Title:
MODERATING INFLUENCE OF GOVERNMENT POLICY ON SUGAR COMPANIES IN WESTERN KENYA

Authors:
Richard M. Imbambi, PhD, Wycliffe Mande, Aketch Ngonga, PhD and Leon Awiti, PhD. ,Kenya

Abstract:
The sugar industry contributes about 15 percent to Kenya’s agricultural GDP and supports directly and indirectly an estimated 25 percent of the country’s population. The objective of the study was to determine the Moderation effect of the Government Policy on the relationship between Strategic Capabilities and Competitive Advantage of Sugar Companies in Western Kenya. The respondents were composed of 727 senior and middle level managers. Yamane (1967) formula was used to calculate the sample size of 88 respondents. The primary data was obtained using a structured questionnaire pre-tested for reliability and validity. A numerical 5- point Likert scale was used in the questionnaire. The research instrument was developed based on the constructs identified in the conceptual framework. For reliability analysis Cronbach’s alpha was used. Construct validity was established by finding out whether the questions were correctly phrased in terms of clarity and ambiguity. Content validity was tested by use of experts and supervisors in the relevant areas. Both descriptive and inferential statistics were used to analyze the data. Out of 88 questionnaires sent out, 64 questionnaires were received back giving a response rate of 73%. The Correlation and Logit regression analyses established that there is an insignificant weak positive relationship between strategic capabilities and competitive advantage. Logit regression analysis established that when all the strategic capabilities were acting on the competitive advantage at the same time, material capability was the most critical strategic capability and statistically significant in determining the competitive advantage of the sugar companies in Western Kenya. Logit regression analysis showed that sugar companies that had strong Strategic Capabilities when positive Government policy was in play were 4.091 times more likely to be competitive compared to those that had weak Strategic Capabilities. Hypothesis testing established that Government policy significantly moderates the relationship between strategic capabilities and competitive advantage of sugar companies in Western Kenya. The study findings indicate that the role of the Government policy has profound Influence on the competitive advantage of sugar companies in Kenya. A review of the literature indicates that few studies have been carried out on the influence of strategic capabilities on competitive advantage of the sugar industry in Kenya. Therefore, an expansion of the geographical scope of the study to involve more private owned sugar companies in Kenya is required for validation of the studyfindings. The study recommends privatization of the public owned sugar mills as the most viable option for revitalization of the sugar sector in Kenya. Further, the study recommends the government and the sugar industry stakeholders to establish a standing joint committee to resolve the emerging issues around sugarcane area zoning, drop in sugarcane yield, poor road infrastructure, and value added tax, financial debt and privatization of the public owned sugar mills