STRATEGIC BUSINESS MODELS AND PERFORMANCE OF LARGE GRAIN MILLING COMPANIES IN KENYA

Abstract

In the face of rising global competition and shifting consumer preferences, the strategic deployment of innovative business models has become imperative for manufacturing firms seeking sustained performance. This study investigated effect of strategic business models, specifically the freemium and multilevel marketing (MLM) models, on the performance of large grain milling companies in Kenya. Drawing on the Resource-Based View (RBV) and Resource Dependence Theory (RDT), the study examined how internally developed capabilities and externally managed networks contribute to firm-level outcomes such as sales growth, profitability, and market share expansion. A descriptive research design was employed, targeting a census of 223 management-level employees from all 16 large grain milling companies registered under the Kenya Association of Manufacturers (KAM). Stratified random sampling method was used to select a sample of 141 participants, with a final response rate of 88.4% (125 respondents). Data were collected using semi-structured questionnaires and analyzed using descriptive statistics, Pearson correlation, and multiple linear regression techniques with the aid of SPSS version 25. Descriptive findings indicated high levels of agreement with the adoption of both strategic models. For the freemium model, firms reported strong usage of perpetual licenses, free samples, and customer-driven feedback mechanisms. The MLM model showed wide application in direct selling, agent recruitment, and performance-based incentives. Correlation analysis revealed significant and positive relationships between each model and firm performance, with MLM (r = 0.730) having a stronger effect than freemium (r = 0.543). Regression analysis confirmed that both models significantly predict firm performance, with the MLM model (β = 0.521, p < 0.001) having a slightly higher effect than the freemium model (β = 0.419, p < 0.001). Together, the models accounted for 64.1% of the variance in performance outcomes (R² = 0.641), indicating a robust explanatory power. The study concludes that both freemium and MLM models are viable strategic tools for enhancing competitiveness and operational outcomes in the grain milling sector. Firms that leverage internal capabilities while cultivating external networks are better positioned to respond to market volatility, reach underserved segments, and improve financial performance. The study recommends further investment in digital infrastructure to enhance freemium execution and capacity-building programs to strengthen MLM networks. Future research should explore longitudinal impacts of these models and expand analysis to other agribusiness sectors to enhance generalizability.

Keywords: Strategic Business Models, Freemium Model, Multilevel Marketing, Firm Performance, Grain Milling, Kenya