HOW KNOWLEDGE MANAGEMENT AFFECTS PERFORMANCE OF RETAIL PHARMACEUTICAL FIRMS IN NAIROBI CITY COUNTY: THE MODERATING EFFECT OF OPERATING ENVIRONMENT

Abstract

Most companies survival is highly influenced and relates to the existing operating environment and their performance solely depends on the knowledge management practices they adopt. The objective of the study was to establish the effect of operating environment on the relationship between knowledge management and performance of retail pharmaceutical firms in Nairobi County, Kenya. There has been growing concern amongst strategic management researchers and practitioners alike in attempting to understand why some firms achieve higher levels of performance than others albeit operating in the same or similar business environments. The research was anchored on Knowledge-Based View theory and the industrial organization economics theory. The
study applied positivism philosophy and descriptive research design. The population of the study was all 720 registered retail pharmaceutical firms in Nairobi County out of which a sample of 116 retail pharmaceutical firms was considered for the study. Primary data was collected using semi-structured questionnaires. Data was analyzed using descriptive statistics and inferential statistics. The results of the study showed that knowledge management significantly influences firm performance. The results also provided evidence to support the moderating influence of operating environment on the relationship between knowledge management and firm performance. A theoretical argument followed in this study observed operating environment in which a firm operates dictates the strategy to be chosen by a firm thus influencing performance. The study will enable stakeholders and owners of the retail pharmaceutical firms to develop policies that facilitate knowledge management process in their firms and having processes for applying knowledge learned from experience. Future studies could explore relevant factors that were not discussed in this study like the role of technology and innovations that could further influence retail pharmaceutical performance.

Key words: Knowledge Management, Operating Environment, Firm Performance, Retail
Pharmaceuticals