Influence of Determining Strategic Direction on Organization Performance of Pharmaceutical Companies in Kenya

Abstract

The chief executive’s ability to determine strategic direction through a unifying vision and mission and establishing social capital within the top management team influences the organization’s performance in different contexts. This study aimed at establishing the influence of determining strategic direction on the organisational performance of pharmaceutical companies in Kenya and was grounded on the strategic leadership theory. The study was anchored on positivism philosophy with a descriptive design approach. A stratified simple sampling was used to target a sample of 390 senior managers within the three strata, namely, local companies, generic companies, and research and development multinationals, proportionately to achieve a respondent rate of 82%. The strategic direction was operationalised through the leader’s vision, mission, and strategic goals, while organization performance was measured through profitability, Customer perspective and learning & growth. Five key tests were carried out: correlation analysis, chi-square test, one-way ANOVA, ordinal logistic regression, and parameter estimates to test the hypothesis. Ordinal logistic regression (Nagelkerke Pseudo R-square) results established that 8.1% variance in organizational performance was explained by strategic direction, R2 = .081. In addition, ordinal regression parameter estimates indicated that strategic direction significantly predicted organizational performance, β=0.473, p≤.05. The study concluded a significant relationship between strategic direction and organizational performance. In particular, a leader’s vision, mission and strategic goals were attributed to the positive influence on organizational performance at the pharmaceutical companies in Kenya. The study results indicate that when the leader's strategic direction is clear, communicated and aligned throughout the organization, this significantly and positively influenced organisational performance. Consequently, the study recommended that leaders embed their vision and mission within their strategic plans and ensure alignment throughout the organization.