Organizational Strategies and The Performance of Selected Startups in Kenya.

Abstract

Startups make up a significant portion of industries in the Kenyan economy, but despite their growing numbers, they also experience many failures. The lack of well-defined strategies hinders their ability to drive innovation, capture and grow market share, and engage employees effectively, contributing to the high failure rate among these companies. This study explores how adopting strategic approaches can improve these key performance areas, enhancing startup sustainability and performance. The study aimed to assess the relationship between organizational strategies and the performance of selected startups in Kenya. The study's specific objectives were to establish the relationship between corporate-level, business-level, and functional-level strategies and the performance of the selected startups. The Resource-Based View (RBV), Dynamic Capability theories, and Porter’s Five Forces Model guided the study. The study employed an explanatory survey research design. The study’s population was 1157 respondents with a target population of 204 managers across the four startups: Jumia Group Kenya, Flutterwave, Twiga Foods and Mara. Nassuma’s formula was used to determine an appropriate sample size of 156 managers. The study used a self-constructed structured questionnaire to collect data. The data collection instrument was pretested at Sky Garden among 15 managers. The internal Reliability of the research instrument was tested using Cronbach’s alpha, which had a reliability value of .716. Data was analyzed with the aid of SPSS Version 27. Descriptive statistics were used to describe the data using means, frequencies, and standard deviation. Inferential statistics using simple and multiple regression were used to establish the relationships between business strategies and the performance of the selected startups. Pearson correlation was used to test the strength of the relationship between study variables. The results showed that corporate-level strategy (p = 0.093) had a weak positive correlation to the performance of the selected startups. Business-level (p = 0.010) and functional-level (p = 0.079) strategies strongly affect the selected startups' performance. In conclusion, the study showed that where the three levels of organizational strategy were present, there was an increase in the startup's performance. It is recommended that startups should first diversify their strategies to enhance performance by integrating new business ideas and partnerships. Second, management should focus on innovation and market differentiation to improve the effectiveness of the business-level strategy. Finally, having clear functional-level policies aimed at efficiency, teamwork, and talent development can significantly boost organizational performance. These recommendations can significantly reduce the failure rates of startups, allowing them to become a thriving part of the economy and contributing to employment rates.