Strategic Choices, Firm Size and Organisational Performance of Family-Owned Businesses In Nairobi County-Kenya

Abstract

Family-owned businesses play a vital economic role in Kenya, yet many continue to face performance challenges despite numerous interventions. This study examined the influence of strategic choices—digital promotion, geographical diversification, open innovation, and conglomerate diversification on the performance of family-owned businesses in Nairobi. Anchored on the philosophy of positivism and using an ex-post facto design, the study targeted top and middle managers from 226 family-owned businesses that have operated for over ten years. Stratified and simple random sampling techniques were used, and data was collected via structured questionnaires. A pilot study was conducted in Nakuru County to enhance validity. The data analysis tool employed was SPSS version 28, using descriptive and inferential statistics. Findings revealed that digital promotion significantly enhances competitive performance. Geographical diversification and open innovation were also strong positive predictors of performance, while conglomerate diversification had a modest positive effect. Firm size moderated the influence of geographical diversification and open innovation on performance. The study concludes that digital promotion is a universally effective strategy, geographical diversification is essential regardless of firm size, and open innovation is key for sustained growth. While conglomerate diversification offers mixed outcomes, strategic choices overall play a critical role in performance. Recommendations include leveraging strategic choices to align management decisions with firm characteristics. Family businesses should invest in leadership, governance, and operational systems, while policymakers should promote strategies aligned with firm size. Future studies could explore how generational shifts influence strategic decision-making in family-owned businesses. Future research should expand the research across counties in Kenya or comparing urban versus rural family-owned businesses could reveal location-specific barriers or enablers of diversification strategies. A similar study could also be carried out on one specific industry.