An Assessment of the Effect of Vertical Diversification on Organizational Competitiveness: A Case of Sugar Firms in Kenya

Wilfred N. Marangu, Caroline Nkatha N’gondu, Robert K. W Egessa


This study sought to analyze the effect of vertical diversification on organizational competitiveness of sugar firms in Kenya. The main objective was to establish the effect of effect of vertical diversification on organizational competitiveness of sugar firms in Kenya. The study adopted descriptive correlational survey design and this being a census study; all the sugar firms in the Kenya were studied. Using a questionnaire, primary data was collected from the production and marketing managers as key informants of each of the sugar firms. The production  and marketing managers of every sugar firm were selected to take part in the study as they are perceived to be knowledgeable on the issues under study and for which they are either responsible for their execution or they personally execute them. The questionnaire was pre-tested on a pilot respondent who are not part of the study respondents but knowledgeable in the study aspects in order to ensure their validity and relevance.  Secondary data was extracted from annual reports, publications and documentary analysis was also used to gather background information by reviewing literatures relevant to the study.   Reviews of the measures used to measure the study variables were also used to construct the questionnaire to ensure face and construct validity. The data collected was analyzed using descriptive and inferential statistics. Cronbach’s alpha coefficient was used to measure the reliability of the scale, which was used to assess the interval consistency among the research instrument items. In order to test the hypothesis, the aggregate mean score of firm Competitiveness measures were regressed against the mean score of measures of Vertical Diversification. the regression results reveal that vertical diversification had overall significant positive relationship with the competitiveness of sugar firms (? = 0.464, p-value = 0.004). The study therefore rejected the null hypothesis since ? ? 0 and p-value ? ? and concludes that Vertical diversification significantly affected competitiveness of sugar firms in Kenya. The regression results also shows that 46.4 percent of the sugar firm competitiveness can be explained by vertical diversification (R square = 0.464).

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