 Effects of Supplier Relationship Capabilities on Sustainable Competitive

Advantage

4.5.1 Supplier Relationship Capabilities

Firms always pay their suppliers on time. This was confirmed by 93% who agreed and

strongly agreed with the statement, 2.3% were neutral about it as 4.6% disagreed and

strongly disagreed with the statement as shown in the Table 4.12.

Suppliers provide the right quantity and quality of goods and services. This was

confirmed by 88.4% who agreed and strongly agreed with the statement, 9.3% were

neutral about it as 2.3% disagreed and strongly disagreed with the statement as shown in

the Table 4.12.

Suppliers deliver products on-time. This was confirmed by 86% who agreed and strongly

agreed with the opinion, 10.5% were neutral about it as 3.5% disagreed and strongly

disagreed with the statement as shown in the Table 4.12.

Procurement costs of suppliers’ products are highly competitive. This was confirmed by

82.3% who agreed and strongly agreed with the statement, 15.3% were neutral about it as

2.4% disagreed and strongly disagreed with the statement as shown in the Table 4.12.

Firms have no intentions to change their current suppliers. This was confirmed by 78.8%

agreed and strongly agreed with the statement, 16.5% were neutral about it as 4.7%

disagreed and strongly disagreed with the statement as shown in the Table 4.12.

Firms freely discuss on the type of contract to be employed for a particular purchase or

sale. This was confirmed by 86.9% agreed and strongly agreed with the statement, 9.5%

were neutral about it as 3.6% disagreed and strongly disagreed with the statement as

shown in the Table 4.12.

Firms share information on definition of what needs to be purchased /sold with our

suppliers. The results showed that 88.2% agreed and strongly agreed with the statement,

7.1% were neutral about it as 3.6% disagreed and strongly disagreed with the statement as

shown in the Table 4.12.

Suppliers freely share important information on market research. The results showed that

82.4% agreed and strongly agreed with the statement, 14.1% were neutral about it as

3.6% disagreed and strongly disagreed with the statement as shown in the Table 4.12.

50

Firms share information with their suppliers/buyers of the possibility and procedures

pertaining contract amendments. This was confirmed by 87.1% agreed and strongly

agreed with the statement, 9.4% were neutral about it as 3.6% disagreed and strongly

disagreed with the statement as shown in the Table 4.12.

Firms generally trust major suppliers to stay within the terms of the contract. This was

confirmed by 87.1% who agreed and strongly agreed with the statement, 9.4% were

neutral about it as 3.6% disagreed and strongly disagreed with the statement as shown in

the Table 4.12.

Major suppliers do not try to alter the facts in order to get concessions from firms. This

was confirmed by 87.1% agreed and strongly agreed with the statement, 9.4% were

neutral about it as 3.6% disagreed and strongly disagreed with the statement as shown in

the Table 4.12.

When unexpected situations arise, suppliers always act in a manner that is favorable to us.

This was confirmed by 73.5% who agreed and strongly agreed with the opinion, 15.7%

were neutral about it as 10.8% disagreed and strongly disagreed with the statement as

shown in the Table 4.12.

Firms trust that their suppliers will deliver high quality most of the time. This was

confirmed by 91.7% who agreed and strongly agreed with the statement, 4.8% were

neutral about it as 3.6% disagreed and strongly disagreed with the statement as shown in

the Table 4.12.

Relationship between firms and their major suppliers is characterized by high levels of

trust. This was confirmed by 94.1% who agreed and strongly agreed with the statement,

3.5% were neutral about it as 2.4% disagreed and strongly disagreed with the statement as

shown in the Table 4.12.

51

Table 4.12: Supplier Relationship Capabilities

Variables

Str

on

gly

dis

agre

e

Dis

agre

e

Neu

tral

Agre

e

Str

on

gly

Agre

e

We always pay our suppliers on

time. 2.3% 2.3% 2.3% 44.2% 48.8%

Our suppliers provide the right

quantity and quality of goods and

services.

2.3% 0.0% 9.3% 55.8% 32.6%

Our suppliers deliver products on-

time. 2.3% 1.2% 10.5% 48.8% 37.2%

The procurement costs of our

suppliers products are highly

competitive.

2.4% 0.0% 15.3% 52.9% 29.4%

We have no intentions to change

our current suppliers. 3.5% 1.2% 16.5% 57.6% 21.2%

Our suppliers and us freely discuss

on the type of contract to be

employed for a particular

purchase/sale

2.4% 1.2% 9.5% 50.0% 36.9%

We share information on definition

of what needs to be purchased /sold

with our suppliers

3.5% 1.2% 7.1% 50.6% 37.6%

We share information about the

important aspects which must be

incorporated in suppliers/buyers

proposals/offers

2.4% 0.0% 7.1% 56.5% 34.1%

Our suppliers freely share important

information on market research. 2.4% 1.2% 14.1% 42.4% 40.0%

We share information with our

suppliers/buyers of the possibility

and procedures pertaining contract

amendments

1.2% 2.4% 9.4% 56.5% 30.6%

Our firm generally trust major

suppliers to stay within the terms of

the contract.

2.4% 1.2% 9.4% 44.7% 42.4%

Our major suppliers do not try to

alter the facts in order to get

concessions from us.

1.2% 2.4% 7.1% 44.0% 45.2%

When unexpected situations arise,

our suppliers always act in a

manner that is favorable to us.

9.6% 1.2% 15.7% 42.2% 31.3%

We trust that our suppliers will

deliver high quality most of the

time.

2.4% 1.2% 4.8% 53.6% 38.1%

The relationship between our

business and its major suppliers is

characterized by high levels of trust.

2.4% 0.0% 3.5% 29.4% 64.7%

52

4.5.2 Correlation test Between Supplier Relationship Capability and Sustainable

Competitive Advantage

A Pearson correlation test was done to investigate if there is a significant relationship

between supplier relationship capability and sustainable competitive advantage. The

results showed that there is a significant correlation between supplier relationship

capability and sustainable competitive advantage (r=0.391, p<0.05). This is an indication

that supplier relationship capability significantly affects sustainable competitive

advantage. The results are as shown in the Table 4.13.

Table 4.13: Correlation test Between Supplier Relationship Capability and

Sustainable Competitive Advantage

Sustainable Competitive

Advantage

Supplier Relationship Capability

Pearson Correlation .391**

Sig. (2-tailed) .000

N 81

**. Correlation is significant at the 0.01 level (2-tailed).

4.5.3 Linear Regression Analysis

A linear regression analysis was done to investigate the extent to which supplier

relationship affects sustainable competitive advantage. The results from model summary

shows that R square is 0.153, meaning that the supplier relationship could only explain

15.3 % of the variation in sustainable competitive advantage. The findings are shown in

Table 4.14.

Table 4.14: Model Summary Between Supplier Relationship Capability and

Sustainable Competitive Advantage

Model Summary

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 .391a .153 .142 .67904 .153 14.294 1 79 .000

a. Predictors: (Constant), Supplier relationship capability

53

The ANOVA in Table 4.15 further showed that the independent variable, supplier

relationship capability has a significant linear relationship with the sustainable

competitive advantage (F=14.294, p =0.00).

Table 4.15: ANOVA Between Supplier Relationship Capability and Sustainable

Competitive Advantage

ANOVAa

Model Sum of

Squares

df Mean Square F Sig.

1

Regression 6.591 1 6.591 14.294 .000b

Residual 36.427 79 .461

Total 43.017 80

a. Dependent Variable: Sustainable competitive advantage

b. Predictors: (Constant), Supplier relationship capability

The analysis on the coefficients in Table 4.16 indicates the true effects of the independent

variables on: Sustainable competitive advantage as below;

Y= 2.118 + 0.461X3

The model indicates that increasing supplier relationship strategy by one unit, Sustainable

competitive advantage increases by 0.461 units. The t-test further reveals that the positive

effect of supplier relationship strategy on Sustainable competitive advantage is

statistically significant (t=3.781, p=0.00). The results are as shown in Table 4.16.

Table 4.16: Coefficients Between Supplier Relationship Capability and Sustainable

Competitive Advantage

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig. 95.0%

Confidence

Interval for B

B Std.

Error

Beta Lower

Bound

Upper

Bound

1

(Constant) 2.118 .515 4.116 .000 1.094 3.142

Supplier

relationship

capability

.461 .122 .391 3.781 .000 .218 .704

a. Dependent Variable: Sustainable Competitive Advantage

54

4.6 Chapter Summary

The findings on the first research question revealed retail firms had consistently posted

positive cash flow. It was also noted that retail firms had continuously accepted new

proposals and recommendations from employees. In addition, streamlining of internal

processes had ensured high efficiency and interdepartmental collaboration or not. On the

second research question, it was demonstrated that retailers were constantly in contact

with those who could influence end users’ purchases. It was further revealed that the

retail firms adopted market research skills to develop effective marketing programs. In

addition, retailers collected industry information through informal means. Moreover, sales

associates were empowered with mobile tools to ensure continuous customer

engagement. Similarly, it was revealed that retail firms constantly engaged in research to

develop product quality and standards. Regarding the last research question, it was

indicated that retail firms always paid their suppliers on time. Moreover, it was noted that

suppliers provided the right quantity and quality of goods and services. On the same note,

suppliers made timely deliveries. Besides, procurement costs of suppliers’ products were

highly competitive. Finally, whenever unexpected situations arose, suppliers always acted

in a manner that was favorable to the retailers. The next chapter presents the discussion of

the findings, conclusion and recommendations based on the study specific objectives.

55

CHAPTER FIVE

5.0 DISCUSSION, CONCLUSION, AND RECOMMENDATIONS

5.1 Introduction

The chapter provides summary of the findings, discussion of the findings in relation to the

existing studies, conclusion of the major findings as well as recommendations for

improvement and further studies.

5.2 Summary

The purpose of the study was to investigate the effect of strategic capabilities on

sustainable competitive advantage among foreign retail firms in Kenya with a focus on

foreign supermarket chains in Nairobi City County. To fulfil this purpose, the study was

guided by the following research questions; How do technology capabilities affect retail

firm’s sustainable competitive advantage? What is the effect of marketing capabilities on

firm’s sustainable competitive advantage? Lastly, how do supplier management

capabilities affect retail firm’s sustainable competitive advantage?

The study adopted descriptive survey design. The study targeted foreign owned

supermarket chains, registered in Nairobi City. The National Chamber of Commerce

indicate that there are five foreign owned supermarket chains in Nairobi: Carrefour,

Choppies Enterprises Kenya, Game Stores, Shoprite Kenya, and Village Supermarket.

For this study, the population comprised of the 124 employees at the management level as

per the human resource records of each of the five foreign-based supermarkets operating

in Nairobi City as at February 2020. This study then adopted a stratified sampling

technique to derive a sample size of 114 participants. Questionnaires were used to obtain

primary data. Questionnaires were administered to all the sampled respondents within the

chosen firms. Descriptive statistical tools such as frequencies, percentages, mean and

standard deviations aided the researcher to describe the characteristics of the target

population in relation to the objectives of the study. Inferential statistics entailed Pearson

Correlation, ANOVA, and Simple Linear Regression. The output of the analysis was

presented in form of tables, charts, and figures.

The first research question aimed to understand the effect of technology capabilities on

retail firm’s sustainable competitive advantage. Majority of the respondents agreed that

56

retail firms had consistently posted positive cash flow. It was also noted that retail firms

had continuously accepted new proposals and recommendations from employees. In

addition, more than three quarter of the respondents agreed that streamlining of internal

processes had ensured high efficiency and interdepartmental collaboration or not.

Similarly, it was highly agreed that the application of technology had translated into cost

cutting leading to higher profit margin.

The second research question sought to determine the effect of marketing capabilities on

the retail firms’ sustainable competitive advantage. Three quarters of the respondents

agreed that retail firms were constantly in contact with those who could influence end

users’ purchases. It was further revealed that the retail firms adopted market research

skills to develop effective marketing programs. In addition, it was slightly agreed that

retailers collected industry information through informal means. Sales associates were

empowered with mobile tools to ensure continuous customer engagement. It was further

established the retailers frequently supported that customer’s personal initiatives.

Similarly, it was revealed that retail firms constantly engaged in research to develop

product quality and standards.

The last research question sought to establish the effect of supply chain capability on

sustainable competitive advantage of retailers. It emerged that retail firms always paid

their suppliers on time. Furthermore, it was noted that suppliers provided the right

quantity and quality of goods and services. On the same note, suppliers made timely

deliveries. Also, procurement costs of suppliers’ products were highly competitive.

Besides, retailers freely discussed on the type of contract to be employed for a particular

purchase or sale. Finally, whenever unexpected situations arose, suppliers always acted

in a manner that was favorable to the retailers.

5.3 Discussion

5.3.1 Technological Capabilities and Sustainable Competitive Advantage

The findings revealed that supermarkets had invested in computer systems to keep

reliable stock data in real time. Secondly, retailers embraced the concept of ongoing

revolution of the retail industry to increase the speed and flexibility of order fulfillment

operations. According to Shet (2018), IT plays an important role in the management of

complex retail operations. Market knowledge, as well as control of data and information

is essential to obtain a competitive advantage in the retail sector. Today’s consumers are

57

well updated than ever and they shop to greatly increased expectations for service and

price. Retailers are beginning to notice that technology’s role is one of an enabler.

Essentially, information technology can speed up processes and increase sales, improve

customer retention rates and deliver cost saving benefits to the company.

Additionally, retailers rely on sensor-embedded shelves to track inventory. To optimize

the deployment of inventory, retailers are expected to manage the uncertainties,

constraints, and complexities across their global supply chain on continuous basis. This

allows them to improve their inventory forecasting ability and accurately set inventory

targets. An IT solution is a proven and market-leading solution for determining optimal

time-varying inventory targets for every item, at every location throughout supply chain.

This allows retailers you to significantly reduce inventory without adversely affecting

service levels.

The study indicated retailers provided fresh products home deliveries to clients. The

findings are in support of Espegren, Carling and Olsmats (2018) who posited that home

delivery transportation service is one of the critical resources to the success or failure of

the e-grocery business. Punakivi and Saranen (2019) showed that e-grocery home

delivery service can actually be as much as 43 per cent cheaper compared to the current

costs of customers visiting the store using their own car and spare time. This is a strong

argument in favor of the forecasts showing rapid growth of the e-grocery market in the

near future. Thus, supermarkets in Kenya are also gravitating wards faster home delivery

options for the ordered goods (Ghajargarh, Zenizini & Montarano, 2016).

It was further revealed that supermarkets had taken advantage of IT outsourcing as

mechanism of cost control and improvement of service delivery. For instance, Electronic

data interchange (EDI) technology integrated with all of the necessary internal systems

can assist with streamlining the order management processes required to accommodate

more complex fulfillment models such as drop shipping programs (Pierre, 2018). EDI

ensures that the e-commerce order goes from the website, through the retailer’s system

and directly to the drop ship-capable supplier. Suppliers can also benefit from sharing

their inventory availability with their retailers. For example, an online retailer gets regular

real-time updates on a supplier’s inventory counts, which the retailer can then share

online. Customers visiting the website will see real-time availability of a particular

product, which can help them make faster buying decisions. In addition, retailers can even

58

automatically remove the items from their websites to avoid any out-of-stock issues that

might arise (Kitheka, & Ondiek, 2014).

Supermarkets utilized radio frequency identification tagging positions to safeguard their

merchandise by allowing products to be tracked from manufacturer through the entire

supply chain. With the help of RFID, it becomes easy for the sales staff to locate a

particular item in the store and check its availability in less time (Pan, Giannikas, Han &

Grover-Silva, 2016). Additional software, Smart Ops, permit supermarkets to proactively

managing supply chain uncertainty across all stages to improve their total chain inventory

planning, so that their customer service levels can be stabilized and even increased while

overall costs to the business are minimized (Campo & Breugelmans, 2015). Smart Ops

enterprise software solutions support many initiatives and challenges associated with

different manufacturing and distribution industries from Lean Manufacturing, Just-In-

Time (JIT), and Six Sigma initiatives, to postponement strategies, to Collaborative

Planning, Forecasting, and Replenishment (CPFR), and Sales & Operations Planning (S

& OP) activities.

Another emerging aspect of technology in Kenyan retailing market is the adopting the

Payment Card Industry (PCI) Security Compliance addresses the firm’s internal security

setup and practices, in order to mitigate payment security risks. Digital payment is set to

reach new heights in 2020 as consumer demand for cashless transactions increases

worldwide and as more retailers offer digital payment options. Technological

advancements such as the IoT and the use of block chain for digital payments will make

mobile and online payments more secure, easier to track and less expensive. To meet

consumer demand for seamless, frictionless payment, various parties – including e-

commerce platforms, online payment companies and retailers – have launched their own

mobile payment services.

Various ERP vendors have developed retail-specific systems which help in integrating all

the functions from warehousing to distribution, front and back office store systems and

merchandising. An integrated supply chain helps the retailer in maintaining his stocks,

getting his supplies on time, preventing stock outs and thus reducing his costs, while

servicing the customer better.

59

5.3.2 Marketing Capabilities and Sustainable Competitive Advantage

The independent variables, which included market sensing, customer engagement and

product innovation, were found to be positively related to sustainable competitive

advantage. Market-sensing capabilities that are superior enhance a firm's ability to

identify underserved market segments and those requirements, which its competitors are

offering, but not fulfilling the specific requirements of the customer and that of the

channel to render such services (Dias, 2013). Therefore, the firm's efforts to grow its

revenues in providing solutions to underserved and unsatisfied market segments can be

achieved by engaging existing customers and attracting new ones. The aspects of market

sensing such as customer intelligent is important in the providing insights for managers

concerning opportunities for which the firm should capitalize on within existing customer

base and to exploit for the requirements of the new customers (Dentonia, English &

Schwarzc, 2015).

It was further revealed that the supermarkets were constantly in contact with those who

could influence our end users' purchases (e.g., retailers, distributors). The findings are in

support of Soh, Krishnaswamy, Yen and Kiumarsi (2016) who contend that continued

success of a firm can be achieved through long-term relationship with customers, which is

quite emphasized in relationship marketing instead of a short-term relationship. Smirnova

et al. (2011) who concluded that employing marketing potentials might be effective on

improving relationship among the company and customer and give competitive capability

to the company and finally these items will be followed by improved performance further

reinforce the findings.

The supermarkets adopted market research skills to develop effective marketing

programs. Marketing capability is regarded as a tool to gather customer and marketing

information as a source of further learning and development, which is the recipe of

continued success. A company that invests heavily in R & D capability to fully exploit the

benefits of internationalization for the prospects of marketing capability

internationalization grows in innovation competitiveness. Strong marketing capability of

the firm is helpful with critical information and intelligence on customers, their decision-

making, motivations, attitudes and behaviors (Shah, Rust, Parasuraman, & Staelin, 2006).

To possess strong capability of information and intelligence on customers that leads to

60

value capturing is encouraged, and firms should invest in value creation that will result in

innovation.

The supermarkets sent appreciation message(s) to customers on every shopping.

Customer Appreciation Strategy (CAS) is regarded as marketing tactics used by

organizations to win customer loyalty and brand commitment over its product and service

offerings. Opara and Wali (2013) conceptualized three domains for CAS implementation,

among which includes: service personalization; internal customer reward system and

external customer reward system. The results reinforced that CAS tactics are viable for

use in attaining business goals and objectives.

The findings also indicated that sales associates had been empowered with mobile tools to

ensure continuous customer engagement. The study supports the observation by Khadka

and Maharjan (2017) that customer engagement under modern market conditions

acknowledges value creation as a significant factor that makes it possible for companies

to survive and thrive in intense competition. Strong relations between customer

engagement that translates into value creation and customer loyalty are ingredients of

business success. At the time when the marketing operations within the retail sector are

severely affected by Covid-19, a study by Deloitte (2020) advises retailers to be

consistently in touch with their customers through utilization of digital platforms.

Moreover, the supermarkets collaborated with suppliers to incorporate changing

consumer tastes and preferences into the final product. Vlachos and Bourlakis (2014)

argue that the effectiveness of collaboration, and thus the functioning of the food supply

chain, is highly dependent on retailers' initiative to build and foster trust with their

partners. It also depends on manufacturers' ability to fulfil a complex set of retailers'

requirements including physical distribution management, commitment to the partnership,

and effective information management. Majority of supermarkets are progressively

moving towards more collaborative trading relationships with their suppliers as a strategic

weapon in the quest for sustainable competitive advantage.

The supermarkets continuously engaging in research to develop product quality and

standards. The retailer’s market research can gain reliable marketing information to

reduce uncertainty to tolerable levels and facilitate planning and control at a reasonable

cost (Alshanty & Emeagwali, 2019). Through market sensing such firms continuously,

61

increase their knowledge of and experience with customers, by lowering the cost of

serving them over time (Lindblom, Olkkonen, Mitronen & Kajalo, 2008). Besides, the

supermarkets utilized artificial intelligence (AI) to predict and manage the orders of

highly perishable items. Improved marketing capability by the use of customer and

relevant business intelligence, enhanced customer or market research and analysis, and

improved marketing and delivery process leads to innovation performance of firms in

global market (Shah et al., 2006; Tsai & Eisingerich, 2010).

In addition, the supermarkets are always detecting changes in customers' product

preferences. The Kenyan retail market is one of the most promising in the world and it is

growing. According to Rishi and Singh (2012), the factors that influence consumers;

physical factors (discounts, quality, local brands, display and visual appeal); social factors

include (salesmen behaviour and choice of children), and temporal factors (open space)

should be considered by the super marketers while designing marketing strategy for

Indian consumers as these factors are having influence upon the number of visits and

amount spent in the supermarket.

A study conducted by Alharbi (2015) proved that marketing capability could drive

business competitiveness. Superior marketing capabilities is one of the strong attribute for

those organizations that outperform their competitors. Therefore, most supermarkets are

investing largely for the development of the marketing capabilities, which benefits the

organization with both business growth and sustainable competitive advantage. Firms

with strong marketing capabilities should focus their resources on the most profitable

customers and those with a high potential for future profits and ultimately the success of

the organization (Cao & Gruca, 2005). It is marketing capability that explains significant

variance in the components of a firm’s pursuit for sustainable competitive advantage.

5.3.3 Supplier Relationship Capabilities on Sustainable Competitive Advantage

The supermarkets indicated that they paid their suppliers on time. This observation is in

sharp contrast with the recent report by The Association of Kenya Suppliers (2018). In

the report, the suppliers complained of unfair trade practices perpetrated on them by

retailers due to imbalance in the bargaining power between the retailers and the suppliers.

The sum total of these practices was late payment to the suppliers, which was estimated at

Kes 40bn. In addition, the debts outstanding for 60 days and above amounting to Kes

62

335m as at 31st Dec. 2016 or 42% of total amount owed. Five supermarkets accounted for

92% of the total debt owed for 60 days. Nakumatt and Uchumi alone accounted for 73%

of the debt. In the report, late payment was cited by the supplier’s association as a key

factor to closure of businesses, uncompetitive products due to high finance costs

associated with borrowing as they await to be paid, loss of good will with other players in

the supply chain who the Suppliers are not able to be due to cash flow constraints

associated with later payments.

The suppliers freely shared important information on market research. Moreover,

suppliers shared information with our suppliers/buyers of the possibility and procedures

pertaining contract amendments. Empirically, it has been demonstrated that integration of

operations with suppliers can improve firm performance (Zhang, Lettice, Chan &

Nguyen, 2018; Zhao, Huo, Selen & Yeung, 2017). An additional benefit of cross-

functional, collaborative relationships with key suppliers is the ability to concrete value.

The study agrees with Ochieng (2018) who indicated that supplier management positively

and significantly influenced performance of retail chain stores in Nairobi City County,

Kenya.

The supermarkets generally trusted major suppliers to stay within the terms of the

contract. This is in line with Thomas (2020) which indicated that collaboration between

the two sides had improved over the past two years, leading to improved customer

satisfaction and business planning. Out of the 210 global retailers and suppliers who

participated in the survey, more than 50% said their biggest impediments to improving

collaboration are a lack of trust and communication, limited product assortment and a

lack of data transparency throughout the supply chain. Sixty-three percent of retailers and

52% of suppliers said a lack of trust and communication makes collaboration challenging

or “very challenging.”

The study agrees with Kemunto (2017) that supplier selection based on quality factors

improves quality products in supermarkets and supplier selection based on cost factors

results to reduction of production and material cost in the supermarket. Hence, quality

factor is the most effective and efficient supplier selection factor towards improvement of

supply chain performance in the supermarket

63

The supermarkets embraced just-in-time supply chain. This minimizes waste and

guarantees freshness. A just-in-time supply chain is a simple concept: minimize the

number of goods held in stock. Perishable goods (meat, apples, avocados) become part of

a fluid supply chain and never sit for long periods in storage. This reduces the time

between harvest and consumption, maximizing freshness for all the products that our

customers order.

In addition, the supermarkets had resorted to building and equipment innovation. To

complement advanced technologies, our supply chain is backed by building and

equipment innovations. During the 12 hours that perishable goods are held in the supply

chain, everything is stored at the right temperature and under optimal lighting to ensure

freshness. Well-designed loading and unloading bays allow the operations team to make

quick turnarounds across our distribution network, resulting in a smooth flow of goods

from the supplier to the customer’s doorstep.

Johnston, Mccutcheon, Stuart and Kerwood (2004) higher levels of inter-organizational

cooperative behaviors such as shared planning and flexibility in coordinating activities

were found to be strongly linked to the supplier’s trust in the buyer firm. The findings

show that the way supermarket buyers treat their suppliers matters more for their

suppliers' performance than their status as key customers. The study also suggests that the

length of time a small producer has been supplying a supermarket makes no difference to

how they perceive their treatment. Rather, suppliers form their perceptions of fairness

relatively quickly, so buyers should establish good relationships from the outset when

taking on new producers, particularly when they are small business with limited

resources.

A recent study by Santana and Fearne (2019) notes that small suppliers who believe they

are fairly treated by big supermarkets will put more resources into their relationship with

buyers and perform better. In the effort of strengthen retailer-supplier trust, the ear 2018

witnessed the signing of trust deal between the duo. Kenya’s Trade Ministry has brokered

an agreement of retailers and suppliers to foster trust and promoting sanity in the

important retail trade sector (Ndibe, 2018). The retailers and suppliers subsequently

signed a code of practice on what would see the country’s retail sector apply self-

regulation in a bid to curtail late payment. The signing came at a time when delayed

64

payments had been an issue of contention among suppliers and had led to the collapse of

several retail chains and supermarkets (Wells, 2020).

Ariesty (2016) observed that supplier commitment variable affect supplier performance

through information sharing and collaboration, while the variable of supplier trust has no

effect to measure supplier performance. Makori (2016) found that quality improvement

and lead-time reduction has a positive and significant effect on competitive advantage.

However, sufficient efforts were not directed towards the purchasing process and joint

decisions regarding the supplied products. Based on this research and literature review, it

is still perceived that all the factors are equivalently related to increased competitive

advantage. Anderson (2019) suggests invitation of vendors during strategic planning.

Collaborating on business strategy and working with vendors to streamline processes will

benefit all the stakeholder. Overall, the present research imitates previous observation by

Gichini and Namusonge (2018) that supplier capabilities influenced the competitive

advantage the supermarkets to a great extent.

5.4 Conclusion

5.4.1 Effects of Technological Capabilities on Sustainable Competitive Advantage

Technology is a strategic imperative for Kenyan retailers if they are to stay relevant and

profitable. Technology touches the entire sphere all the spheres of retailing experience.

Automation is at the core improving customer service and cost efficiency. With changing

customer demands and expectations rising rapidly, supermarkets need to be able to

quickly respond in order to capitalize on revenue opportunities through adoption of

appropriate technological capabilities. The study concludes that technology that

reinforces on advanced analytics in meeting changing consumer expectations is vital for

sustainable competitive advantage.

5.4.2 Effects of Marketing Capabilities on Sustainable Competitive Advantage

Marketing capability is critical at attaining sustainable competitive advantage in

supermarkets. As sources of competitive advantage, companies try to exploit different

marketing capabilities in order to create competitive advantage. They attempt to introduce

new product, by satisfying customer’s needs, by developing higher product or service

65

quality, by training efficient sales person. The study concludes that marketing capability

positively propels sustainable competitive advantage in supermarkets.

5.4.3 Effects of Supplier Relationship Capabilities on Sustainable Competitive

Advantage

Strategic partnerships are at the top of the corporate agenda of many retail players. It has

been demonstrated that integration of operations with suppliers can improve prospects for

competitive advantage. An additional benefit of cross-functional, collaborative

relationships with key suppliers is the ability to cocreate value. Therefore, supplier

relationships harnessed through open and transparent communication, balanced trust, and

enduring commitment are antecedent to sustainable competitive advantage in

supermarkets.

5.5 Recommendation

5.5.1 Recommendations for Improvement

5.5.1.1 Effects of Technological Capabilities on Sustainable Competitive Advantage

Supermarkets should rely on computer technology in effective management of stock data

in real time. Therefore, having advanced technology and gimmicks is pointless if a

competitor is offering similar quality products are a better price. The study recommended

that supermarkets should automate their inventory management systems so has to

improve customer service delivery levels and reduce operational costs. It was also

recommended that the supermarkets should utilize internet technology in linking firm

head offices with the suppliers, embrace outsourcing of ICT solutions as a cost control

strategy, and conduct enough research before investing in any new technology. Finally, it

is suggested that foreign based supermarkets capitalize big data analytics to streamline

their production efficiency.

5.5.1.2 Effects of Marketing Capabilities on Sustainable Competitive Advantage

To achieve sustainable competitive advantage in the international markets, the study

argues the supermarkets to follow the followings; firstly, put adequate efforts and

resources to market research in order to tap into a set of processes needed to discover

information about customer needs and broad market information, and design marketing

66

programs to meet and exceed these needs and foreign market conditions. Subsequently,

attention could be directed at innovation/product capabilities and market sensing

capabilities to identify and satisfy the changing needs of existing and potential customers

whilst at the same time enjoying high profit margins. Supermarkets should have strong

marketing capabilities to focus on customer acquisition, the effective management of

marketing programs, and the ability to coordinate action oriented among the diverse

elements in the supermarket needed in order to implement a marketing program. It is

recommended that supermarkets should constantly monitor, remain vigilant and

concerned with pricing processes in order to competitively price their products. Foreign-

based supermarkets need to remain aware of competitor’s prices and what ad-campaigns

they are running is essential for retailers to remain competitive. Finally, it is

recommended that the foreign-based supermarkets should improve their service regarding

feedback system, implement staff training as well as conduct regular advertising

campaign to attract new customers and to inform existing customers about new products

on shelves.

5.5.1.3 Effects of Supplier Relationship Capabilities on Sustainable Competitive

Advantage

It is necessary that supermarkets settle the dues owed to suppliers in time to ensure the

continuity of the supply chain. Cultivating the element of trust in the relationship between

the supplier and the foreign based supermarkets can drive understanding towards better

bargaining deals. Suppliers should be encouraged to share the information regarding

market research with their customer retailers. The study also recommends that foreign-

based supermarkets should adopt an open and frequent communication between their

personnel and their suppliers so as to increase both parties understanding and encourage

conflict resolution between both parties. Foreign-based supermarkets should use

customer-related data to improve home delivery effectiveness and efficiency. In addition,

in cementing their relationship with the suppliers, it is vital to hold frequent executive

review meetings and key performance indicators with the partners. These ensure that

expectations are always clear and both parties benefit from the relationship. They

participate in supplier research and development shows and attend conferences with

suppliers their vendors use. Importantly, it is advisable to remove barriers that could

impede collaboration with the suppliers. As a result of further outsourcing of non-core

67

competencies, organisations are starting to realize that they have become more reliant on

suppliers in terms of innovative power, security of supply, corporate social responsibility,

and on-going cost savings. Finally, the study recommends for retail industry players to

adopt the three domains of CAS in planning CAS programs, because it presents high

possibility and potentials for business growth and attraction of competitive advantage

(Impact Evaluation: - Post Customer Appreciation Strategy Implementation outcomes).

5.5.2 Recommendations for Further Research

This study contributes to knowledge and empirical studies on the sustainable competitive

capabilities in foreign retailing supermarkets. However, there are some limitations, which

call for further research. First, the research was undertaken in a single industry, which

prevents generalization to other industrial settings. Second, the effect of the independent

variables, particularly supplier relationship management, tends to appear in the future or

long term. Since this study was cross-sectional, it is suggested that future research

consider a longitudinal study to examine the long run effects of the variables on

performance. Furthermore, since the study has focused only on technological, marketing,

and supplier relationship capabilities, the other organizational capabilities such as

technology, R&D, operations, financial etc. may have stronger impact on business

performance. Thus, which capabilities that is, technological, marketing or other

organizational, contribute more towards business performance could also prove to be an

interesting line for future research.

68

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82

APPENDICES

APPENDIX I: INTRODUCTION LETTER

Dear Respondent,

My name is Atoni Gift an MBA (Strategic Management) student at United States

International University- Africa (USIU).

I am undertaking a research on Strategic Capabilities Influencing Sustainable

Competitive Advantage of Foreign-Based Supermarkets in Nairobi City County,

Kenya. Kindly accept my invitation for your participation in this research by sparing

some time to fill the questionnaire.

This questionnaire is being administered for research purposes and any information

provided will be used purely for academic purposes and will be treated with

confidentiality.

Thank you.

83

APPENDIX II: QUESTIONNAIRE

SECTION I: Background Information

You are requested to mark (✔) the most appropriate description of the respective

background characteristic.

1. Level of Education

Certificate [ ] Diploma [ ] Undergraduate [ ]

Masters [ ] PhD [ ] Other ……………………………………

2. Number of Years Worked in Supermarket:

Less than 1 year [ ] 1-5 Years [ ]

6-10 Years [ ] More than 10 Years [ ]

3. Position in the firm

Senior Manager [ ] Middle Level/Line Manager [ ] Supervisor [ ]

4. Number of outlets in Kenya

1-3 [ ] 4- 6 [ ] 7-9 [ ] 10 and above [ ]

5. Size of the organization (number of full time employees)

< 200 [ ] 200-400 [ ] 401-600 [ ] 601-800 [ ]

801-1000 [ ] More than 1000 [ ]

6. Year the firm entered Kenyan market

Less than 12 months ago [ ] 12-24 months [ ] 36 months [ ],

37-48 months [ ] more than 48 months [ ]

84

SECTION II: TECHNOLOGICAL CAPABILITIES

Rate the level of agreement with the following statements in the context of

marketing capabilities of your firm

Technological Capabilities

Str

on

gly

Dis

agre

e

Dis

agre

e

Neu

tral

Agre

e

Str

on

gly

Agre

e

TC1 The firm has invested in predictive analytics and big

data

1 2 3 4 5

TC2 The firm has invested in computer systems to keep

reliable stock data in real time.

1 2 3 4 5

TC3 The firm embraces the concept of ongoing

revolution of the retail industry to increase the speed

and flexibility of order fulfillment operations.

1 2 3 4 5

TC4 Facial recognition technology has been adopted to

proactively battle shoplifting and retail crime.

1 2 3 4 5

TC5 The firm relies on sensor-embedded shelves to track

inventory.

1 2 3 4 5

TC6 The firm provides fresh products home deliveries to

clients

1 2 3 4 5

TC7 Internet technology is utilized in linking firm

headquarters and key suppliers

1 2 3 4 5

TC8 The firm has taken advantage of IT outsourcing as

mechanism of cost control and improvement of

service delivery.

1 2 3 4 5

TC9 The firm utilizes radio frequency identification

tagging positions to safeguard its merchandise by

allowing products to be tracked from manufacturer

through the entire supply chain.

1 2 3 4 5

TC10 The Payment Card Industry (PCI) Security

Compliance addresses the firm’s internal security

setup and practices, in order to mitigate payment

security risks

1 2 3 4 5

TC11 The firm encourages use of technology to support

activities that facilitate critical thinking among

employees

1 2 3 4 5

TC12 Application of technology has translated into cost

cutting hence higher profit margin.

1 2 3 4 5

TC13 Managers encourage team members to experiment

new technologies’ in order to improve work process.

1 2 3 4 5

TC14 The firm has continuously accepted new proposals

and recommendations from employees.

1 2 3 4 5

TC15 We have a system that allows staff to learn

successful practices from other organizations.

1 2 3 4 5

TC16 Application of technology has translated into cost

cutting hence higher profit margin.

1 2 3 4 5

85

SECTION III: MARKETING CAPABILITIES

Rate the level of agreement with the following statements in the context of

marketing capabilities of your firm

Marketing Capabilities

Str

on

gly

Dis

ag

ree

Dis

ag

ree

Neu

tral

Ag

ree

Str

on

gly

Ag

ree

MC1 The firm is always detecting changes in customers' product

preferences

1 2 3 4 5

MC2 The firm is constantly in contact with those who can influence

our end users' purchases (e.g., retailers, distributors)

1 2 3 4 5

MC3 The firm adopts market research skills to develop effective

marketing programs

1 2 3 4 5

MC4 The firm collects industry information through informal means

(lunch with industry friends, talks with trade partners).

1 2 3 4 5

MC5 There are specific mechanisms for sharing lessons learned in the

firm

1 2 3 4 5

MC6 The firm sends appreciation message(s) to customers on every

shopping.

1 2 3 4 5

MC7 Sales associates are empowered with mobile tools to ensure

continuous customer engagement

1 2 3 4 5

MC8 The firm has built a consumer community along its brand. 1 2 3 4 5

MC9 Annual contests are held for customers and winners are issued

with free shopping vouchers.

1 2 3 4 5

MC9 The firm frequently supports customers’ personal initiatives. 1 2 3 4 5

MC10 The firm collaborates with suppliers to incorporate changing

consumer tastes and preferences into the final product.

1 2 3 4 5

MC11 The firm is always engaging in research to develop product

quality and standards.

1 2 3 4 5

MC12 The firm has adopted food lockers/pods to ensure conformity to

high quality food standards.

1 2 3 4 5

MC13 The firm uses artificial intelligence (AI) to predict and manage

the orders of highly perishable items.

1 2 3 4 5

MC14 The firm enables grocery retailers to help customers discover

new recipes, shop smarter and increase their revenue.

1 2 3 4 5

MC15 The firm is always detecting changes in customers' product

preferences

1 2 3 4 5

MC16 Our firm has consistently posted positive cash flow 1 2 3 4 5

MC17 The firm has continuously accepted new proposals and

recommendations from employees.

1 2 3 4 5

86

SECTION IV: SUPPLIER RELATIONSHIP CAPABILITIES

Rate the level of agreement with the following statements in the context of

supplier relationship capabilities of your firm

Supplier Relationship Capabilities

Str

on

gly

dis

agre

e

Dis

ag

ree

Neu

tral

Ag

ree

Str

on

gly

Ag

ree

SRC1 We always pay our suppliers on time. 1 2 3 4 5

SRC2 Our suppliers provide the right quantity and quality of

goods and services.

1 2 3 4 5

SRC3 Our suppliers deliver products on-time. 1 2 3 4 5

SRC4 The procurement costs of our suppliers’ products are

highly competitive.

1 2 3 4 5

SRC5 We have no intentions to change our current suppliers. 1 2 3 4 5

SRC6 Our suppliers and us freely discuss on the type of

contract to be employed for a particular purchase/sale

1 2 3 4 5

SRC7 We share information on definition of what needs to

be purchased /sold with our suppliers

1 2 3 4 5

SRC8 We share information about the important aspects

which must be incorporated in suppliers/buyers

proposals/offers

1 2 3 4 5

SRC9 Our suppliers freely share important information on

market research.

1 2 3 4 5

SRC10 We share information with our suppliers/buyers of the

possibility and procedures pertaining contract

amendments

1 2 3 4 5

SRC11 Our firm generally trust major suppliers to stay within

the terms of the contract.

1 2 3 4 5

SRC12 Our major suppliers do not try to alter the facts in

order to get concessions from us.

1 2 3 4 5

SRC13 When unexpected situations arise, our suppliers

always act in a manner that is favorable to us.

1 2 3 4 5

SRC14 We trust that our suppliers will deliver high quality

most of the time.

1 2 3 4 5

SRC15 The relationship between our business and its major

suppliers is characterized by high levels of trust.

1 2 3 4 5

SRC16 Streamlining of internal processes has ensured high

efficiency and interdepartmental collaboration.

SRC17 Our supplier network has strengthened in the past

years.

Thank You For Participating

87

APPENDIX III: NACOSTI RESEARCH PERMIT