Strategic Decision-Making Practices and Organisational Performance of Selected Real Estate Firms in Nairobi City County, Kenya

Abstract

In Nairobi City County's dynamic real estate sector, effective strategic decision-making is essential forreal estate sector. Many firms, however, grapple with suboptimal performance, marked by inefficient resource use and inadequate risk management, which contributes to Kenya's housing deficit. This study assessed the relationship between strategic decision-making practices and the organisational performance of selected real estate firms in Nairobi, examining the moderating role of firm size. The research specifically established the effects of strategic planning, resource allocation, and risk management on performance. Grounded in Strategic Decision-Making Theory and its supporting frameworks, the study employed a descriptive and explanatory research design. Data was collected from 148 managers across 50 firms, selected from the Kenya Property Developers Association (KPDA), using structured questionnaires. The analysis involved descriptive statistics and multiple linear regression to test the hypotheses. The findings showed that resource allocation was the most significant and positive predictor of organisational performance. In contrast, risk management had a significant negative relationship with organisational performance, suggesting that its current application may be perceived as restrictive. Strategic planning, when assessed alongside the other practices, did not have a statistically significant direct effect. Furthermore, the analysis revealed that firm size did not moderate the relationship between strategic practices and performance, indicating that the identified success drivers are applicable across firms of all scales in this market. The study concludes that the ability to strategically deploy capital and talent is the single most critical driver of success for real estate firms in Nairobi, more so than the existence of a formal plan. It is recommended that practitioners prioritize optimizing their resource allocation processes and reframe risk management from a compliance-based function to a strategic, value-adding tool. Future research could qualitatively investigate the negative perceptions of risk management and explore the mediating role of resource allocation in the planning-performance relationship.