Uncertain Effect of Vertical Integration Strategy on Performance of Commercial State Corporations in Kenya

Abstract

This study assessed the effect of vertical integration on the performance of commercial state corporations in Kenya. Commercial state corporations in Kenya have been associated with various challenges, including a lack of profitability and substandard goods and services. Whether such dismal performance is occasioned by weak corporate strategies is the research concern of the study. The study was based on the Modern Portfolio Theory of diversification theory. The study was based on a positivist research philosophy. A cross-sectional correlational design was adopted as the study design. The target population was 1,026 senior managers of the Commercial State Corporations. The researcher sampled 1,026 employees of Kenya's Commercial State Corporations using the sampling formula for small populations. Nassiuma's (2000) recommendation of a coefficient of variance of 21 to 30 per cent and a standard error of 2 to 5 per cent is generally appropriate. The sample size was 99 senior managers in Commercial State Corporations. Primary data was collected using a structured questionnaire. Collected data was analysed using descriptive data analysis techniques (Mean, Standard Deviation, Maximum and Minimum) and regression analysis. The results were presented using tables and figures. Third, the study that established a significant effect of vertical integration strategy on financial, customers’, internal business process and learning, growth and development performance of Commercial State Corporations in Kenya (? =0.474, p=0.000<0.05; ? =0.382, p=0.003<0.05; ? =0.490, p=0.000<0.05). The study will inform Commercial State Corporations on the design and implementation of effective corporate strategies for value creation.