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ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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Coordination Capability and Performance of Manufacturing Small
and Medium Enterprises in Nairobi City County, Kenya
Edna Maria Aloo, Patrick Dan Mukhongo
Jomo Kenyatta University of Agriculture and Technology, Kenya
DOI: https://dx.doi.org/10.47772/IJRISS.2025.910000166
Received: 06 October 2025; Accepted: 12 October 2025; Published: 06 November 2025
ABSTRACT
The general objective of this study was to examine the influence of coordination capability on performance of
manufacturing small and medium enterprises in Nairobi City County, Kenya. The target population of this study
consisted of four hundred and twenty-five (425) manufacturing small and medium enterprises registered by
Kenya Association of Manufacturers and domiciled in Nairobi City County, Kenya. To achieve this objective,
the study used proportionate stratified random sampling which is considered to be appropriate because of their
uniqueness and segmentation of the various sector strata. The study adopted cross-sectional survey research
design. Primary data was collected using structured questionnaires from a sample made up of owners of firms
or their firm managers in the absence of the former and they constituted the unit of observation. Pilot testing was
undertaken to test the validity and reliability of the questionnaire and pilot data analysis was done using
Statistical Package for Social Sciences (SPSS) version 26. The results showed that the instrument met face and
content validity as experts confirmed the questionnaire's content and applicability to the relevant subject domain.
Results were presented in tables and graphs with clear explanations given based on the findings. Simple linear
regression analysis was done to get descriptive and inferential statistics. This study used F-tests to test the
significance of the overall model and the significance of each of the specific variable was determined by
unstandardized coefficients. The study found that coordination capability had a positive and significant influence
on performance of manufacturing small and medium enterprises in Nairobi City County, Kenya. The study
recommended that firms needed to embrace coordination capability as it influenced performance of
manufacturing small and medium enterprises.
Keywords: Performance of Manufacturing SMEs, Strategic Capabilities, Coordination Capability
INTRODUCTION
Every organization is started with specific objectives that the founders want to see accomplished and as a result,
the organization constantly works to ensure that its objectives are met (Wilson, 2023). Organizational
performance in carrying out daily tasks is one of the assurances for reaching organizational goals, with numerous
elements contributing to good performance, such as the organization's strategy and its compilers and executors,
the manager and other important players like the organization's owner.
Strategic capability is a complex and accumulated set of skills and knowledge that enables an organization or
business unit to coordinate activities and use its assets to create economic value and sustainable competitive
advantage (Tasheva & Nielsen, 2022). The relationship between strategic capabilities and differentiation
strategies in improving organizational performance. Organizations need all sorts of interrelated capabilities in
their portfolios to create requisite value, and these capabilities differ across organizations in line with attendant
internal and external factors.
Organizations’ competences are shaped by their strategic profiles and environmental dimensions and morph into
strategic capabilities that have a bearing on financial and physical assets, organizational structure, technology
and human resources (Ammirato et al., 2023). Organizational based capabilities indicate that contribution of
strategic capabilities to organizational performance is dependent on the environment in which organizations
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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operate; and is the ability of an enterprise to operate its day-to-day business as well as grow, adapt, and seek
competitive advantage in the market place.
Statement Of the Problem
Manufacturing small and medium enterprises in Kenya face many issues including challenges in growth, high
failure rate and high competition and currently, the manufacturing SME sub-sector is overcrowded with many
firms developing products that are highly imitable (Gitari, 2023). At the same time, there is high competition in
the sub-sector where new products enter the market from time to time thus leading to saturation and making the
market a red ocean. This challenge could however be dealt with when these companies had in place strategic
capabilities in terms of financial, human resource, knowledge management and cost efficiency capabilities.
Although the manufacturing SMEs have enormous potential for transforming the economy, there has been
modest growth over the years with their GDP contribution declining from 9.3% in 2022 to 7.2% in 2023
(Kariuki, 2023). The manufacturing SMEs’ overall output was expected to reach $8.88 billion in 2023, a 9.89%
increase from 2022, and was $8.08 billion in 2021, a 5.59% increase from 2020. A study by Micro Small and
Medium Enterprises at the end of 2023 noted that 46.3% of small firms closed down raising questions about the
sector's sustainability (Akoth & Mutabazi, 2023), pointing to challenges in performance of manufacturing SMEs
and their sustainability.
Nguyen et al., (2023) reviewed green organizational capabilities and competitive advantage of construction
enterprises in Vietnam organizational. Also, Melesse and Knatko (2024) studied the contingent effects of
strategic orientations and strategic capabilities on competitive performance in Ethiopian manufacturing
enterprises, both studies occasioning a contextual gap which the current study seeks to fill. Locally, Wachira
(2024) assessed entrepreneurial capabilities and performance of small and medium enterprises in Kenya hence
occasioning a conceptual gap. This study seeks to address these gaps by reviewing the influence of coordination
capability on performance of manufacturing small and medium enterprises in Nairobi City County, Kenya.
Research Objective
The general objective of this study was to examine the influence of coordination capability on performance of
manufacturing small and medium enterprises in Nairobi City County, Kenya.
Scope Of The Study
The study focused on four hundred and twenty-five (425) manufacturing small and medium enterprises
registered with the Kenya Association of Manufacturers and domiciled in Nairobi City County as at end of 2024,
and formed the unit of analysis. The study’s respondents were the firm owners or firm managers in the absence
of the former since both are deemed to participate in strategy formulation and the execution process, with the
respondents making the unit of observation.
LITERATURE REVIEW
Theoretical Review – Knowledge Based Theory
Grant (1996) founded the knowledge-based theory of the firm postulating that knowledge is the most tactically
significant resource in an organization because knowledge-based resources are often hard to imitate and are
socially multi-dimensional and heterogeneous, thus forming capabilities.
Knowledge-based theory of the firm is consistent with the approach to organizations as cultures and considering
that organizations are hypothesized as cultures, they are intended to learn through actions that comprise cultural
artefacts (Abbas & Khan, 2023).
Although there are various approaches to knowledge-based view, the most feasible way is the accrual of
distinctive capabilities and core competences by organizations through the accumulation of experience,
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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articulation of knowledge and codification. The theory therefore fittingly explains coordination capability as a
variable in this study.
Conceptual Framework
A conceptual framework illustrates the expected relationship between the study variables and defines the
relevant objectives for the research process and maps out how they come together to draw coherent conclusions
(Sukma & Leelasantitham, 2022).
Independent Variable Dependent Variable
Figure 1: Conceptual Framework
Discussion of Study Variables – Coordination Capability
Coordination capability, sometimes known as integration capability, is the ability of an organization to assess
the value of its current resources and combine them to create new capabilities (Kastelli et al., 2024). The
successful coordination of a variety of tasks and resources as well as the synchronization of disparate activities
are necessary for the implementation of new configurations of operational capabilities.
The coordination and integration of non-tradable assets within the organization can result in new value-
enhancing amalgamations as they cannot be easily simulated in the market (Allen & Barbalau, 2022). Lack of
efficient coordination and consolidation of different resources and tasks may put the seemingly slight
technological changes to have massive effects on incumbent organization’s competitive positions in the market.
Coordination capability improved the harmonization and integration of inferred and codified knowledge that
allows organizations to cost-effectively deliver their services and obtain further information regarding
customers’ needs (Jembere, 2022). Coordination capabilities are frequently related to new product development
where teams fitting in different organizational segments work together by combining their diverse skills and
backgrounds in order to design and develop the specific products and services.
Performance of Manufacturing Small and Medium Enterprises
Organizational performance denotes comparing an organization's actual output and results to its projected
outputs, goals, and objectives and in a similar vein, organizational performance describes how well an
organization performs when projects are completed as planned (Aguilera et al., 2024). It includes three distinct
areas of organizational outcomes: product market performance, which includes market share and sales;
shareholder returns, which includes economic value addition; and financial performance, which includes profits,
return on assets, and return on investment.
The performance metrics integrate quantitative also known as objective measures as well as qualitative, also
called subjective measures. Quantitative measures put emphasis on final results including sales turnover and
return on investment whereas qualitative measures emphasize on the criteria for achieving the end results such
as product or service quality, customer satisfaction, employee satisfaction and commitment (Rochmatullah et
al., 2023).
Organizational performance can be evaluated for individuals, groups, or the entire organization and is measured
at various points in its hierarchical order. The people who ask the questions and the reasons behind the need for
measuring organizational performance determine which metrics are used (Samson & Bhanugopan, 2022).
Performance of Manufacturing
Small and Medium Enterprises
ï‚· Service delivery
ï‚· Efficient processes
ï‚· New products
Coordination Capability
ï‚· Resource allocation
ï‚· Change communication
ï‚· Innovation leverage
ï‚·
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
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EMPIRICAL REVIEW
Rehman and Jajja (2023) investigated the interplay of integration, flexibility and coordination focusing on a
dynamic capability view to responding environmental uncertainty and results found that environmental
uncertainty enhanced strategic flexibility and business strategy integration. Further, business strategy integration
had a significant positive impact on supply chain coordination that drives operational performance, and also that
strategic flexibility had no direct impact on supply chain coordination rather it affects supply chain through
business strategy integration.
Wu and Ding (2024) examined the effect of different dimensions of coordination capability on knowledge
transfer, and the important role of learning orientation, and explored the direct effect of coordination capability
on knowledge transfer and learning orientation as a moderator of these relationships. The empirical results
showed that job rotation, cross-functional interfaces, and decision participation had positive effects on
knowledge transfer with learning orientation moderating the relationship between job rotation, cross-functional
interfaces and decision participation.
Echongu (2023) examined organizational capabilities and the performance of commercial state corporations in
Kenya. Correlation tests established that there was a positive association between innovative capabilities,
resource capabilities, management capabilities, coordination capabilities, and performance of commercial state
corporations. The study established that there was a positive and significant effect of organization capabilities
on state corporations’ performance in Kenya. Specifically, the study revealed that coordination capabilities had
a strong positive and statistically significant effect on the performance of commercial state corporations in
Kenya.
CRITIQUE OF LITERATURE REVIEW
There is a paucity of studies on strategic capabilities and particularly coordination capability in the context of
small and medium enterprises, this being due to the fact that the vast majority of the subject's literature and
research have been carried out in comparatively more developed nations (AlMulhim, 2023). Furthermore, a
number of studies in the aforementioned extant literature examined strategic capabilities in general and their
influence on organizational performance; however, the application of this was essentially implicit and subjective.
Few studies examined coordination capability in small and medium enterprises sub-sector and most of the
reviewed studies concentrated on a variety of sectors including manufacturing, information technology,
healthcare and engineering. While the basic concepts underlying the subject matter may be the same, their
application markedly varies, especially in the case of projects involving the manufacturing sector, like the
enhancement of organizational performance of the sub-sector (Buzzao & Rizzi, 2023).
There is a dearth of research measuring the combined impact of various and crucial elements of strategic
capabilities on organizational performance of small and medium enterprises because the reviewed literature and
studies, in general, took a non-specific approach to examining the influence of strategic capabilities on improved
organizational performance of small and medium sized enterprises (Islami et al., 2020). It is noteworthy that the
small and medium enterprises sub-sector has expanded rapidly over time in terms of the complexity of
beneficiaries.
Research Gaps
There exists a conceptual gap concerning the specific mechanisms within coordination capability that drive
organizational performance outcomes, despite the fact that multiple studies (Hattab et al., 2023; Idolor et al.,
2023) highlighted the beneficial impact of strategic capabilities on performance. Research that has already been
done emphasized elements like strategic planning, market analysis and business development, but did not venture
into great detail about how these elements.
Coordination capability and its influence on organizational performance in various sectors apart from
manufacturing small and medium enterprises are the subjects of various researches (Melesse et al., 2024; Nguyen
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
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et al., 2023) respectively. However, refined understanding about how coordination capability impacts
performance in emerging markets and Kenya in particular remains less tackled.
RESEARCH METHODOLOGY
A research design aims to visualize how the study is carried out, the kind of data to be collected, how it is
acquired, and how much it costs the researcher. It is a blueprint or framework used to produce solutions to
research challenges (Elmore et al., 2021). By doing this, the researcher is able to gather pertinent information
from which to draw conclusions. This study adopted cross sectional survey research design which has the ability
to obtain dynamics of a phenomenon at a given point in time to establish the prevailing situation of the population
under investigation. The design presents the data in a more meaningful way making it easier to interpret.
Target population is the totality of all the subjects, objects, or members who characteristically share specific
features and it is made up of all the members of a real or hypothetical set of people or objects to which a
researcher seeks to generalize the results of research (Willie, 2023). On the other hand, the accessible population
is made up of all the people or elements who can reasonably be included in the sample (Thacker, 2020). This
study’s target population was made up of four hundred and twenty-five (425) manufacturing small and medium
enterprises domiciled in Nairobi City County, Kenya and registered with the Kenya Association of
Manufacturers. These constituted the unit of analysis. The accessible population of the study were the owners of
manufacturing SMEs or the firm managers in the absence of the former and these constituted the unit of
observation.
A sample is a representation of the comprehensive population that may be utilized in a research study and which
carries all of the characteristics of the full population and provides a fair representation and denotes the number
of distinct elements employed in an experiment. Ahmed (2024) indicated that a sample's ability to accurately
reflect the characteristics of the full population employed in the study is the true test of its validity. The sample
size was determined using Nasiurma (2000) formula as shown; -
n = (Ncv
2
) / (cv
2
+ (N-1) e
2
)
where;
n = Sample size
N = Population
cv = Coefficient of variation (take 0.7)
e = Tolerance at desired level of confidence (take 0.05 at 95% confidence level).
The substituted values in determining the sample size from the target population are;
n = 425 x 0.7
2
/ (0.7
2
+ (425 - 1) 0.05
2
)
n = 209 / (0.49 + (424) 0.0025)
n = 135
Stantcheva (2023) indicated that a questionnaire is a research tool that aids in understanding what is required
and obtains the intended response from participants in the form of empirical data in order to accomplish the
study's goal. The main instrument used to collect data for this study were questionnaires, which were thoughtfully
designed to cover relevant and salient research areas.
Authorization to conduct the study was obtained from the relevant department at Jomo Kenyatta University of
Agriculture & Technology in the form of an approval letter for the research and also a request letter to the
participating manufacturing small and medium enterprises’ owners or their managers by filling out the
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ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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questionnaires. This ensured that the study complied with all ethical concerns pertaining to any research
undertaking.
Participants were informed of the purpose and design of the study, as well as the fact that answering the
questionnaire was completely voluntary. Sequel to approval to proceed with the study, a pilot test involving a
small number of respondents was undertaken to assess the validity and reliability of the research instrument. The
Cronbach’s Alpha value of .743 indicated that the instrument was reliable. The test assisted in determining the
validity of the questionnaire and the attitudes of respondents regarding the questions that are included in it.
RESEARCH FINDINGS AND DISCUSSION
Response Rate
A total of one hundred and thirty-five (135) questionnaires were distributed to the respondents designated to
participate in the study and one hundred and eighteen (118) questionnaires were completed and collected,
accounting for about 87.4% of the distributed questionnaires. Gawali (2023) stated that a response rate of at least
70% is deemed suitable for conducting studies, drawing conclusions, and generating deductions and inferences
about a population.
General Information
Research showed that 42% of the respondents held bachelor’s degree qualification while 31% were diploma
holders, and the remaining being 27% held Master’s degree qualification respectively. Statistics showed that
44.1% of the small and medium enterprises had existed for between five and ten years, 33.9% had been in
existence for less than five years while 22% had operated for more than ten years.
Performance of Manufacturing Small and Medium Enterprises
Respondents provided feedback on the statements under performance of manufacturing small and medium
enterprises, and the findings are displayed in Table 1;
Table 1: Performance of Manufacturing Small and Medium Enterprises
Statement
N
Mean
Std. Deviation
Our firm has achieved improved service delivery levels.
118
3.90
.767
The market standing of our firm is reasonable at its current status.
118
3.90
.721
Our firm has introduced several new products in the preceding years.
118
3.92
.758
Our firm has always ensured that customers get customized services.
118
4.03
.745
Our firm has put in place customer satisfaction metrics.
118
3.92
.758
Our firm always ensures simple and seamless provision of goods.
118
3.64
.974
In our firm, performance metrics are reviewed to align with objectives.
118
3.52
.985
Valid N (listwise)
118
n = 118 (SD = Strongly Disagree; D = Disagree; N = Neither Agree nor Disagree; A = Agree; SA = Strongly
Agree) *Mean = (Strongly Disagree = 0 – 1.8; Disagree = 1.9 – 2.6; Neither Agree nor Disagree = 2.7– 3.4;
Agree = 3.5 - 4.2; Strongly Agree = 4.3 – 5.0).
Derived statistics shows that the mean and standard deviation values for all items on performance of
manufacturing small and medium enterprises were close to the mean and less than two (<2) respectively,
indicating convergence in respondents' opinions. This was most evident on the item about firms always ensuring
that customers got efficient services which returned the highest mean (M = 4.03, SD =.745). This enhances
streamlined processes, which leads to lower costs and improved internal operations.
The results concur with Melesse (2025) who reviewed strategic capabilities and competitive performance of
firms, basing on development, current themes, and future research agenda. The overall findings indicated that
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supply chain management, human resource management, management practices, information technology, and
learning competencies influenced strategic capabilities effectiveness.
Coordination Capability and Performance of Manufacturing SMEs
Table 2 displays the results of respondents' feedback on coordination capability and performance of
manufacturing small and medium enterprises statements.
Table 2: Descriptive Statistics for Coordination Capability
Statement
N
Mean
Std. Deviation
Our firm always strives to interpret market information correctly.
118
3.89
.725
Top management ensures allocation of resources across departments in the firm.
118
3.97
.739
Our firm ensures that allocated resources are properly used.
118
3.75
.978
Our firm always ensures communication to all staff regarding strategic and policy
changes.
118
3.86
.846
In our firm, we ensure that all key decisions are cascaded to all staff members.
118
3.64
.892
Our firm leverages on innovativeness to achieve customer satisfaction.
118
3.78
.730
Our firm has a program for patenting all innovations to ensure assured revenue
streams.
118
3.63
.932
Valid N (listwise)
118
n = 118 (SD = Strongly Disagree; D = Disagree; N = Neither Agree nor Disagree; A = Agree; SA = Strongly
Agree) *Mean = (Strongly Disagree = 0 – 1.8; Disagree = 1.9 – 2.6; Neither Agree nor Disagree = 2.7– 3.4;
Agree = 3.5 - 4.2; Strongly Agree = 4.3 – 5.0).
The results in Table 2 indicate that the mean scores were fairly high and standard deviation values were below
two (< 2), pointing to the fact that there was overall convergence of opinions towards the mean. The item about
most firms ensuring that allocation of resources equitably across departments scored the highest mean (M = 3.97,
SD = 739). The findings confirm that equitable allocation of resources significantly boosts firm performance
by increasing motivation, productivity, and collaboration while reducing burnout and employee turnover. The
results agree with Wu et al., (2024) who reviewed the effect of coordination capability on knowledge transfer
with the moderating role of learning orientation, and evaluated the effect of different dimensions of coordination
capability on knowledge transfer. The findings contribute to understanding the dynamics of knowledge sharing
within organizations, highlighting the importance of both coordination capability and a learning-focused culture.
Regression Analysis
In simple linear regression, coefficients represent the change in the dependent variable for a one-unit change in
the independent variable, while holding other variables constant. The linear regression model that was applied
in this study is shown;
Y = β
0
+ β
1
X
1
+ ε
Where;
Y = Performance of Manufacturing SMEs
β
0 =
Constant term
β
1 =
Beta Coefficient
X
1
= Coordination Capability
ε = Error term
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Table 3: Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
Durbin-Watson
1
.879
a
.773
.744
.39242
2.059
a. Predictor: (Constant), Coordination Capability
b. Dependent Variable: Performance of Manufacturing Small and Medium Enterprises
From Table 3, the correlation coefficient value denoted as R was .879 which indicated that the relationship
between coordination capability and performance of manufacturing small and medium enterprises in Nairobi
City County, Kenya was positive. Coordination capability accounted for 77.3% of the variation in performance
of manufacturing SMEs as supported by R Square value of .773. The adjusted R square value was .744,
indicating that 74.4% variation in performance of manufacturing SMEs was explained by the model, accounting
for the predictor, while other factors not included in the model explained 22.7% of the variation in performance
of manufacturing SMEs in Nairobi City County, Kenya. The standard error of .39242 denoted the deviation from
the line of best fit.
Table 4: ANOVA Results
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
16.783
1
16.783
399.595
.000
b
Residual
4. 929
116
.042
Total
21.712
117
a. Dependent Variable: Performance of Manufacturing Small and Medium Enterprises
b. Predictors: (Constant), Coordination Capability
Table 4 presents the regression model of the independent variable and the dependent variable showing that it
was significant (F (1, 116) = 399.595, p-value = .000), signifying that coordination capability was an effective
predictor in the model hence the regression model fitted the data.
Table 5: Regression Coefficients
Model
Unstandardized Coefficients
Standardized Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
1.412
.349
4.045
.000
Coordination Capability
.445
.109
.436
4.082
.000
a. Dependent Variable: Performance of Manufacturing Small and Medium Enterprises
The regression equation was represented as;
Y = 1.412 + .445X
1
Where;
Y – Performance of Manufacturing Small and Medium Enterprises
X
1
–
Coordination Capability
As shown in Table 5, the beta coefficient for coordination capability was significant (β
1
= .445, t = 4.082, p-
value = .000), deducing that for every single unit improvement in the index of coordination capability, there was
a corresponding improvement index of .445 in performance of manufacturing small and medium enterprises.
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
The general objective of this study was to examine the influence of coordination capability on performance of
manufacturing small and medium enterprises in Nairobi City County, Kenya. The study found that coordination
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capability had a significant influence on performance of manufacturing small and medium enterprises. The study
specifically determined that firms ensured the allocation of resources equitably across departments in order to
have optimal contribution across the board.
The study concluded that coordination capability had a positive and significant influence on performance of
manufacturing small and medium enterprises in Nairobi City County, Kenya. This was contributed by firms
ensuring that equitable allocation of resources across departments was to have optimal contribution across the
board. In addition, the study found that firms always strove to interpret market information correctly so that they
could be responsive in a better way to market requirements and sustain better delivery. The study noted that
firms communicated well to staff regarding strategic and policy changes, thus achieving information symmetry.
The study recommends that coordination capability is key to enhancing performance of manufacturing small and
medium enterprises thus should be a key focus of implementation. Firms should have a program for patenting
all innovations to ensure assured revenue streams, and while not every firm may need to patent every innovation,
a strategic patenting program may lead to assured revenue streams by securing exclusive rights, enabling
licensing, attracting investment, and providing a competitive advantage. Manufacturing enterprises need to
ensure that all key decisions are cascaded to all staff members, which creates alignment between strategic goals
and daily operations, improves efficiency, and enhance adaptability to market changes.
The study used cross sectional survey research design, which means that data was collected at a specific point
in time, making it impossible to draw definitive conclusions about the causal relationship between the variables
presented by the regression model, and therefore hypothesized relationships between variables should be drawn
and interpreted more cautiously. The circumstances make it difficult to interpret the model in the way that
multiple regression analysis implies, and it is important to remember that when models are tested against
longitudinal data, clear causal inferences can be made. Future research on strategic capabilities could use a
longitudinal research design to collect data over a longer period of time to improve regression inference.
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