Dynamic Capabilities: Antecedent of Financial Performance of Oil Marketing Firms in Kenya

Abstract

The economic growth, energy security, and industrial development of the economies, especially the emerging ones, are heavily relying on the downstream petroleum industry. Nevertheless, the industry is becoming more of an environmental turbulence, regulation and technology upheaval, as well as declining profitability. Firm-level adaptive capabilities in such fluid environments are frequently needed because traditional sources of competitive advantage have long since failed to support financial performance. The role of internal strategic capabilities in affecting the performance of firms is hence critical to theory and practice in strategic management. The Kenyan oil marketing is a highly regulated and volatile business environment that is characterized with world oil prices that are not stable, controlled pump prices, high capital requirements and intense competition in the market. These forces have exerted strain on the financial performance of firms and internal strategic capabilities that can enable firms to maintain profitability have been questioned. The paper has used the Dynamic Capabilities Theory, and the Resource-Based View to discuss how the dynamic capabilities of sensing, seizing, learning and reconfiguration are antecedents of financial performance of oil marketing companies in Kenya. The data were collected through structured questionnaires and analysed through descriptive statistics, correlation and multiple regression (SPSS v27) based on cross-sectional survey data (n = 94) of oil marketing firms licensed in the City County of Nairobi. The outcomes of the study indicate that the dynamic capabilities explicatively describe the variance in Return on Assets (ROA) to the tune of 75.7%. Sensing, seizing, learning, and reconfiguration capabilities influence financial performance positively and statistically significant, but seizing and reconfiguration capabilities have the most significant effects. The findings suggest that those companies that systematically scan their environment, take immediate action on any opportunity in the market, institutionalize organizational learning, and constantly redesign structures and processes have higher likelihood of high financial performance. The paper then ends by giving policy and managerial implications to the regulators and managers and recommends future research opportunities on dynamic capabilities in emerging markets.

Key words: Dynamic capabilities; sensing; seizing; organizational learning; reconfiguration: financial performance; oil marketing firms; Kenya

DOI: 10.7176/EJBM/18-9-05

Publication date: September 30^th 2026