Analysis of Diversification Strategies and Organizational Performance of Private Information Technology Companies in Kenya

Diversification strategy plays a key role in enhancing organizational performance across various sectors. In Kenya, the information technology (IT) sector contributes about ۸% to GDP and grows at a rate of ۱۰.۸% annually. However, private IT companies experience persistent challenges that affect their sustainability and strategic growth. This study examined the effect of diversification strategies on the performance of private IT companies in Kenya. The study was anchored on four theories: Resource-Based Theory, Modern Portfolio Theory, Dynamic Capabilities Theory, and Balanced Scorecard Theory. A descriptive research design was used, targeting a population of ۴۳۳ registered private IT firms, from which a purposive sample of ۲۰۸ companies was drawn. Data were collected using structured questionnaires and analyzed using descriptive, correlation, and regression analysis through SPSS. The findings showed that concentric and conglomerate diversification strategies had a positive and significant influence on organizational performance. The study concluded that internal diversification strategies are critical in driving the performance of private IT companies than external policy factors. It was further observed that government IT sector policy showed a weak and statistically insignificant effect on organizational performance. The coefficient of determination (R²) was ۰.۶۸۹, indicating that ۶۸.۹% of the variance in performance could be explained by the diversification strategies applied. The study recommends enhanced investment in strategic diversification and innovation among private firms. The study provides a basis for evidence-based policy formulation and improved strategic planning in Kenya’s private IT sector.

کلیدواژه ها:

Dynamic Capabilities ، Innovation ، Policy ، resources