Ansoff’s growth strategies, government regulation, and Financial performance of the leather industry in Kenya

Abstract

This study examines the impact of Ansoff's growth strategies on the financial performance of Kenya's leather industry, with particular focus on how government regulations moderate these relationships. Against the backdrop of declining export performance despite abundant raw materials, the research investigates three key strategic approaches: market penetration strategies, market development strategies, and product development strategies. The study employs a descriptive research design grounded in positivist philosophy, drawing theoretical support from the Ansoff Matrix Theory, Market-Based View Theory, Resource-Based View Theory, and Market Power and Competition Theory. Data collection involved structured questionnaires administered to 75 senior managers across 15 licensed tannery firms, selected through stratified random sampling to ensure industry representation, supplemented by five years of audited financial records (2019-2023). A pilot study involving 05 managers from non-sampled firms confirmed the research instruments' reliability with Cronbach's alpha scores exceeding 0.7. Analysis was conducted using both descriptive and inferential statistical techniques, including correlation analysis, multiple regression, and moderation analysis through Hayes' Process Macro. The Statistical Package for the Social Sciences (SPSS) facilitated data processing, with diagnostic tests confirming the appropriateness of the analytical approach. These included the Kolmogorov-Smirnov test for normality assessment, Spearman's Rank Correlation for non-parametric relationships, and Variance Inflation Factor analysis to rule out multicollinearity concerns (all VIF values remained below 5). The findings reveal that Ansoff's growth strategies collectively account for 46.5% of the variance in financial performance, with market penetration strategies (β = 0.32) and market development strategies (β = 0.28) demonstrating stronger immediate effects compared to product development strategies (β = 0.18). Government regulations emerged as a significant moderator, explaining an additional 12% of variance in the strategy-performance relationship. The study concludes with practical recommendations for industry stakeholders: firms should balance short-term market-focused strategies with longer-term product innovation investments, while policymakers are advised to streamline regulatory frameworks and introduce targeted incentive programs. Future research directions include longitudinal studies to track strategy evolution and comparative analyses with other manufacturing sectors facing similar challenges.