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DECLARATION I hereby declare that this is my original work and has not be submitted to any institution
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Student’s name: MBIADJEU NGASSAM PALOMA
Registration number: BUS-3-2946-2/2016
This research proposal has been submitted with our approval as the university supervisors
Signature……………………………… Date…………………………………
Supervisor’s name: SIMON MURITHI
School of business and economics
Kenya Methodist University
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Supervisor’s name: STEPHEN MAORE
School of business and economics
Kenya Methodist University
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DEDICATIONThis thesis is dedicated to my loving mother Ms. Youtcha Helene and my beloved sister Mbiadjeu Tchouadep Elodie whom I am proud of being the sources of inspiration and joy in my entire life.

ACKNOWLEDGEMENT The production of this work has been the concerted effort of well-wishers who need to be acknowledged for their contribution. I first give glory and honor to God the Almighty Father for having shower upon me His Holy Spirit and granting me good health during the research period. I am very appreciative of the encouragement, patience and invaluable suggestion and guidance provided by my supervisors Mr. Simon Murithi and Mr. Stephen Maore. Similar sentiments are also extended to the entire school of business and economics of the Kenya Methodist University. In a special way I too appreciate Tchamba Alain and my friends who have continuously supported, encouraged and morally guide me, for without them I would not have achieved this level. Folem Romeo for the guidance he gave me throughout this research. Lastly I am greatly indebted to my sister for her emotional, physical and material support and encouragement she gave me throughout this research.

TABLE OF CONTENTS
TOC o “1-3” h z u DECLARATION PAGEREF _Toc509737436 h iDEDICATION PAGEREF _Toc509737437 h iiACKNOWLEDGEMENT PAGEREF _Toc509737438 h iiiLIST OF TABLES PAGEREF _Toc509737439 h viLIST OF FIGURES PAGEREF _Toc509737440 h viiLIST OF ABREVIATION PAGEREF _Toc509737441 h viiiABSTRACT PAGEREF _Toc509737442 h ixCHAPTER ONE PAGEREF _Toc509737443 h 1INTRODUCTION PAGEREF _Toc509737444 h 11.0 Background of the study PAGEREF _Toc509737445 h 11.1.1 Manufacturing firms in Kenya PAGEREF _Toc509737446 h 21.1.2 Pharmaceutical and medical equipment sector in Kenya PAGEREF _Toc509737447 h 31.2 Statement of the problem PAGEREF _Toc509737448 h 31.3 The Objectives PAGEREF _Toc509737449 h 51.3.1 General objective PAGEREF _Toc509737450 h 51.3.2 Specific Objectives PAGEREF _Toc509737451 h 51.4 Research Questions PAGEREF _Toc509737452 h 51.5 Significance of the study PAGEREF _Toc509737453 h 61.6 Scope and Limitation PAGEREF _Toc509737454 h 61.6.1 Scope PAGEREF _Toc509737455 h 61.6.2 Limitations PAGEREF _Toc509737456 h 71.6.2.1 Assembling a Research Team PAGEREF _Toc509737457 h 71.6.2.2 Getting institutions to participate PAGEREF _Toc509737458 h 71.6.2.3 Dealing with data PAGEREF _Toc509737459 h 71.7 Assumptions of the study PAGEREF _Toc509737460 h 71.8 Definition of terms PAGEREF _Toc509737461 h 8CHAPTER TWO PAGEREF _Toc509737462 h 10LITERATURE REVIEW PAGEREF _Toc509737463 h 102.1 Introduction PAGEREF _Toc509737464 h 102. 2 Theoretical Review PAGEREF _Toc509737465 h 102. 2. 1 Transaction Cost Theory PAGEREF _Toc509737466 h 102.2.2 Resource Based View Theory PAGEREF _Toc509737467 h 112.2.3 Eclectic Paradigm Theory PAGEREF _Toc509737468 h 132.2.4 Institutional Theory PAGEREF _Toc509737469 h 142.2.5 Theoretical Framework PAGEREF _Toc509737470 h 152.3 Empirical Review PAGEREF _Toc509737471 h 162.3.1 Factors that influence internationalization of Kenyan manufacturing firms PAGEREF _Toc509737472 h 162.3.2 Role of Organization Attributes in Internationalization PAGEREF _Toc509737473 h 162.3.3 Role of Decision maker`s Abilities in Internationalization PAGEREF _Toc509737474 h 182.3.4 Role of Market Features of internationalization PAGEREF _Toc509737475 h 192.3.5 Role of Regulatory support in Internationalization PAGEREF _Toc509737476 h 212.3.6 Internationalization PAGEREF _Toc509737477 h 222.4 Conceptual Framework PAGEREF _Toc509737478 h 222.5 Operationalization of Variables PAGEREF _Toc509737479 h 23CHAPTER THREE PAGEREF _Toc509737480 h 25RESEARCH METHODOLOGY PAGEREF _Toc509737481 h 253.1 Introduction PAGEREF _Toc509737482 h 253.2 Research Design PAGEREF _Toc509737483 h 253.3 Target Population PAGEREF _Toc509737484 h 253.4 Sample Design and Sample PAGEREF _Toc509737485 h 263.5 Data Collection Instrument and Procedures PAGEREF _Toc509737486 h 263.5.1 Reliability and validity PAGEREF _Toc509737487 h 273.5.1.1 Validity PAGEREF _Toc509737488 h 273.5.1.2 Reliability PAGEREF _Toc509737489 h 273.6 Measurement of Variables PAGEREF _Toc509737490 h 273.7 Data Analysis PAGEREF _Toc509737491 h 283.8 Research Limitations PAGEREF _Toc509737492 h 293.8.1 Sensitivity of information PAGEREF _Toc509737493 h 293.9 Research Ethics PAGEREF _Toc509737494 h 29REFERENCES PAGEREF _Toc509737495 h 30APPENDICES PAGEREF _Toc509737496 h 37LIST OF TABLES
TOC h z c “Table 3” Table 3. 1: Target Population PAGEREF _Toc509738503 h 26
LIST OF FIGURES TOC h z c “Figure 2.” Figure 2. 1: Theoretical Framework PAGEREF _Toc509738519 h 15Figure 2. 2: Conceptual Framework PAGEREF _Toc509738520 h 23Figure 2. 3: Operationalization Framework PAGEREF _Toc509738521 h 24
LIST OF ABREVIATIONMNC: Multinational Corporations
KAM: Kenyan Association of Manufacturers
KAPI: Kenyan Association of Pharmaceutical industry
ABSTRACTInternational business is any business activity organized and carried across national business firms in pursuit of their stated aims and objectives. The aim of any organization be national or international is to maximize their profit and minimize their costs; this is achieved through effective and efficient allocation of its resources in its operations. Selected pharmaceutical and medical equipment present in Kenya will be investigated to analyze the key determinants of internationalization. The objectives of the study will be to determine the extent to which organization`s attributes, decision maker`s abilities, market features and regulatory support influence internationalization of selected Kenyan pharmaceutical and medical equipment firms. This study will further provide empirical review, the conceptual and operational framework. In research design and methodology, a descriptive research design will be used. The main objective of this design is a clear description of the persons involved and acquisition of accurate information from the current situation. Due to this topic being important in the field of international business, this research will have a general objective which is to analyze the key determinants that influence internationalization of selected Kenyan pharmaceutical and medical equipment firms. It will specifically look at determinants such as: organization`s attributes, decision maker`s abilities, market features and regulatory support. Purposive sampling method will be used to gain access to information from the members of the population in order to determine the status of the population and how they relate to one or more variables. The sample size will consist of 63 respondents out of the targeted 75 respondents. The study will use questionnaire method in form of structured questions to collect data from the field. The data will be summarized and presented in the form of pie charts and graphs and questionnaires will be collected and analyzed so as to acquire relevant data.

CHAPTER ONEINTRODUCTIONThe main purpose of this chapter is to lay down the ground for the study area as well as to elaborate on the research a problem that is examined by this study. This study will look the key determinants of internationalization of selected Kenyan pharmaceutical and medical equipment firms. This chapter contains the background of the study, statement of the problem, research objectives, research question, significance, limitations and assumptions of the study.

1.0 Background of the studyGlobalisation is the shift from self-contained or independent national economies towards an interdependent and integrated global economic system. Globalization is a platform that enables firms to operate beyond their national borders thus making them able to achieve their objectives and goals. Globalization has pushed firms to expand their operations outside their home country, this expansion is done in stages where the firm at first focuses only on its local market with no export, then will later start exporting via an agent, followed by the establishment of a sales subsidiary then ultimately establish a production or manufacturing unit. When internationalizing the question of when and how to access the host country is critical to the MNC`s success.
According to Matusitz and Minei (2013), globalisation has allowed MNCs to set a wide range of strategies, enabling them to effectively and efficiently conduct their cross border operations. Global markets players are referred to as multinational corporations (MNCs). A multinational corporation (MNC) is an organization characterized by ownership of production facilities and other assets in more than one country excluding its home country and a centralized head office that helps in the overall coordination of all management activities of its branches or subsidiaries (Leonard, Pulignano, Lamare, ; Edwards, 2014). A multinational corporation (MNC) can further be defined an organization whose cross border operations are characterized by a common strategy formulation and implementation.
The MNCs are also characterized by their ownership of productive assets in host countries. Nisar, Boateng, Junjie, and Leung (2012) assert that levels of control, ownership and different resource commitment factors have the ability to influence the MNCs market entry mode decision. Market entry mode choices are a mixture of commitment of single factors; external factors and internal factors. These factors are further explained through various theories and surveys. The decision to internationalize requires a thorough and meticulous evaluation of all market entry modes, the potential political, economic, cultural and other risks to ascertain the business environment conduciveness in a host country
According to Hajela and Akbar (2011), the MNCs mode market access, information, position, and the ease of acquisition of resources are dependent on the choice of market entry mode. Market entry mode is vital and associated to control. Control is a key to the success of MNCs because it ensures that risks are minimized, returns on investment are maximized thus increasing performance through reduction of lead time by supplying quality products and services to right clients at the right time. This will increase the organization goodwill. The MNC expansion strategy is a key determinant of market entry decision, it ensures that the firm through its core competencies is able to exploit the host country`s opportunities, resources and capabilities to remain competitive in international markets. Andrew (2011) asserts that MNCs are sensitive to the host country`s size , availability of resources , industry development, market competition, a partnering firms availability, requirements and regulations when deciding on the appropriate market entry strategy because the MNC`s decision of how to access a international markets has a significant impact on its financial performance.
According to Gathirua (2013), the MNCs market operations are conditioned by their foreign entry mode choice, the choice of market entry strategy has a huge impact on the firm`s future decisions and performance in foreign markets due to complex, continual change and dynamic business environment. Most firms choose market entry strategies that allow them to take advantage of the chances in the economy in a manner that is bearable (Lau ; Hurly, 2012). A company can access internationalize via investment or non-investment modes (Hajela et al., 2011).The multinational firm can expand through: mergers and acquisitions, joint ventures, contractual entry modes and wholly owned subsidiaries investment.

1.1.1 Manufacturing firms in KenyaThe manufacturing sector in Kenya is one of the fastest-growing sectors and a major source of employment in Kenya. According to Nyori and Ogola (2015), the firms in the Kenyan manufacturing sector manufacture a wide range of items generally designed to meet the domestic needs of low-income households although some are exported to neighboring countries. KAM is the representative organization for manufacturing value-add industries in Kenya. Established in 1959 as a private sector body, KAM provides links for cooperation, dialogue members to the relevant authorities. KAM promotes trade and investment and standards and encourages the formulation, enactment and administration of sound policies that facilitate a competitive business environment and reduce the cost of doing business.
1.1.2 Pharmaceutical and medical equipment sector in KenyaIn Kenya the pharmaceutical industry plays a major role in supporting maintaining the health sector. According to Weru (2018), Kenya is currently the largest producer of pharmaceutical products in the Common Market for Eastern and Southern Africa (COMESA) region, supplying about 50 per cent of the regions’ market. The Pharmaceutical manufacturing in Kenya can be traced back to the 1940s. Wamae and Kariuki (2014) have observed that Local production is now predominately undertaken by locally owned firms and that the vast majority of pharmaceutical manufacturing companies in Kenya are engaged solely in formulation activities i.e. converting manufactured bulk substances into final usable forms and packaging. The pharmaceutical industry in Kenya is growing at a rapid pace and offers excellent opportunities for exporters and manufacturers to establish their products and services in the lucrative market for pharmaceuticals in East Africa. Kenya is currently the largest producer of pharmaceutical products in the Common Market for Eastern and Southern Africa (COMESA) region, supplying about 50% of the regions’ market.

KAPI is an industry association established in late 1960’s with the objective of representing and promoting the interests of the Medical Devices and Pharmaceutical industry in Kenya. KAPI’s vision is to promote an ethical, innovative and responsible health care industry in Kenya with an overall goal of ensuring that medicinal products of the highest quality can be readily available for prevention and treatment of human and animal diseases.

1.2 Statement of the problem
The successful operation of a multinational corporation relies heavily on the international environment and conditions within specific host countries. The Internationalization decision can be influenced by different set of factors, these are internal and external firm`s factors and the question of when and how to enter the foreign market. According to Nisar, Boateng, Junjie, and Leung (2012), market entry modes involve different levels of control, ownership and different resource commitment. Quer, Claver, and Rienda (2011) define market entry strategy as a structural agreement that allows a firm to implement its product market strategy in a host country either by carrying out only the marketing operations or both production and marketing operations there by itself or in partnership with others. An entry mode can further be defined as a structural agreement that allows a firm to implement its product market strategy in a host country either by carrying out only the marketing operations International market entry strategy is a platform through which multinational enterprises (MNCs) gain access to new global markets. These factors are a critical determinant in the success of the multinational, which is why the MNCs should take into consideration all these factors to ensure successful internalization.
Hollensen, Boyd, and Dyhr Ulrich (2011), study focused on the choices and consequences of the entry modes but also international ownership levels where they found out that the entry mode decisions of Danish SMEs are influenced by personal networks and high turnover that enables the company to make stronger commitments in foreign countries. They assert that the entry mode choice influences the financial performance of international activities. From this study, it appears that using a particular market entry strategy may yield higher growth and performance than others.
Previous research has explored the relationship between the choice of international market entry strategy and firm performance. Among these studies, Zekiri and Angelova (2011), assert that an organization will be more attracted to a type mode depending on their backgrounds, nature of the company, strategic objectives as well as its resources. In many cases, there are many obstacles that companies have to meet while deciding to enter other markets, for example; safety, environmental, packaging, labeling, patents, trademarks and copyrights, are factors that businesses depend on being successful. Sadaghiani, dehghan, and Zand (2011) also conducted a study on the impact of international market entry strategy on export performance and the study concluded that their results depict that the entry strategy affects the export performance of the Iranian export companies. They concluded that the variable share of entry strategy in anticipation and changes in export performance of the export companies is approximately 48%. Developing economy such as Kenya has little or no studies on the relationship between internationalization factors and the success of MNCs.
Majority of Studies on key determinants that influence internationalization concentrate on developed and emerging countries, which leave a knowledge gap for developing economies such as Kenya. There is a scarcity of studies on the key determinants that influence internationalization of Kenyan pharmaceutical and medical equipment firms and the researcher is not aware of any study that has been done on the analysis of key determinants that influence the internationalization of selected Kenyan pharmaceutical and medical equipment firms. This study therefore wishes to bridge this knowledge gap by analyzing the key determinants that influence internationalization of selected Kenyan pharmaceutical and medical equipment firms.

1.3 The ObjectivesThis section defines strategies or implementation steps to attain the identified goals. Objectives are a way to break a strategy down into a set of achievable targets.

1.3.1 General objective
The purpose of this study is to analyze the key determinants that influence internationalization of selected Kenyan pharmaceutical and medical equipment firms.
1.3.2 Specific ObjectivesThe specific objectives of this study will be:
To analyze how organization’s attributes influence the internationalization of selected Kenyan pharmaceutical and medical equipment firms.

To assess how the decision maker`s abilities affect the internationalization of selected Kenyan pharmaceutical and medical equipment firms.

To find out how market features impact the internationalization of selected Kenyan pharmaceutical and medical equipment firms.

To examine how regulatory support determine the internationalization of selected Kenyan pharmaceutical and medical equipment firms.

1.4 Research QuestionsThe research question to this study will be as follow:
What is the effect of organization attributes in the successful internationalization of selected Kenyan pharmaceutical and medical equipment firms?
How does the decision maker`s attributes affect the internationalization of selected Kenyan pharmaceutical and medical equipment firms?
What is the effect of market features on the internationalization of selected Kenyan pharmaceutical and medical equipment firms?
How does regulatory support affect the internationalization of selected Kenyan pharmaceutical and medical equipment firms?
1.5 Significance of the studyThe study may be of use to management of pharmaceutical and medical equipment firms in Kenya. This is because it will highlight the key determinants that influence internationalization. Managers may therefore use these results to select the optimal strategies that would optimize growth of multinationals.

The results of this research study will categorically benefit many organizations along the pharmaceutical and medical equipment sector by providing information on internationalization key determinants to be used so as to increase financial performance. Kenyan pharmaceutical and medical equipment firms will benefit from this study because the results of this research will give insights which would enable them to improve their internationalization decision making which in return will improve their performance. Furthermore, the study will aid managers of prospective firms, and also those other people that want to go into other markets. The study will also provide ample information to those firms already in the market with strategies that are not working for them.
Finally the study will provide the researcher with information on key determinants that influence the internationalization of selected Kenyan pharmaceutical and medical equipment firms so as to meet their goals and objectives. The researcher will enhance her level of academic qualification in the field of finance international business, and scholars interested in research may use the result of this study to improve or set as background for their work.

1.6 Scope and Limitation1.6.1 ScopeVarious factors such as: organization attributes, decision maker`s abilities, market features and regulatory support justify why Kenyan manufacturing firms internationalize. The study will restrict itself to factors influencing the internationalization of selected Kenyan pharmaceutical and medical equipment firms.

The study will focus on the key determinants that influence internationalization of selected Kenyan pharmaceutical and medical equipment firms. The study will target selected pharmaceutical and medical equipment firms in Kenya. The respondents will include: Top level managers; Middle level managers and Lower level staff. The study will be carried out from March to May 2018 where questionnaires and interviews will be used to gather information from the respondents.

In this study some of the information required will be confidential in nature and some respondent may be reluctant to share them with the researcher in order to overcome this challenge the researcher will only use the information for academic purposes.

1.6.2 Limitations1.6.2.1 Assembling a Research TeamTo overcome the difficulty of assembling a research Team the researcher will be clear about her needs and solicit useful feedback.

1.6.2.2 Getting institutions to participateThe researcher will not stop at the first rejection, will be prepared, persevere and ask for help when needed. The researcher will make the respondents understand that the data collected will be for academic use only.

1.6.2.3 Dealing with dataThe researcher will stay focused and ask for help from professionals.

1.7 Assumptions of the studyThe study will assume that the respondent will willingly respond to the questionnaires and give reliable information. We assume that the sample population will be representative of the entire population.

1.8 Definition of termsThese are terms that are not widely known outside the researcher discipline. These terms include particular theoretical constructs, formulas, operational definitions that differ from colloquial definitions, schools of thought and discipline-specific acronyms.

Internationalization
Internationalization can be defined as a process involves a series of incremental ‘stages’ whereby firms gradually become involved in exporting and other forms of international business.(Bell, Crick, & Young, 2004).
Multinational Corporation
A multinational corporation (MNC) is an organization that has facilities and other assets in at least one country other than its home country. They have centralized head offices where they coordinate management. (Leonard, Pulignano, Lamare, and Edwards, 2014).Organization Attributes
Organization attributes are characteristics such as: firm size, firm age and product appeal which Successful internationalization is dependent on. (Barney, Ketchen, and Wright, 2011).

Decision maker`s abilities
The manager’s personality, his/her managerial skill, and technical know-how are factors that impact successful internationalization. (Stoian M. , 2010).

Market access
Market access is the ability for MNCs to enter the industry and get customers. Internationalization offers diversification of country-specific risks, reduction of dependence on home country–based suppliers and customers, (Pukall ; .Calabrò, 2014).

Regulatory support
These are home and host country institutions that affect firm’s domestic and global performance because the presence or absence of specific inputs outside the firm induces it to develop distinct resources that either rely on the availability of particular external inputs or compensate for the lack of certain external inputs. (Cuervo-Cazurra, 2011).

CHAPTER TWOLITERATURE REVIEW2.1 IntroductionThis chapter will present a review of available literature on the topic area. Its main purpose will be to improve the researcher’s understanding of the study area as well as to aid in identifying research gaps that can be filled by this study. It looks at key determinants that influence the internationalization of Kenyan pharmaceutical and medical equipment firms. It will contain theoretical framework, conceptual framework and the empirical review.

2. 2 Theoretical ReviewThis section explains some of the specific theories that can be related to the topic of study on key determinants of internationalization of selected Kenyan pharmaceutical and medical equipment firms. The theories are: Transaction Cost Theory, Resource Based View Theory, and Eclectic Paradigm and Institutional theory as discussed below:
2. 2. 1 Transaction Cost TheoryOne of the most important theoretical paradigms in finance and all other fields during the past years is the Transaction cost theory. Transaction costs are cost incurred because firms participate in the market. These are direct and indirect expenses of negotiating, monitoring, and enforcing explicit and implicit contracts between firms. Transaction costs are divided into three categories: information costs, bargaining costs and enforcement costs (Jansson, 1994).

Information costs are the costs associated with collecting information in order to identify and to appraise adequate business. Information costs are all about the distribution of prices and quality of commodities, the search for potential buyers and sellers and for relevant information and their behavior and circumstances. Bargaining costs are costs that occur when participating in negotiations including time and costs for legal and insurance issues, costs which evolve between the transacting parties during the negotiation phase. Enforcement costs appear after the contract has been set and it is aimed at the sanctioning of trading partners who do not perform according to the discussed terms.as day to day operations.
Williamson (1985) differentiated transaction costs as comprising of ex-ante costs of (searching and information, drafting and negotiating an agreement, costs of safeguarding the agreement) and ex-post costs that entail (costs of evaluating the input, measuring the output and monitoring and enforcement). The transaction cost theory sees ex-ante costs and ex-post costs as important as production costs, or perhaps even more important. While production costs are easier to assess than transaction costs, transaction costs are an important part of the total costs of a firm.
According to Eggertsson (1990), high transaction costs cause market failure, if the transaction costs are too high, exchange will not take place or will be severely constrained. The relevance of transaction cost theory to internalization could be viewed from the perspective of the management. Managers can’t manage costs effectively and can’t make right choices without taking into account the transaction costs. They are in charge of strategic decision making as well. Coase (1937) asserts that an organization tends to expand when the cost of organizing an extra transaction within the firm has become equal to the cost of carrying out the same transaction by means of an exchange on the open market. A fundamental assumption of the transaction cost theory is that organization attempt to minimize information costs, bargaining costs and enforcement costs when they are undertaking transactions. That is why when considering internationalization or export functions; transaction cost theory is relevant because it suggests that organizations will choose the solution that minimizes the sum of ex ante and ex post costs. The value added from internalization is relative efficiency because internationalization costs are relatively lower when compared to those of carrying the exchanges in the market (Jones, 1998).
2.2.2 Resource Based View TheoryAccording Xinming, Brouthers, and Filatotchev (2013), the resource-based view (RBV) maintains that control of capabilities, like marketing orientation, is important since losing control may lead to poor value creation and/or rapid imitation by competitors. They assert that organization with strong marketing orientation want to control these capabilities to be sure they are obtaining reliable information about potential customers, competitors, and other external parties, and that the response to this information is properly implemented, so that they gain the greatest value from these resources.
Onkelinx, Manolova, ; Edelman (2015) observed that Internationalization requires the development of specific firm-level capabilities, such as a marketing capability of niche market access and global positioning, a technological capability of launching knowledge-intensive products and services, or a networking capability needed for acquisition of knowledge and access to complementary resources. Internal and external resources available to the firm constitute the total set of resources available to the firm. In order to gain access to strategic resources, MNCs co-operate, with respect to the product flow, with competitors, in other words by getting into network relations. MNCs are dependent on the development potential of key internal and external resources, which can be adjusted or developed within the firm and between firms and their environments (Ahokangas, 1998). He believes that this adjustment behavior can be analyzed along two dimensions. Firstly in terms of where are the resources located, are they internal or external to the firm, secondly in terms of where the development of resources takes (inward orientation) or (outward orientation).

Das and Teng (2000) assert that the RBV emphasizes the firm’s resources as the fundamental determinants of competitive advantage and performance. The resource-based rationale emphasizes value maximization of a firm through pooling and utilizing valuable resources. That is, firms are viewed as attempting to find the optimal resource boundary through which the value of their resources is better realized than through other resource combinations The resource-based view model assumes that firms within an industry (or within a strategic group) may be heterogeneous with respect to the bundle of resources that they control and resource heterogeneity may persist over time because the resources used to implement firms’ strategies are not perfectly mobile across firms (i.e., some of the resources cannot be traded in factor markets and are difficult to accumulate and imitate).Resource heterogeneity (or uniqueness) is considered a necessary condition for a resource bundle to contribute to a competitive advantage. If all firms in a market have the same stock of resources, no strategy is available to one firm that would not also be available to all other firms in the market.

According to Peteraf and Barney (2003), performance differentials are derived from rent differentials, attributable to resources having intrinsically different levels of efficiency in the sense that they enable the firms to deliver greater benefits to their customers for a given cost (or can deliver the same benefit levels for a lower cost). Strengths and weaknesses of organizations should be considered when developing strategies on how to outperform competitors with their given resources bundles and capabilities. Sustained competitive advantage of an organization comes from tangible and intangible capabilities and resources the organization is able to develop and control (Wernerfeld, 1984).
Barney (1991) asserts that resource value depends on the extent to which it is valuable, rare and difficult to imitate or substitute. Managers seek to attain renewal and reconfiguration of resources because competition and business environment change and decrease their value (Rumelt 1984, de Rond 2003). The RBV is a relevant theory in internationalization because organizations pursue different internationalization development strategies with different international activities over time. They can be either firm or network-oriented resources.

2.2.3 Eclectic Paradigm TheoryDunning (1980) eclectic paradigm is one of the various theories that try to explain why firms start to internationalize. This internationalization theory relates to the advantages of ownership, location, and internalization. He suggests that there are three main types of international production, namely: market seeking, resource seeking and efficiency seeking and they can be explained by the endowment/efficiency paradigm. This theory explains that the firm specific advantages, location advantages are the reasons why MNCs decide to start investing abroad. The eclectic paradigm explains the reasons why firms internationalize, their capacity and willingness to internationalize their production activities.

According to Rugman ( 2010), there are three factors that determine the international activities of multinational enterprises (MNCs). These are ownership (O) advantages, location (L) advantages, and internalization (I) advantages. The propensity of a firm to engage itself in international production increases if those three factors are satisfied. Letto-Gilles (2012) looked at ownership advantages as firm net competitive advantages that companies from one country possess over those firms from other countries when servicing a specific market , Location advantages as the degree to which companies decide to locate abroad value added activities , Internalization as the degree to which companies add value to their output by identifying as more profitable to internalize the generation and exploitation of their ownership advantages rather than through the open market. Ownership advantage is manifested by firm-specific ownership of intangible assets such as technological or marketing knowledge, superior managerial capabilities to control and coordinate international transactions. Location advantage is the comparative cost of country-specific inputs (materials, labor, and natural resources) accessible by firms operating within that country’s borders, or by the cost of trade barriers between countries ( transportation costs, tariffs and non-tariff barriers). Internalization advantage arises from the fact that the factors constituting ownership advantage become a private good once transferred outside the boundaries of the firm.
Williams (1997) asserts that ownership advantages are crucial in the eclectic framework, because it is the possession of these advantages that allows the foreign bank to overcome the advantages enjoyed by the domestic banks due to incumbency An eclectic paradigm was applied to the banking sector, and it suggested that multinational banks have location-specific advantages which may include follow-the client, country-specific regulations, and entry restrictions (Yannopoulus, 1983). The eclectic paradigm is important in internationalization because it explains the level and pattern of foreign value added activities of firms. It helps explain not only the initial act of foreign production but also its growth.

2.2.4 Institutional TheoryWang, Hong, Kafouros and Wright ( 2012) argue that institutions are external, affecting all firms in a given business sector and country, the ways in which institutional factors, such as state ownership, affect a firm are idiosyncratic to that firm. Institutional theory suggests that as a general rule firms are affected by institutions. Institutional theory has its origin from Hall and Taylor (1998) identified three schools of thought about institutionalization: the historical approach, the ‘rational choice’ approach, and the sociological approach. However, the integrated perspective came from the work of Scott (1995) where he stated that the institution provides stability and meaning to a firm?s social behavior. Political, legal, economic, and social rules that articulate and maintain widely observed norms and rules are institutions (Scott, 1995).Strategic choices are driven by a reflection of the formal and informal constraints of a particular institutional framework that a firm is embedded (Oliver, 1997).
Dunning and Lundan (2008) asserts that the institution-based view suggests that the strategic choice of the firm is enabled or constrained by a multitude of institutional forces including elements that both promote and hinder the upgrading of existing resources and capabilities .The home country specific regulatory policies encourage firms to engage in expansion overseas if they are straightforward, consistent and liberal On the other hand, weak institutional framework gives rise to high transaction costs of establishing new business relationships and inhibits potential transactions (Meyer, 2001) because it increases search, negotiation and enforcement costs. Buckley, Forsans, and Munjal (2012), assert that institution-based view argue that a firm’s strategies, such as internationalization, are shaped at least in part by the institutional framework of the home country of the firm.
According to Sillince and Barker (2012), Institutional theory main pillars are structures, schemes, rules, norms, routines; this theory explains economic interactions between several economic units of analysis. Institutional theory components explain how these elements are created, and affect organizations. The institutional theory is relevant in internationalization because it looks at the firm strategy and considers strategic choices as the outcome of such interactions between institutions and organizations (Peng, 2002).

2.2.5 Theoretical FrameworkThis section will consist of concepts and, together with their definitions and reference to relevant scholarly literature, existing theory that are used in our study. It demonstrates an understanding of relevant theories.38100315596Transaction Cost Theory
00Transaction Cost Theory
Figure 2. 1: Theoretical Framework 412432578105Internationalization
00Internationalization
3095625781050019411957556500
4762540005Resource Based View Theory
00Resource Based View Theory
193929026225500
30956251149350047625307975Eclectic Paradigm Theory
00Eclectic Paradigm Theory

195072010096500
1933575203200003810052070Institutional Theory
00Institutional Theory

Source: Author (2018)
2.3 Empirical Review2.3.1 Factors that influence internationalization of Kenyan manufacturing firmsInternationalization brings many benefits to companies; it provides an attractive foreign market entry and expansion approach for MNCS. International exposure can be used to improve competitiveness at home through enhanced managerial skills and capabilities gained from participating in foreign markets (Griffith and Hoppner, 2013). International expansion offers MNCs growth opportunities because of stagnant domestic market competition, leading to an enlarged customer base. It is in this context that an increasing number of firms are expanding internationally, (Ibeh, Wilson, ; Chizema, 2012). However, with the steady rise of competition in export markets, firms’ export survival depends heavily on better understanding the determinants of export performance.
Leonidou and Katsikeas (2010) have attempted to identify key variables that influence successful internationalization. Internal determinants of successful internationalization include the export marketing mix strategy, firm`s size and age, and international experience among others. These internal resource advantages empower the firm to create a competitive advantage with their own capabilities making it difficult for other competitors in the industry to overtake the market leader. International experience of the manager is a strategic intangible capabilities linked to decision-making in terms of resource allocation for performance enhancement (Lages and Sousa, 2010). Other external determinants of successful internationalization also examined include foreign market attractiveness and market access (Leonidou, Palihawadana, & Theodosiou, 2011). Export performance tends to be conditioned by foreign market attractiveness which poses both threats and opportunities for firms. Political interventions undertaken by the host government can enforce changes in the firm’s operations, policies, and strategies. Therefore, firms operating in foreign markets need to keep a close track of changes in policies and regulations to remain competitive
2.3.2 Role of Organization Attributes in InternationalizationInternationalization allows the MNCs growth by enlarging its customer it is in this context that an increasing number of firms are expanding internationally. According to Barney (2011), the organization internal resources generate competitive advantage thus leading to successful internationalization. Successful internationalization is dependent on the MNC characteristics such as: firm size, firm age and product appeal.
Firm size can be measured by the number of employees working for the organization. To compete in foreign markets, firms should be large enough as internationalization requires different to be implemented to perform. Internationalization requires appropriate resources, larger firms have greater ability to expand resources and expand risk than smaller ones. Chenke and Hao (2010) assert that due to availability of managerial, financial resources as well as economies of scale larger firms show a higher degree of internationalization Furthermore, smaller firms bear higher costs for acquiring foreign market information. Large firms have many resources that allow them to operate at greater scale and scopes compared to smaller firms and have a greater orientation towards internationalization (Childs ; Byoungho, 2015). Small size firms may lack of resources that is why they may be hesitant to enter many markets at greater scale and scope.Whereas large firms have greater knowledge, and thus have a greater ability to enter international markets due to possession of greater resources such as greater financial support and an increased access to market information.

The driving force for business internationalization is the experiential knowledge about foreign market operations (Stoian, Rialp, ; Rialp, 2011). The firm`s age refers to the accumulation of experience in the international market, which enables a firm to develop the relevant capabilities required to adapt export marketing strategies to create competitive advantage in foreign markets (Ruzo, Losada, Navarro, ; Díez, 2011 ; Sui ; Baum, 2014). The amount of learning a firm has acquired over a period is generally measured by the age of the firm. Older firms are regarded as holding financial and human resources and higher economies of scale and these resource advantages facilitate their acceleration into international markets. According to Childs and Byoungho ( 2015) , experienced firms have an advantage over less experienced firms that is why they are to enter many foreign countries. As the organization gains experience they acquire market knowledge that allows them to access many countries and choose markets that are increasingly further away from the home market. They believe that based on the experience level, firms will show different patterns in their internationalization. When firms have experience, they are more fearless in their decisions to enter countries; they become confident about adapting to the local needs of the international market.
MNCs are pulled into internationalization by the ability of their products to spread independently into foreign markets because of the perceived quality (this is how subjective consumers possess complete information about a product’s attributes) ,aesthics ( this is the extent to which the firm`s new product is attractive in appearance in matters of personal judgment) , performance (this is the primary operating characteristics of the product and how well it performs its intended functions) , durability (this is the period the product remains usable before it deteriorates and needs to be disposed of ) and workmanship (this is how well manufactured the product appears to be) , all these product dimension lead to increased sales and large market share.
2.3.3 Role of Decision maker`s Abilities in InternationalizationThe decision-maker’s previous experience of the company`s home market and foreign market influence successful internationalization. The manager’s personality, education level, age, language proficiency, and experience abroad, his/her managerial skill, and technical know-how are factors that impact successful internationalization. According to Stoian and al…(2011), firms employing untrained and inexperienced staff in international business tend to exhibit lower levels of performance because of lack of information on environmental opportunities and threats. Better educated decision makers are expected to be more open-minded and interested in foreign affairs, thus being more willing to objectively evaluate the benefits and disadvantages of exporting, as well as to possess more managerial knowledge and capabilities which could enhance export performance
Management attitudes (risk aversion, change aversion, personal ambition, innovation, dynamism, flexibility) and perceptions of risk (on the advantages of internationalization and on the barriers to internationalization) are a prerequisite of international expansion. Risk-taking is one of the most important factors in finding international opportunities and increasing the volume of activities abroad. A certain tolerance for risk-taking is necessary in seeking international expansion (Pérez-Luño, Wiklund, & Cabrera, 2011). Managerial perceptions guide decision making in an organization (Stoian.M, 2010). Acedo and Galán (2011) assert that the perception of risks and opportunities in internationalization influence the decision to enter foreign markets and affects the commitment of the organization to its international activities. The decision to internationalize will not be taken unless management has a positive attitude regarding the opportunities and potential barriers that international expansion will give. The proactive decision makers have positive perceptions of working in foreign markets (including perceptions of greater opportunities, likelihood of success and less risk). The decision-maker’s perception of various foreign markets is motivated by the firm`s sales/profit goals. Perceived similarities and differences between the domestic and host market will determine a firm’s international expansion and influence its performance. International experience provides firms with opportunities to accumulate foreign market knowledge and develop internationalization capabilities (Clarke, Tamaschke, & Liesch, 2013).
International experience is vital because organizations have to learn how to behave in a different market context. Griffith & Hoppner (2013) observed that the enhanced understanding of foreign business practices facilitates effective planning and control of export activities. Decision makers with international experience are better prepared to study the international market, identify foreign business opportunities and encounter potential overseas clients. Internationalization calls for specialized knowledge and experience requirements in the workforce (Brambilla, Lederman, & Porto, 2012, Love & Roper, 2015). Jurgita (2017) asserts that experience provides cumulative knowledge and skills for managers and business contacts. Previous foreign work, managerial experience acquired while working, studying or travelling abroad help to create knowledge based on practical skills, which may increase the ability of a manager to recognize opportunities and exploit them.

According to Hultman, Katsikeas, and Robson (2011), knowledge acquired by managers mainly through export operations abroad can be challenged by a substantial amount of uncertainty. The international experience of a manager constitutes a source of sustainable competitive advantage, Managers of firms with international experience can identify the differences in environmental conditions and are more likely to select attractive markets and adapt export marketing strategies to suit the specific needs of those markets.
2.3.4 Role of Market Features of internationalizationMarket access is improved by the lowering of trade barriers. A trade barrier is a constraint that hinders the ability of a firm to initiate, develop, or withstand business in foreign markets. Determinants, such as industry factors, formal and informal institutional environments, market structure and other environmental characteristics, impact new venture creation and the ensuing path of new venture evolution (Lamotte & Colovic, 2015). Milanzi (2012) noted that small firms are more prone to problems such as resource constraints, organizational deficiencies, and managerial limitations than larger firms. Understanding export barriers can assist in determining why some exporting firms are unable to exploit the full capacity of their business and why other firms fail to achieve positive performance outcomes. Export barriers can be classified as internal and external. Internal barriers are related to organizational resources/capabilities and the firm’s approach to exporting. External barriers usually come from the home and host environment within which the firm operates. Internationalization offers diversification of country-specific risks, reduction of dependence on home country–based suppliers and customers, (Pukall ; .Calabrò, 2014). But the foreign market is characterized by legal and regulatory frameworks including high standards to protect the consumer in the import market; therefore, managers have to allocate resources to adapt their products to meet the quality standards in various export markets.
Freeman and Styles (2014) noted that firm’s location influence positively international expansion because of all its accrued benefits. Location of the firm allows taking advantage of good infrastructure and supply of raw material. Location-specific advantages provide benefits such as skilled labor, low-cost labor and easy access to resources helping the firm gain competitive advantage. Tang (2011) asserts that the exchange of resources is motivated by commitment of organizations to developing and maintaining relationships. Internationalization allows a better exploitation of economies of scale and the utilization of lower labor costs, lower commodity prices, as well as access to new qualified employees and know-how in foreign industry clusters (Dicken, 2011). Industrial environment influences affect firms internationalization market conditions are considered to be critical. Cultural similarity, governmental regulations, local business conventions are market attractiveness characteristics that influence international expansion. Organizations tend to select countries with similar culture to their own in order to increase their performance. Foreign market entrants often perceive a significant amount of uncertainty when entering countries not deemed similar to the home country. Organizations tend to select countries with similar culture to their own in order to increase their performance. Foreign market entrants often perceive a significant amount of uncertainty when entering countries not deemed similar to the home country. Firms tend to enter nations with like consumer behaviors, market conventions, industry structures, institutional settings and local business conventions, which create a feeling of market similarity.

2.3.5 Role of Regulatory support in InternationalizationThe home country and host country environment can interfere in foreign businesses affairs. Cuervo-Cazurra (2011) asserts that home country institutions affect firm’s domestic and global performance because the presence or absence of specific inputs outside the firm induces it to develop distinct resources that either rely on the availability of particular external inputs or compensate for the lack of certain external inputs. According to Marano, Arregle, Hitt, Spadafora, ; .Essen (2016), home and host countries institutions are regulatory/legal, economic. Institutional factors are closely linked to an economy’s entrepreneurial performance and regulatory environmental effects on internationalization (Gupta, Guo, Canever, Yim, Sraw and Liu, 2014). Institutions may implement policies which encourage firms to expand or have constraints such as limited property rights protection, weak legal systems, and unexpected changes of regulatory policies, that may either hamper a firm`s ability to internationalize or push them to do so in order to escape the home country limitations (Wang et al., 2012).

According to Tang (2011), smaller firms generally face greater initial entry barriers than their larger counterparts in building formal business relationships. The host country can enforce changes in operations, policies, and strategies of a foreign firm. These may act to undermine the effectiveness and competitiveness of the activities of MNCs. It is necessary for firms operating in foreign markets to keep a close track of changes in regulations. Baum and al… (2011) observed that entry barriers such as unknown legal or cultural practices are sometimes difficult to overcome. They believe that if legal, market or culture-based uncertainties overshadow internationalization efforts, firms will be more deterred from venturing abroad. A foreign country’s government may impose exchange controls, which can have a significant impact on reinvestment, financing and repatriation decisions. Financial barriers hamper the firm’s ability to amortize initial expenditure and secure the revenue necessary to finance ongoing development costs (Baum et al., 2011), thus, laws and pressures from the foreign government can play an important role in performance by enhancing or reducing a firm’s effectiveness and capability. Konadu (2016) observed that firms faced with legal problems like the freedom to convert, or transfer their currencies performed better after the managers became aware of the problems. However, managers of high performing firms designed more appropriate strategies to overcome the challenges than those in low-performing firms.
2.3.6 InternationalizationInternationalization is the involvement of organizations in international markets. Robert, Sharif, and Edwards (2015) define internationalization as the outward movement in a firm’s international activities and the process of increasing international involvement in international operations. The decision to go international is a very critical decision. The development of economy and technology, international trade has allowed organizations to transact beyond their national borders. A firm may choose to internationalize due to various reasons, such as trade barriers lowering or elimination that make it easy for firms to access new markets, the pursuit of cheaper resources, the increasing consumer requirements in the overseas market. These factors encourage organizations to launch their products or services into foreign market. Internationalization requires both detailed adjustment and general transferal of experiences. It is a question of choosing specific business locations and transferring competencies between markets – both domestic and international.

According to Ravelomanana, Liang, Mahazomanana, and Miarisoa (2015), the reason why organizations internationalize is due to their wish to expand their sales into new and more profitable markets. Foreign markets allow organization to be profitable, to attain latest technology and innovations in the product and manufacturing process. Internationalization can also be referred to as globalization. Globalization has encouraged the sale and distribution of products and brands in many countries around the world. It has been triggered by host country governments reducing trade and investment barriers. Globalization has made it possible for firms to find new opportunities by internationalizing their operations
2.4 Conceptual FrameworkConceptual framework is used in research to outline possible courses of action or to present a preferred approach to an idea or thought. Armstrong (2006) explains that the conceptual framework aims to update and refine the existing concepts to reflect the changes. According to Rose (2008), conceptual framework is an intermediate theory that attempts to connect all the aspects of inquiry (statement of the problem, significance of the study, literature review, methodology, data collection and analysis). She asserts that conceptual framework acts like a map that gives coherence to empirical inquiry and is used to outline possible causes of action or present preferred approach to an idea; hence it is a structure of assumptions and principles that hold together the ideas comprising a broad concept. She further points out that conceptual framework synthesize ideas for the purpose of organized thinking and providing study direction, and comprise the independent and dependent variables and an examination into their relationship.

Figure 2. 2: Conceptual Framework 3095625343535001905058420Organization Attributes
00Organization Attributes
238633036639500
409575020320Internationalization
00Internationalization
2393315372745001905068580Decision Maker`s Abilities
00Decision Maker`s Abilities

31064206286500243840032829500-1905060325Market Features
00Market Features

-19050134620Regulatory Support
00Regulatory Support

24314159398100
2.5 Operationalization of VariablesThe operational framework shows the parameters that will be used to measure the variables. The organization features will be measured by the firm`s size, product appeal and firm`s age. Decision maker`s abilities will be measured by personnel characteristics, management perception of risk and international experience. Market features will also be measured by market access, resource access and industry attractiveness. Regulatory support will be measured by home country support and host countries support. The parameters or indicators dictate the outcome of independent variable that will influence the dependent variable.

Figure 2. 3: Operationalization Framework 4438651334010FIRM`S SIZE
PRODUCT APPEAL
FIRM`S AGE
00FIRM`S SIZE
PRODUCT APPEAL
FIRM`S AGE

4029075382270002276476172720ORGANIZATION ATTRIBUTES
00ORGANIZATION ATTRIBUTES
193357538227000188531537973000
4438651288290PERSONNEL CHARACTERISTICS
MANAGEMENT PERCEPTION OF RISK
INTERNATIONAL EXPERIENCE
COMMUNICATION
00PERSONNEL CHARACTERISTICS
MANAGEMENT PERCEPTION OF RISK
INTERNATIONAL EXPERIENCE
COMMUNICATION

407670029845000227647522225DECISION MAKER`S ABILITIES
00DECISION MAKER`S ABILITIES
186690134607500-28575127000INTERNATIONALIZATION
NUMBER OFYEARS IN THE HOST COUNTRIES
NUMBER OF COUNTRIES ENTERED
REVENUES

00INTERNATIONALIZATION
NUMBER OFYEARS IN THE HOST COUNTRIES
NUMBER OF COUNTRIES ENTERED
REVENUES

4438651290195MARKET ACCESS
RESOURCE ACCESS
INDUSTRY ATTRACTIVENESS
00MARKET ACCESS
RESOURCE ACCESS
INDUSTRY ATTRACTIVENESS
163830020447000
40741603238500022764755080MARKET FEATURES
00MARKET FEATURES
188595035750500
4438651244475HOME COUNTRY SUPPORT
HOST COUNTRY SUPPORT
00HOME COUNTRY SUPPORT
HOST COUNTRY SUPPORT

407670031242000227647526035REGULATORY SUPPORT
00REGULATORY SUPPORT
193357533083500
Dependent variable Independent Variables Parameters
Source: Author (2018)
CHAPTER THREERESEARCH METHODOLOGY3.1 IntroductionThis chapter presents the methodology that will used to carry out this study. Research methodology is defined as an operational framework within which the facts are placed so that their meaning may be seen more clearly. The methodology will include the research design, the population that will be studied, the sampling strategy, the data collection process, the instruments that will be used for gathering data, and how data will be analyzed and presented.

3.2 Research DesignIn this study a descriptive research design will be used. This method seeks to describe the state of the affairs, as they exist. The objective of this design will be is portray an accurate profile of persons, events or situations. This design allows the collection of large amount of data from a sizable population in a highly economical way. It allows one to collect quantitative data, which can be analyzed quantitatively using descriptive and inferential statistics. Therefore, the descriptive survey is deemed the best method to fulfill the objectives of this study. The design is preferred because it is concerned with answering questions such as who, how, what which, when and how much (Cooper & Schindler, 2011). This method will help collect data from members of a population in order to determine the status (Cooper & Schindler, 2011) of that population with respect to one or more variables.
Descriptive survey research will be used in collecting the primary data from the respondents. The purpose of using survey research is to obtain information that describes exiting phenomena by the population of study which will specifically be the importance.
3.3 Target Population
Target population is the specific population about which information is desired. A population is a well-defined or set of people, services, elements, and events, group of things or households that are being investigated. The target population in this study will include: 25 top level managers, 25 middle level managers, 25 lower level staff; in this three categories of respondents the researcher would randomly select one respondent from each of the 25 selected Kenyan pharmaceutical and medical equipment firms.

Table 3. 1: Target Population Categories Population Size Frequencies (%)
Top Level 25 33.33
Middle level 25 33.33
Lower level 25 33.34
Total 75 100
Source: Author (2018)
3.4 Sample Design and Sample In this study purposive sampling will be used, where only management staff will be included assuming that this level understand internationalization performance. The study will use census, a census is a study of every unit, everyone or everything, in a population. It is known as a complete enumeration, which means a complete count.
3.5 Data Collection Instrument and Procedures
Primary data will be used in this study. Primary data will be collected by the use of questionnaires and will ensure immediate feedback, accuracy, clarity and they will help reveal sensitive information important for the study. Mugenda and Mugenda assert the accuracy of data to be collected largely depend on the data collection instrument in term of validity and reliability. Validity as noted by Schindler (2011) is the degree to which result obtained from the analysis of the data actually represents the phenomenon under study.

A scale will be administered to measure the attitude to key determinants of internationalization of the pharmaceutical and medical firms. This scale will consist of 5 point likert-type items (5- strongly agree, 4- agree, 3- moderately agree, 2- disagree and 1- strongly disagree) that will be combined into a single composite score or variable during the data analysis process. The respondents will be approached through a consent letter to the management of the organization. The researcher will then distribute the questionnaire by email or physically depending on the respondents’ preference and collect the completed questionnaire for analysis.
3.5.1 Reliability and validityValidity will be achieved by pre-testing the instrument the questionnaire to identify and change any ambiguous, awkward, or offensive questions and technique as emphasized by (Cooper and Schindler, 2011). Reliability on the other hand refers to a measure of the degree to which research instruments yield consistent results (Mugenda ; Mugenda, 2003). In this study, reliability will be assured by Pre-testing the questionnaire with a selected sample. The pre-testing exercise will take place at the convenience of both the researcher and the research assistant.

3.5.1.1 Validity
The study will measure the key determinants of internationalization using the intolerance ambiguity scale. Weber (2012) employed this scale in his assessment of the risk attitude of individuals and reported a Cronbach’s alpha of 0.68.

3.5.1.2 Reliability
To ensure reliability, the researcher will use a tested scale obtained from the study conducted with the purpose of measuring risk attitude and risk perceptions (Weber, 2012). The scale has a Crobanch’s alpha of 0.68 which is considered adequate for this study.
3.6 Measurement of VariablesVariables such as gender, level of education and management levels will be measured using the nominal scale. The ordinal scale will be used to measure variables such as the age and years of experience. The number of years the respondent worked with the current employer will be measured using the ratio scale. The five point Likert type scale (5- strongly agree, 4- agree, 3- moderately agree, 2- disagree and 1- strongly disagree) will be used to measure the key determinants of internationalization of the pharmaceutical and medical firms. Participants will be expected to indicate their level of agreement for each statement. Internationalization will be measured using the number of years in the host country and the number of countries entered.

3.7 Data Analysis
Cooper ; Schindler (2011) highlighted data analysis as inspection, cleaning, transforming and modeling data in order to highlight useful information to draw conclusions and to support decision making. The questionnaires will be first edited for completeness and consistency to ensure that respondents complete them as required. Data will be collected from the questionnaires and will be edited, coded to enable responses be grouped into categories. This will involve giving all statements numeric codes based on meaning for ease of data capturing. The data will be gathered and analyzed by use of descriptive and quantitative statistics. This would be done with the aid of computer applications, specifically the SPSS software. The descriptive statistics will help in describing the data and determining the respondents’ degree of agreement with the various statements under each factor. The use of percentages, means, modes and standard deviation could be employed. Information will be presented in the form of detailed descriptions with the possible use of other presentation techniques like graphs, pie charts, and tables. Quantitative data will be analyzed using descriptive statistics which involves percentages, measures of central tendency, frequencies and measures of dispersion as well as inferential statistics with 5% test significance level which entail correlation and regressions models, which will take the form of:
Y=?0+?1X1+?2X2+ ?3X3+ ?4X4+e Where: Y = Internationalization Performance
X1 , X2 , X3 , X4 = Independent Variables
X1= Organization`s features
X2= Decision maker`s abilities
X3= Market features
X4= Regulatory support
?0= Constant
?1, ?2 , ?3, ?4 = Regression coefficients or Change included in Y by each X value
e = error term
3.8 Research Limitations3.8.1 Sensitivity of informationSome respondents might not wish to disclose full information with the aim of protecting the organization and for security purposes on areas they perceive to be confidential in nature. However the researcher will assure that the information is treated with confidentiality and is used for academic purposes only.

3.9 Research EthicsConsent will be sought from the respondents. The data will be collected and used for the purpose of the research and will not avail to third parties. The researcher will exercise confidentiality, honesty and respect. The questions will be made as simple and clear as possible to avoid misinterpretation and ambiguity.

CHAPTER FOURRESULTS AND DISCUSSION4.1 Introduction
This chapter presents the responses of the study and the analysis of data that was collected on key determinants of internationalization. Specifically, it focused on the influence of organization`s features, decision maker`s abilities, market features, regulatory support on internationalization of selected Kenyan pharmaceutical and medical equipment firms
4.2 Response Rate
The researcher distributed 75 questionnaires and was able to collect seventy fully filled in questionnaires which represented 93% of the total questionnaires distributed. According to Kothari (2004) 50% response rate is considered average, 60-70% is considered adequate while anything above 70% is considered to be an excellent response rate. Morrison and Louis (2007) indicated that for a social study, anything above 60% response rate is adequate for making significant conclusion in social sciences. The 93% response rate was therefore a good representative of the respondents to provide enough information for analysis and to derive conclusions. However some respondents were reluctant to respond to questionnaires citing demanding work schedules, stringent disclosure policies and general lack of time as their excuses.

Table 4. SEQ Table_4. * ARABIC 1: Response rateDetails Frequency Percent
Distributed Questionnaires 75 100%
Returned Questionnaires 70 93%
4.3 Analysis of variables
This section entails the use of factor analysis, descriptive statistics of the variables, correlation analysis, and regression analysis to deduce more meaning of the data for the purpose of concrete results, findings and conclusion.

4.3.1 Gender of the RespondentsTable 4.1 shows that majority (67%) of the respondents were male while the female gender was represented by 33%.

Table 4. SEQ Table_4. * ARABIC 2: Gender of the RespondentsFrequency Percent
Male 49 52.1
Female 45 47.9
Total 94 100

4.3.2 Work ExperienceFigure 4.1 shows that most of the staff 53(55.3%) has served their institutions for four to seven years. About 23(24.5%) of the staff has served for less than three years, Only a small percentage (about 19.1%) consisted of staffs who have served above eight years which is positive for long-term financial stability. These findings concur with the study by Ghafoor (2013) cited in Kamau (2014) on the role of demographic characteristics on job satisfaction among banking staff which revealed that 19% of the staff had worked for 16 years and above. The implication of these findings is that in terms of financial stability long service translates into ability to experience in risk management in the medium and in the long-term.

Figure 4. SEQ Figure_4. * ARABIC 1: Work experience4.3.3 Highest level of educationFigure 4.2 shows that most (41.5%) of the respondents have masters (25.5%) had
PhD degrees while (11.7%) had a university degree. This finding conforms to the study by Gichuhi (2014) which revealed that (40.4%) of the respondents had Master’s degree, 21.6% had PhDs while those with bachelors, diplomas and other qualifications were 17.0%, 12.4% and 8.5% respectively. The implication of this finding is that banking sectors need to put more effort to increase the number of staff with higher qualifications to PhD level.

Figure 4.2: Highest level of Education
4.4 Operational Risk ManagementThe questions in this section aimed at measuring the knowledge and understanding of the respondents regarding the operational risk management in their organization.

4.4.1 Incorporation of Operational Risk Management Plan
It was important to ascertain whether the respondents were aware that their company had incorporated operational risk management plan, a yes or no response was required. It is evident that the greater majority (62.8%) of the respondents indicated that their companies had incorporated operational risk management.

Figure 4. SEQ Figure_4. * ARABIC 2: Incorporation of Operational Risk Management Plan4.4.2 Corporate Governance and Improving the Financial Stability
It was important to ascertain the respondents’ knowledge whether corporate governance is an essential element toward improving the financial stability of their company a yes or no response was required. It is evident that the greater majority (62.8%) of the respondents indicated that corporate governance is an essential element towards improving financial stability.

Figure 4. SEQ Figure_4. * ARABIC 3: Corporate Governance and Improving the Financial Stability
4.4.3 Practices for effective corporate governance
The respondents were asked what their companies were doing to ensure effective corporate governance. Figure 4.4, majority (63%) of the respondents cited that their companies were practicing business ethics, 17% indicated they were doing proper reporting system while a few (2%) did not respond.

Figure 4. SEQ Figure_4. * ARABIC 4: Practices for Effective Corporate Governance
4.4.4 Internal and External Control and Financial Stability
It was important to ascertain the respondents’ knowledge whether having internal and external control does improve the financial stability of their company, a yes or no response was required. Figure 4.5 showed that 62.8% indicated that having internal and external control does improve the financial stability of their company 36.2% thought otherwise while 1.1% did not give any response.

Figure 4. SEQ Figure_4. * ARABIC 5: Internal and External Control and Financial Stability
4.4.5 Benefits of Internal and External Control
The respondents were asked to indicate some of the benefits of internal and external control toward financial stability of their company. From figure 4.6, majority (64.9%) indicated risk assessment as a benefits of internal and external control, 26.6% indicated risk assessment and process walkthroughs and documentation while 7.4% cited process walkthroughs and documentation.

Figure 4. SEQ Figure_4. * ARABIC 6: Benefits of Internal and External Control4.4.6 Effect of Communication Policy
The respondents were asked how communication policy within and without their company affected the financial stability of their companies. Majority (66.0%) indicated that communication policy plays a crucial role in altering individual’s attitudes, 20.2% indicated communication policy assisted in controlling process while 9.6 indicated that communication policy plays a crucial role in altering individual’s attitudes and assisted in controlling process.

Figure 4. SEQ Figure_4. * ARABIC 7: Effect of Communication Policy
4.4.6 Benefits of having a clear communication policy
The respondents were asked to give some of the benefit their companies were enjoying for having a clear communication policy in order to improve its financial stability. Figure 4.8 shows that 69.1% of the respondents indicated their companies enjoyed efficiency, 18.1% indicated profitability, and 6.4% indicated both efficiency and profitability while another 6.4% did not respond.

Figure 4. SEQ Figure_4. * ARABIC 8: Benefits of having a clear communication policy4.4.7 Clear Execution Plan for Financial Stability
The respondents were asked whether their companies had a clear execution plan for financial stability. Majority 62.8% of the respondents indicated they had a clear execution plan for financial stability, 36.2% indicated otherwise while 1.1% did not respond.

Figure 4. SEQ Figure_4. * ARABIC 9: Clear Execution Plan for Financial Stability4.4.8 Benefits of Implementing Financial Stability Plan
The respondents were asked to indicate some of the benefit of implementing financial stability plan by their companies. According to figure 4.10, majority (64.9%) of the respondents indicated that implementing financial stability plan facilitated risk management, 12.8% did not respond, 11.7% indicated that it improved organization risk assessment.

Figure 4. SEQ Figure_4. * ARABIC 10: Benefit of Implementing Financial Stability Plan4.4.9 Response on statements about operational risk management
The respondents were asked to give their level of agreement with statements about operational risk management in their company. Regarding grading of their company on embracing the idea of operational risk management was ranked very good at 62.8%, on how the respondents saw the benefits of operational risk management to their company, majority 62.8% cited the benefits of operational risk management as very good. Regarding staff members support of the implementation of ERM, majority of the responds 62.8% indicated very good while a few 1.1% indicated very poor. Lastly, rated policies put in place by their company to support change in their operational risk management guideline as very good, 23.4% did not give any opinion, 6.4% very good, another 6.4% rated the policies at poor while 1.1% rated the policy put in place as very poor.

Table 4. SEQ Table_4. * ARABIC 3: Response on statements about operational risk managementStatement 5 4 3 2 1 Mean Std dev How will you grade your company on embracing the idea of operational risk management? 62.8 6.4 24.5 5.3 1.1 4.2 0.255
How do you see the benefit of operational risk management to your company? 62.8 8.5 22.3 5.3 1.1 4.3 0.252
How did staff members support the implementation of ERM for your company? 62.8 6.4 22.3 7.4 1.1 4.2 0.252
How could you rate policies put in place by your company to support change in its operational risk management guideline? 62.8 6.4 23.4 6.4 1.1 4.2 0.253
4.5 Capital Risk ManagementThe questions in this section aimed at measuring the knowledge and understanding of the respondents regarding the capital risk management in their organization.

4.5.1 Developed a Capital Risk Management Tools
It was important to ascertain whether the respondents were aware that their company had developed a capital risk management tools, a yes or no response was required. It is evident that the greater majority (94.7%) of the respondents indicated that their company had developed a capital risk management tools.

Figure 4. SEQ Figure_4. * ARABIC 11: Developed a Capital Risk Management Tools4.5.2 Type of capital risk incorporated
The respondents were asked to indicate the type of capital risk that had been incorporated in the tools. From Table 4.3, market risk was incorporated in the capital management tools as indicated by 28(29.3%) of the respondents, 21(22.3%) indicated both market risk and organizational risk while 19(20.2%) indicated organizational risk.

Frequency Percent
Market risk 28 29.8
Organizational risk 19 20.2
All the above 21 22.3
Total 68 72.3
4.5.3 Practices for Effective Capital Risk Management
The respondents were asked to indicate what their companies were doing for effective capital risk management. Table 4.4 shows that 25(26.6%) indicated that for effective capital risk management, their companies were practicing Appropriate risk measurement, monitoring, and control functions, 18(19.1%) indicated that their companies were practicing adequate risk management policies and procedures using technology while 14(14.9%) indicated their companies were practicing both adequate risk management policies and procedures using technology and appropriate risk measurement, monitoring, and control functions.

Table 4. SEQ Table_4. * ARABIC 5: Practices for Effective Capital Risk ManagementFrequency Percent
Adequate risk management policies and procedures using technology 18 19.1
Appropriate risk measurement, monitoring, and control functions 25 26.6
All the above 14 14.9
Total 57 60.6

4.5.4 Use of Modern Technology in Capital Risk Management
It was important to ascertain whether the use of modern technology in capital risk management improved the financial stability of companies, a yes or no response was required. It is evident that the greater majority 94.7% were in agreement that the use of modern technology in capital risk management improved the financial stability of their companies, 3.2% indicated otherwise while a few (2.1%) did not give any response.

Figure 4. SEQ Figure_4. * ARABIC 12: Use of Modern Technology in Capital Risk Management4.5.5 Benefits of using modern technology in capital risk management
The respondents were asked to give some of the benefits of using modern technology in capital risk management toward improving financial stability of their firm. From Table 4.5, most of the respondents (58.5) indicated the benefit of using modern technology as monitoring and continuous process improvement, 8% indicated detection and removing conflicts of sections while another 8% indicated both monitoring and continuous process improvement and, detection and removing conflicts of sections.

Table 4. SEQ Table_4. * ARABIC 6: Benefits of using modern technology in capital risk managementFrequency Percent
Monitoring and continuously process improvement 55 58.5
Detection and removing conflicts of sections 8 8.5
All the above 8 8.5
No response 23 24.5
Total 94 100.0
4.5.6 Response on reasons why companies embraced capital risk management
The study sought to establish the respondents extent to which they rated with the following statements as reasons why their companies embraced capital risk management. The study used a scale of 1 to 5 where 1 was Very Poor, 2 was Poor, 3 was acceptable, 4 was Good and 5 was very Good.
Regarding how the respondents rated the level benefited derive from its employees skills in regard to risk management 38.3 of the respondents did not give any opinion,35.1% rated the benefit as good while 26.6% rated the benefits as very good. On how the respondents rated the measure put in place by their companies to fully incorporate modern technology in risk management, 41.5% rated the measure put in place by their companies as very good, 38.3% rated measure put in place by their companies as good while 19.1% did not give any opinion. Lastly, the respondents were asked to rate the work performed by the risk management department in their companies, 39.4% percent rated the work performed by the risk management department as good, followed by 30.9% rated the work performed by the risk management department at very good while 29.8% did not give any opinion.

Table 4. SEQ Table_4. * ARABIC 7: Response on reasons why companies embraced capital risk managementStatement 1 2 3 4 5 Mean Std devHow will your rate the level benefited derive from its employees skills in regard to risk management by your company? 0.0 0.0 38.3 35.1 26.6 3.9 0.19
How will you rate the measure put in place by your company to fully incorporate modern technology in risk management? 0.0 1.1 19.1 38.3 41.5 4.2 0.20
How could you rate the work performed by the risk management department on your company? 0.0 0.0 29.8 39.4 30.9 4.0 0.19
4.6 Market Risk Management4.6.1 Development of Ways of Managing Market Risk
It was important to ascertain whether the respondents were aware that their company had developed way of managing market risk, a yes or no response was required. It is evident that the greater majority (26.6%) of the respondents indicated that their companies had not developed a way of managing market risk, 18.1% indicated otherwise while 17.0% did give any response.

Table 4. SEQ Table_4. * ARABIC 8: Development of Ways of Managing Market RiskFrequency Percent
Yes 17 18.1
No 25 26.6
No response 16 17.0
Total 58 61.7
4.6.2 Element of market risk companies are exposed to
The respondents were asked to indicate the element of market risk their companies were exposed to. The results in Table 4.8, shows that the companies were exposed to foreign exchange risk as indicated by 26.6% of the respondents, 18.1% indicated loan defaulting risk while 17.0% indicated both loan defaulting risk and foreign exchange risk.

Table 4. SEQ Table_4. * ARABIC 9: Element of Market Risk Companies are Exposed toFrequency Percent
Loan defaulting risk 17 18.1
Foreign exchange risk 25 26.6
All the above 16 17.0
No response 36 38.3
Total 94 100.0
4.6.3 Interest Rate Risk impact on Financial Stability
The study sought to find out whether the respondents thought interest rate risk has an impact on the financial stability of their companies; a yes or no response was required. It is evident that the greater majority (68.1%) of the respondents thought interest rate risk has an impact on the financial stability of their companies.

Figure 4. SEQ Figure_4. * ARABIC 13: Interest Rate Risk impact on Financial Stability4.6.4 Management of Interest Rate Risk
The respondents were asked to indicate what the companies were doing in order to manage interest rate risk, 44.7% of the respondents indicated their companies were practicing adequate risk management policies and procedures, 8.5% indicated both adequate risk management policies and procedures and appropriate risk measurement, monitoring, and control functions while 6.4% indicated appropriate risk measurement, monitoring, and control functions.
Table 4. SEQ Table_4. * ARABIC 10: Management of Interest Rate RiskFrequency Percent
Adequate risk management policies and procedures 42 44.7
Appropriate risk measurement, monitoring, and control functions 6 6.4
All the above 8 8.5
No response 38 40.4
Total 94 100
4.6.5 Company Reputation and Financial Stability
The respondents were asked to indicate whether the reputation of their company had an impact on its financial stability, a yes or no response was required. It is evident that the greater majority (67.0%) of the respondents indicated that their companies’ reputation had impact on companies’ financial stability.

Figure 4. SEQ Figure_4. * ARABIC 14: Company Reputation and Financial Stability4.6.6 Measures put in place to ensure proper reputational risk management
The study sought to establish some of the measures put in place by the companies to ensure proper reputational risk management, Table 4.10 shows that 44.7% did not respond, 39.4% indicated adequate risk management policies and procedures as measures put in place, 8.55% indicated both adequate risk management policies and procedures, and appropriate risk measurement, monitoring, and control functions while 7.4% indicated appropriate risk measurement, monitoring, and control functions.Table 4. SEQ Table_4. * ARABIC 11: Measures put in place to ensure proper reputational risk management
Frequency Percent
Adequate risk management policies and procedures 37 39.4
Appropriate risk measurement, monitoring, and control functions 7 7.4
All the above 8 8.5
No response 42 44.7
Total 94 100
4.6.7 Response on Market Risk Management
The study sought to establish the respondents extent to which they rated with the following statements market risk management. The study used a scale of 1 to 5 where 1 was Very Poor, 2 was Poor, 3 was acceptable, 4 was Good and 5 was very Good.
Regarding how the respondents graded market risk management, 85.1% indicated market risk management in their organizations as acceptable, 7.4% indicated very good while 6.4 indicated good. On the question about the level of risk management benefit derived by their companies, 69.1% indicated the benefits derived were acceptable, 19.1% indicated good while 11.7% indicated very good. The respondents were asked to indicate their opinions regarding staff member support towards market risk management in their companies, 76.6% indicated acceptable, 17.0% indicated good while 6.4% indicated very good.

Table 4. SEQ Table_4. * ARABIC 12: Response on reasons why companies embraced capital risk managementStatement 1 2 3 4 5 Mean Std devHow will you grade market risk management in your company? 0 1.1 85.1 6.4 7.4 3.2 0.37
What Is the level risk management benefit derived by your company? 0 0 69.1 19.1 11.7 3.4 0.29
How is staff member support market risk management in your company? 0 0 76.6 17.0 6.4 3.3 0.32
What is the level market risk exposure protection of your company? 1.1 0 51.1 7.4 40.4 3.9 0.24
4.7 Investment Risk ManagementThe questions in this section aimed at measuring the knowledge and understanding of the respondents regarding the investment risk management in their organization.

4.7.1 Presence of an Investment Plan
It was important to ascertain whether the respondents were aware that their company had an investment plan, a yes or no response was required. It is evident that the greater majority (39.4%) of the respondents indicated that their companies had an investment plan while 6.4% indicated otherwise.

Figure 4. SEQ Figure_4. * ARABIC 15: Presence of an Investment Plan4.7.2 Reason for Investing
The study sought to establish the reason for it to invest, 53.2% of the respondents indicated the reason for investing was to increase revenue and improve capital base, 39.4% indicated to increase revenue while 6.4% indicated to improve capital base.

Table 4. SEQ Table_4. * ARABIC 13: Reason for investingFrequency Percent
Increase in revenue 37 39.4
Improvement capital base 6 6.4
All the above 50 53.2
No response 1 1.1
Total 94 100.0
4.7.3 Investing and Financial Stability
It was important to establish whether investing helped in financial stability, a yes or no response was required. It is evident that the greater majority (59.6%) of the respondents indicated that investing helped in financial stability while 1.1% indicated otherwise.

Figure 4. SEQ Figure_4. * ARABIC 16: Investing and Financial Stability4.7.4 Company practices to minimize investment risk
The respondents were asked to indicate what their companies were doing to minimize investment risk, 27.7% of the respondents indicated that their companies were practicing adequate risk management policies and procedures, 18.1% indicated their companies were practicing appropriate risk measurement, monitoring, and control functions while a few (9.6%) indicated that their companies were practicing both adequate risk management policies and procedures, and appropriate risk measurement, monitoring, and control functions.

Frequency Percent
No response 41 43.6
Adequate risk management policies and procedures 26 27.7
Appropriate risk measurement, monitoring, and control functions 17 18.1
All the above 9 9.6
Total 94 100
Table 4. SEQ Table_4. * ARABIC 14: Company practices to minimize investment risk4.7.5 Defaulting Loan impact on Financial Stability
The respondents were asked whether defaulting loan have an impact on the financial stability of their company, a yes or no response was required. It is evident that the greater majority (62.8%) of the respondents indicated that defaulting loan have an impact on the financial stability of their company.

Figure 4. SEQ Figure_4. * ARABIC 17: Defaulting Loan impact on Financial Stability4.7.6 Company Practices to Minimize Rate of Defaulting Loan
The respondents were asked to indicate what their companies were doing to minimize the rate of defaulting loan its issue to customer, 25.5% of the respondents indicated that their companies were practicing adequate risk management policies and procedures, 17.0% indicated their companies were practicing appropriate risk measurement, monitoring, and control functions while a few (9.6%) indicated that their companies were practicing both adequate risk management policies and procedures, and appropriate risk measurement, monitoring, and control functions.

Table 4. SEQ Table_4. * ARABIC 15: Company practices to minimize rate of defaulting loanFrequency Percent
No response 44 46.8
Adequate risk management policies and procedures 24 25.5
Appropriate risk measurement, monitoring, and control functions 16 17.0
All the above 9 9.6
Total 94 100
4.7.7 Company illiquid asset impact on financial stability
The respondents were asked whether company illiquid asset have an impact on the financial stability of their company, a yes or no response was required. It is evident that the greater majority (59.6%) of the respondents indicated that company illiquid asset have an impact on the financial stability of their company.

Figure 4. SEQ Figure_4. * ARABIC 18: Company illiquid Asset impact on Financial Stability4.7.8 Company Practices to improve the liquidity position of it investment asset
The respondents were asked to indicate what their companies were doing to improve the liquidity position of it investment asset, 23.4% of the respondents indicated that their companies were practicing adequate risk management policies and procedures, 18.1% indicated their companies were practicing appropriate risk measurement, monitoring, and control functions while a few (1.1%) indicated that their companies were practicing both adequate risk management policies and procedures, and appropriate risk measurement, monitoring, and control functions.

Table 4. SEQ Table_4. * ARABIC 16: Company practices to minimize rate of defaulting loanFrequency Percent
No response 53 56.4
Adequate risk management policies and procedures 22 23.4
Appropriate risk measurement, monitoring, and control functions 17 18.1
All the above 1 1.1
Total 94 100
4.7.9 Inflation within the Economy impact on financial stability
The respondents were asked whether inflation within the economy have an impact on the financial stability of their company, a yes or no response was required. It is evident that the greater majority (57.4%) of the respondents indicated that inflation within the economy have an impact on the financial stability of their company.

Figure 4. SEQ Figure_4. * ARABIC 19: Inflation within the Economy impact on financial stability4.7.10 Measures to mitigate the impact of inflation on investment asset
The respondents were asked to indicate measures put in place by their company to mitigate the impact of inflation on it investment asset, 17.0% of the respondents indicated that their companies were practicing adequate risk management policies and procedures, 10.6% indicated their companies were practicing appropriate risk measurement, monitoring, and control functions while a few (3.2%) indicated that their companies were practicing both adequate risk management policies and procedures, and appropriate risk measurement, monitoring, and control functions.

Table 4. SEQ Table_4. * ARABIC 17: Measures to Mitigate the Impact of Inflation on Investment AssetFrequency Percent
No response 64 68.1
Adequate risk management policies and procedures 16 17.0
Appropriate risk measurement, monitoring, and control functions 10 10.6
All the above 3 3.2
Total 94 100.0
4.7.11 Government Decision or Policies
The respondents were asked whether government decision or policies have an impact on the financial stability of their company, a yes or no response was required. It is evident that the greater majority (58.5%) of the respondents indicated that government decision or policies have an impact on the financial stability of their company.

Figure 4. SEQ Figure_4. * ARABIC 20: Government Decision or Policies4.7.12 Practices to Hedge against Government Decisions or Policies Related Risks
The respondents were asked to indicate measures put in place by their company to hedge against government decisions or policies related risks, 17.0% of the respondents indicated that their companies were practicing appropriate risk measurement, monitoring, and control functions, 9.6% indicated their companies were practicing adequate risk management policies and procedures while a few (2.1%) indicated that their companies were practicing both adequate risk management policies and procedures, and appropriate risk measurement, monitoring, and control functions.

Table 4. SEQ Table_4. * ARABIC 18: Practices to hedge against government decisions or policies related risksFrequency Percent
No response 65 69.1
Adequate risk management policies and procedures 9 9.6
Appropriate risk measurement, monitoring, and control functions 16 17.0
All the above 2 2.1
Total 94 100.0
4.7.13 Response on reasons why companies embraced Investment Risk Management
The study sought to establish the respondents extent to which they rated with the following statements as reasons why their companies embraced investment risk management. The study used a scale of 1 to 5 where 1 was Very Poor, 2 was Poor, 3 was acceptable, 4 was Good and 5 was very Good.
Regarding how investment risk management impact on operation efficiency in their companies 26.6% of the respondents indicated acceptable, 27.2% investment risk management had a good impact on operation efficiency while 4.3% indicated very good impact. On how the respondents rated investment risk management in reducing expense, 34.0% rated investment risk management reduced expenses to an acceptable level. Lastly, the respondents were asked how investment risk management depicted mismanagement in their company, 37.2% percent indicated to an acceptable level, 14.9% indicated that investment risk management depicted mismanagement in their company as to be good.

Table 4. SEQ Table_4. * ARABIC 19: Response on reasons why companies embraced capital risk managementStatement 1 2 3 4 5 Mean Std devHow does investment risk management impact on operation efficiency in your company? 0.0 3.2 26.6 27.7 4.3 2.2 0.14
How will you rate investment risk management in reducing expense to your company? 0 2.1 34.0 17.0 8.5 2.2 0.14
How investment risk management does depicts mismanagement in your company? 0 3.2 37.2 14.9 5.3 2.0 0.15
4.8 Inferential Statistics4.8.1 Regression Analysis
A multiple linear regressions of variables were carried out to determine the effect of risk management on financial stability of commercial bank listed at Nairobi securities Exchanges, Kenya. Tables 4.10 provides a summary of model and indicate the Adjusted o used as test for model fitness. The F Ratio i was carried out to test the significance of the regression model in predicting the dependent variable (financial stability). From the results, it is clear that the four independent variables predict the financial stability (adjusted R squared = 0.304). That means the model explains 33.4 percent of the variance in financial stability (r square = .334), 66.6 percent of variations are brought about by factors not captured in the objectives. Therefore, further research should be conducted to investigate the other factors that affect financial stability of commercial bank listed at Nairobi securities Exchanges, Kenya. The regression equation appears to be very useful for making predictions since the value of R2 is close to 1.

Table 4. SEQ Table_4. * ARABIC 20: Coefficient of Determination (R2)Model R R Square Adjusted R Square Std. Error of the Estimate
1 .578a .334 .304 1.29374
a. Predictors: (Constant), a Predictors: (Constant), operational risk management, capital risk management, market risk management and investment risk management
Table 4. SEQ Table_4. * ARABIC 21: ANOVAbModel Sum of Squares dfMean Square F Sig.

1 Regression 73.934 4 18.483 11.043 .000b
Residual 147.292 88 1.674 Total 221.226 92 The significance value is .000 which is less that 0.05 thus the model is statistically significant in predicting independent variables (operational risk management, capital risk management, market risk management and investment risk management) this shows that the overall model was significant.

Multiple regression analysis was conducted to determine the relationship between the (operational risk management, capital risk management, market risk management and investment risk management) and Financial stability.

Table 4. SEQ Table_4. * ARABIC 22: Regression Analysis Results – Regression Coefficients Unstandardized Coefficients Standardized Coefficients t Sig.

B Std. Error Beta (Constant) 2.195 .355 6.188 .000
Operational risk management .541 .129 .500 4.184 .000
Market risk management .486 .184 .485 2.647 .010
Capital risk management -.237 .151 -.237 -1.566 .121
Investment risk management -.453 .127 -.457 -3.566 .001
a Dependent Variable: Financial Stability
The regression equation (Y = ?0 + ?1X1 + ?2X2 + ?3X3 + ?4X4+ ?) was:
Predicted Dependent variable = 2.195 + 0.541X1 + 0.486X2 – 0.237X3 – 0.453X4
According to the regression equation established, taking all factors into account (Operational risk management, Operational risk management, capital risk management, market risk management and investment risk management) constant at zero financial stability will be 2.195. A one unit increase in operational risk management will lead to 0.541 unit increase in financial stability of commercial bank listed at Nairobi securities Exchanges, Kenya (p;0.05). This finding agreed with Roque and de Carvalho (2013) that operational risk management is critical success factor and had a significant effect on financial stability (P;0.05). The results demonstrated that the effect of operational risk management on financial stability was positive and statistically significant at 5 percent level.

Also the study revealed that a one unit decrease in capital risk management will lead to 0.237 unit increase in financial stability (p;0.05). This finding disagrees with Jun, Qiuzhen and Qingguo (2010) findings from their study on the effects of capital risk management on financial stability focusing on a case of China commercial banks. The study showed that there existed a significant positive relationship between capital risk management and financial stability (P; 0.05). The results indicated that capital risk management improves financial stability among listed banks in Kenya.
Further, a one unit decrease in investment risk management will lead to 0.453 unit increase in financial stability of commercial bank listed at Nairobi securities Exchanges, Kenya (p;0.05). The study findings disagreed with Juliane and Alexander (2013) findings that determined how investment risk management influences commercial banks in UK. The results indicated that investment risk management shows a significant negative relationship with financial stability (b=-0.16, p;0.05).
Lastly, the results showed that a one unit increase in market risk management will lead a 0.486 unit increase in in financial stability of commercial bank listed at Nairobi securities Exchanges, Kenya (p;0.05). The findings are in congruent with Addison and Vallabh, (2002) study results from their study on impact of capital risk management and financial performance of banks in China. The study results indicated that as market risk management increases, the banks improved in financial stability. The p-value showed a relationship between market risk management and financial stability was significant at a 95 percent confidence level.

CHAPTER FIVESUMMARY, CONCLUSIONS AND RECOMMENDATIONS5.1 Introduction
This chapter presents the summary of the research findings, relevant discussions, conclusions and necessary recommendations. The study sought to evaluate the effect of risk management on financial stability of commercial bank listed at Nairobi securities Exchanges. The specific objectives of this study were to analyze the effect of operational risk management, capital risk management, market risk and investment risk management on financial stability of commercial bank. The presentation is organized around specific objectives and research questions. The conclusions are in tandem with the specific objectives and research questions. The recommendations refer to suggestions for further study or proposal for change. Each recommendation relates to each conclusion.

5.2 Summary of FindingsAfter conducting the research and comprehensively analyzing the findings, it was possible to judiciously derive with certainty various conclusions and recommendations.

5.2.1 Operational risk management and financial stability
The first objective sought to analyze the effect of operational risk management on financial stability of commercial bank. The indicators of operational risk management taken into consideration included corporate governance, internal and external control, and communication policy on financial stability.
Descriptive and inferential statistical methods were used to arrive at the findings where deductions and relationships were established. Operational risk management was found to be statistically significant in explaining financial stability among listed commercial banks in Kenya since a unit change in operational risk management only causes 0.541% change in financial stability among the listed commercial banks in Kenya as indicated by regression coefficient. Therefore, statements which sought influence of operational risk management variable were concluded to be statistically significant in explaining changes in financial stability among commercial banks in Kenya. This study finding is in line with Saeed (2015) results from his study on the relationship between operational risk, Credit risk and liquidity risk with financial stability of Malaysia Banks. The regression analysis results that operational risk, have significant influence on capital adequacy and credit growth.
Capital risk management and Financial Stability of commercial bank
The second objective sought to analyze the effect of capital risk management on financial stability of commercial bank. The indicators of capital risk management taken into consideration included development of a capital risk management tools and use of modern technology on financial stability.
Descriptive and inferential statistical methods were used to arrive at the findings where deductions and relationships were established. Capital risk management was found to be statistically insignificant in explaining financial stability among listed commercial banks in Kenya since a unit change in capital risk management only causes 0.237% change in financial stability among the listed commercial banks in Kenya as indicated by regression coefficient. Therefore, statements which sought influence of capital risk management variable were concluded to be statistically significant in explaining changes in financial stability among commercial banks in Kenya.

This study finding is in line with Edvinsson and Malone (1997) results on the relationship between capital risk management and financial stability of banks in Sweden that there exists a positive and significant relationship between capital risk management and financial stablity.
Market Risk Management and Financial Stability of Commercial Bank
The third objective sought to analyze the effect of market risk management on financial stability of commercial bank. The indicators of market risk management taken into consideration included development of ways of managing market risk, management of interest rate risk and maintaining of company reputation on financial stability.
Descriptive and inferential statistical methods were used to arrive at the findings where deductions and relationships were established. Market risk management was found to be statistically significant in explaining financial stability among listed commercial banks in Kenya since a unit change in market risk management only causes 0.486% change in financial stability among the listed commercial banks in Kenya as indicated by regression coefficient. Therefore, statements which sought influence of market risk management variable were concluded to be statistically significant in explaining changes in financial stability among commercial banks in Kenya. This study finding concurs with findings by Murithi (2016) on the influence of market risk management on financial stability of banks in Kenya. The analysis of the market risk management showed the degree in which changes in the degree of financial leverage, interest rate risk and currency exchange exposure management had an adverse impact on the bank’s incomes which is an element of bank stability.

Investment risk management and Financial Stability of Commercial Banks
The fourth objective sought to analyze the effect of investment risk management on financial stability of commercial bank. The indicators of investment risk management taken into consideration included presence of an investment plan, management of defaulting loans, management of illiquid assets and management of inflation on financial stability.
Descriptive and inferential statistical methods were used to arrive at the findings where deductions and relationships were established. Investment risk management was found to be statistically significant in explaining financial stability among listed commercial banks in Kenya since a unit change in investment risk management only causes 0.453% change in financial stability among the listed commercial banks in Kenya as indicated by regression coefficient. Therefore, statements which sought influence of investment risk management variable were concluded to be statistically significant in explaining changes in financial stability among commercial banks in Kenya. This study finding is in line with Marston (2001) results from his study on the relationship between investment plan, management of defaulting loans, management of illiquid assets and management of inflation and financial stability of Banks in Nigeria. The regression analysis results revealed that investment plan, management of defaulting loans, management of illiquid assets and management of inflation have significant influence on financial stability of the banks under study.
5.3 ConclusionFrom the research findings presented above, operational risk management was found to affect financial stability among listed commercial banks in Kenya. It was evident that some companies had incorporated operational risk management plan. Majority of the companies were practicing business ethics and were doing proper reporting system. Communication policy played a crucial role in altering individual’s attitudes and assisted in controlling process. A few of the companies did not have a clear execution plan for financial stability.

Research findings presented in chapter four revealed that capital risk management influenced financial stability among listed commercial banks in Kenya. It was evident that majority of the companies had developed a capital risk management tools. Both market risk and organizational risk were incorporated in the capital management tools. For effective capital risk management, some companies were practicing appropriate risk measurement, monitoring, and control functions. The use of modern technology in capital risk management improved the financial stability.

Based on the research findings presented above, it is clear that market risk management plays a role in ensuring financial stability among listed commercial banks in Kenya. It was evident that the majority of the companies did not have a developed a way of managing market risks. Majority of the companies were exposed to both loan defaulting risk and foreign exchange risk. Majority of the companies were affected by interest rate risk. In addition company reputation and inflation had an impact on financial stability.

Findings in chapter four revealed that investment risk management was found to be statistically significant in explaining financial stability among listed commercial banks in Kenya. It was evident that very few companies had an investment plan. Some reasons for investment included to increase revenue and improve capital base. To minimize investment risks, defaulting risks and inflation risks few companies were practicing adequate risk management policies and procedures, and appropriate risk measurement, monitoring, and control functions.

RecommendationsThis study makes several recommendations to players in the financial sector like the government, policy makers as well as commercial banks. From these research findings, the study recommends that;
Operational risk is inherent in all banking products, activities, processes and systems, and the effective management of operational risk has always been a fundamental element of a bank’s risk management programme. The study recommends that banks should ensure that they identify risks, measure exposures to those risks (where possible), ensure that an effective capital planning and monitoring programme is in place, monitoring risk exposures and corresponding capital needs on an ongoing basis, taking steps to control or mitigate risk exposures and reporting to senior management and the board on the bank’s risk exposures and capital positions.
For effective capital risk management, companies should practice appropriate risk measurement, monitoring, and control functions. The use of modern technology in capital risk management can improve banks’ financial stability.

The study showed that market risk management affected financial stability; this study recommends that organizations should take into consideration development of ways of managing market risk, management of interest rate risk and maintaining of company reputation to enhance financial stability.

5.5 Recommendation for Further StudyThe high beta coefficient of constant in this study also shows that there are other factors which were not included in the statistical model used which could be influencing the financial stability among commercial banks in Kenya. Further studies in the area of risk management in developing countries like Kenya are therefore highly recommended.
Due to time and resources constraints, the study only concentrated on listed commercial banks in Kenya and more research is recommended in other financial institutions and a comparative study of the same between the commercial banks and other financial institutions
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APPENDICESAPPENDIX 1: INTRODUCTORY LETTER
Kenya Methodist University
Nairobi, Kenya.

Dear Respondent,
RE: DATA COLLECTION FOR ACADEMIC RESEARCH
I am a postgraduate student at the Kenya Methodist University, pursuing master of business administration in international business (MBA). In partial fulfillment of the requirement of the degree, I am required to submit a thesis. Due to this, I am conducting a research titling “AN ANALYSIS OF THE KEY DETERMINANTS OF INTERNATIONALIZATION: A CASE STUDY OF SELECTED PHARMACEUTICAL AND MEDICAL EQUIPMENT FIRMS”. The main aim is to analyze the key determinants of successful internationalization of Kenyan pharmaceutical and medical equipment firms
I therefore, kindly request your cooperation in assisting filling the attached questionnaire with the most appropriate responses for all the questions. The information you provide will be held and treated with confidentiality it deserves, and shall only be used purely for the purpose of this research and individual identities shall not be in any means disclosed.

Thanking you in advance and looking forward to your co-operation and assistance.

Yours Sincerely
MBIADJEU NGASSAM PALOMA
MBA Student
APPENDIX 2: QUESTIONNAIRE
The topic of the study you are requested to participate is “ANANLYSIS OF KEY DETERMINANTS OF INTERNATIONALIZATION: A CASE STUDY OF SELECTED KENYAN PHARMACEUTICAL AND MEDICALEQUIPMENT FIRMS”. The principal investigator is Mbiadjeu Ngassam Paloma, a MBA candidate at Kenya Methodist University student number Bus-3-2946-2/2016
This questionnaire has been developed to gather your feedback. The questionnaire should take approximately 15 minutes to complete. Your responses are completely anonymous. If you have questions at any time about this study, you may contact the researcher through the email [email protected]

SECTION A: GENERAL INFORMATION
Kindly indicate your gender
254317533020009144002857500 Male Female
324802526416000Please indicate the number of years you have worked with the current company
502920088900016383005207000Less than 3 Years 4-7 Years above 8 Years
Please indicate your position with the current employer
………………………………………………………………
What is your highest level of education?
4572000241300032480252413000213360024130008382002413000Diploma Bachelor Masters PHD
SECTION B: ORGANIZATION ATTRIBUTES
a) What is the size of the organization at the moment?
34194752222500203835022225005715002222500 Small Medium Large
b) Does the organization size influences foreign market entry decision?
283845033020009334503302000 Yes No
c) Please indicate the number of years organization been in operating in Kenya
421957522225002838450222250013144502222500 Less than 2 years 3 – 5 years above 5years
e) Please indicate your agreement to the following statements on product dimensions as a factor that motivates the entry to foreign markets, using the below five point scale
1= strongly disagree; 2= disagree; 3= moderately agree; 4= agree; 5=strongly agree
STATEMENTS 1 2 3 4 5
The product quality gives a competitive advantage the organization in foreign markets The product packaging and labeling gives a competitive advantage to the organization when exporting in foreign markets The product good performance gives a competitive advantage to the organization in foreign markets The product long life is gives a competitive advantage to the organization in foreign markets The product ISO certification increases customers’ assurance and gives a competitive advantage the organization in foreign markets SECTION C: DECISION MAKER`S ABILITIES
Please indicate your agreement to the following statements on manager`s abilities as a factor that motivates foreign market entry, using the below five point scale
1= strongly disagree; 2= disagree; 3= moderately agree; 4= agree; 5=strongly agree
STATEMENTS 1 2 3 4 5
The Manager`s character and traits influences foreign market entry decision The manager`s technical and professional experience influences foreign market entry decision The manager`s leadership and managerial skills influences the organization’s foreign market entry decision. The manager`s high risk or low risk preference to investments influences foreign market entry decision. The manager`s evaluation of environmental uncertainties influences foreign market entry decision The manager`s perception of incentives and support available in the foreign market influences market entry decision. The manager`s language proficiency influence foreign market entry decision The manager`s knowledge of the targeted foreign market influences the organization’s market entry decision SECTION D: MARKET FEATURES
Please indicate your agreement to the following statements on market characteristics as a factor that motivates foreign market entry, using the below five point scale
1= strongly disagree; 2= disagree; 3= moderately agree; 4= agree; 5=strongly agree
STATEMENTS 1 2 3 4 5
The organization’s product adheres to the culture of the foreign market. Pricing strategy in the target country allows the organization to easily access foreign markets. High or unfair tariffs make it difficult to enter foreign markets. Government requirements in the foreign market do not allow the organization to properly sell its products. Internal and external barriers in the foreign market affect the organization’s entry into the market. The targeted foreign market location gives access to good infrastructure that enhances sales. Market regulations in foreign markets allow the organization to easily access and utilize existing distribution channels. Foreign markets’ cultural resemblance makes the industry attractive. There is a possibility for growth in the foreign market industry The entry in the foreign industry is challenging The target foreign industry is attractive due to lower competition SECTION E: REGULATORY SUPPORT
Please rank your agreement to the following statement on a five point scale provided as follows: 1= strongly disagree; 2= disagree; 3= moderately agree; 4= agree; 5=strongly agree
STATEMENTS 1 2 3 4 5
The organization`s country of origin has agreements with COMESA member countries that help ease foreign market entry decision. Both regulations of the country of origin and target country play an important role in foreign market entry decision. Cooperation agreements between with the target country and the country of origin influence foreign market entry decision The provision of incentives by the government of the organization’s country of origin influences foreign market entry decision The laws, regulations and policies in place in the target country influence foreign market entry decision SECTION F: INTERNATIONALIZATION PERFORMANCE
d) Please indicate the number of years the organization been exporting in member countries of COMESA (Common Market of Eastern and Southern Africa)
…………………………………………
b) Please indicate the number of countries the firm has entered in the COMESA region
………………………………………………………………
c) Please indicate the revenues of the firm after having entered foreign markets.

28384502095500187642522225005429252222500High Stagnant Low
List of COMESA member countries: Angola, Burundi, Comoros, D.R. Congo, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.

THANK YOU FOR YOUR COOPERATION
APPENDIX 3: LIST OF PHARMACEUTICAL AND MEDICAL EQUIPMENT FIRMS KAM MEMBERSNAMES OF THE PHARMACEUTICAL AND MEDICAL EQUIPMENT FIRMS KAM MEMBERS
1 African Cotton Industries Ltd
2 Alpha Medical Manufacturers ltd
3 Autosterile East Africa Ltd
4 Benmed Pharmaceuticals Ltd
5 Beta Healthcare International Ltd
6 Biodeal Laboratories Ltd
7 Biopharma Ltd
8 Cosmos Ltd
9 Dawa Ltd
10 Elys Chemicals Industries Ltd
11 Glaxo Smithkline Kenya Ltd
12 KAM Industries Ltd
13 Laboratory & Allied Ltd
14 Medisel Kenya Ltd
15 Medivet Products Ltd
16 Oss.Chemie (K) Ltd
17 Pharm Access Africa Ltd
18 Pharmaceutical Manufacturing Co. (K) Ltd
19 Promed Industries Ltd
20 Questa Care Ltd
21 Regal Pharmaceuticals Ltd
22 Revital Healthcare (EPZ) Ltd
23 Skylight Chemicals Ltd
24 SoSure Afripads Ltd
25 Toyota Kenya Ltd
Source: Kenyan Association of Manufacturers (2018)

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