Dynamic Capabilities, Human Capital, Firm Innovation: Evidence from Nairobi, Kenya, During COVID-19

Abstract

Organization and locally by the Ministry of Health in Kenya have resulted in financial distress in restaurants and led to their increased closure, financial loss and job losses. Restaurants are labor-intensive and compete fiercely in a dynamic environment making them vulnerable to disruptive conditions. Hence the need to develop dynamic capabilities and strategic human capital to achieve firm innovation which enables them to adapt to sudden environmental changes. The aim of the article, therefore, sought to determine the influence of strategic human capital on the dynamic capabilities -firm innovation relationship in restaurants in Nairobi, Kenya during the COVID-19 pandemic. The study examined the effect of dynamic capabilities on firm innovation. In addition, the study examined the influence of strategic human capital on the dynamic capabilities- firm innovation relationship. 263 large and medium size restaurants were included in the sample size, which was determined using a descriptive cross-sectional design and stratified random sampling. Using questionnaires administered by the researcher, data from 191 restaurants were gathered and analyzed using simple and hierarchical regression models According to the study's findings, there was a positive correlation between dynamic capabilities and firm innovation, and the relationship between these two variables was moderated by strategic human capital. The study concluded that strategic human capital influenced the dynamic capabilities and firm innovation relationship.