determinants of competitive advantage in the textile and apparel industry in tanzania

261 Pages·2015·3.07 MB·English

DETERMINANTS OF COMPETITIVE ADVANTAGE IN THE TEXTILE
AND APPAREL INDUSTRY IN TANZANIA: APPLICATION OF
STRUCTURAL EQUATION MODELING

JOHN ROGATH MBOYA

A THESIS SUBMITTED IN FULFILMENT OF THE REQUIREMENTS FOR
THE DEGREE OF DOCTOR OF PHILOSOPHY IN BUSINESS
MANAGEMENT OF THE OPEN UNIVERSITY OF TANZANIA

2015
ii
CERTIFICATION

The undersigned certify that they have read and hereby recommend for acceptance
by the Open University of Tanzania a thesis titled: ―Determinants of Competitive
Advantage in Textiles and Apparel Industry in Tanzania: Application of
Structural Equation Modelling” in fulfilment of the requirements for the Degree of
Doctor of Philosophy in Business Management of Open University of Tanzania.

..................................................
Prof. Matern A. M. Victor
(First Supervisor)

..................................................
Date

..................................................
Dr. Khatibu G. M. Kazungu
(Second Supervisor)

..................................................
Date
iii

COPYRIGHT

No part of this thesis may be reproduced, stored in any retrieval system, or
transmitted in any form by any means, electronic, mechanical, photocopying,
recording or otherwise without prior written permission of the author or the Open
University of Tanzania in that behalf.
iv
DECLARATION

I, John Rogath Mboya, do hereby declare that, this thesis is my original work and
has not been presented, and will not be presented to any University for similar or any
degree award.

.............................................
Signature

...........................................
Date
v
DEDICATION

This work is dedicated to my wife Rose; my children Happiness, Steven, Emanuel
and Edmund.

Thank you for being proud of my work.
vi
ACKNOWLEDGEMENTS

I express my appreciations to various individuals and institutions who made this
work a success: their cooperation in every stage is highly commendable. It is not
possible to mention everyone who contributed on this work; however, I wish to
register my thanks to the following. First, my appreciations go to the Open
University of Tanzania for providing me an opportunity to pursue the PhD study at
the University. Secondly, I wish to thank my supervisors, Prof. Matern A.M. Victor
and Dr. Khatibu G. M. Kazungu; for their excellent supervision throughout the study.
Despite their busy schedules, they tried their best to be flexible and provide valuable
comments that improved the thesis.

I also thank the editors and peer reviewers of two accredited international journals
for publishing this work. The British Journal of Economics, Management and Trade
published an article based on macro model of this study titled: ―Determinants of
Competitive Advantage in the Textile and Apparel Industry in Tanzania: The
Application of Porter‘s Diamond Model‖. In addition, the article based on the micro
model of the study titled Structural Equation Modelling Analysis of Determinants of
Firms‘ Internal and External Dimensions of Competitive Advantage for the Textile
and Apparel Industry in Tanzania, was published in the Journal of Economics and
Sustainable Development. Third, I wish to thank Dr. Chacha Matoka, the former
PhD Coordinator of the Faculty of Business Management for his coordination, who
facilitated during the proposal stage. Later, his coordination role was handled to Dr.
Salum Mohammed, who did commendable work as regards facilitation. Furthermore,
the panellists involved on this study made valuable contributions that were seriously
vii
considered to improve the study, under chairmanship of Dr. Proches Ngatuni, the
Head of Faculty of Business Management. In addition, the viva voce committee at
the level of Faculty and Directorate of Postgraduate Studies, made commendable job
to examine this study. I also acknowledge employees of the textile and apparel firms
in Dar es Salaam, Tabora and Arusha for providing good cooperation in the
fieldwork especially filing the questionnaires in time. My appreciations are also
extended to Mr. Peniel M. Lyimo, the former Permanent Secretary of the Prime
Minister‘s Office, who encouraged me to pursue the study to contribute on scaling up
efforts on competitive advantage. I also thank Dr. Florens M. Turuka, the Permanent
Secretary of the Prime Minister‘s Office, for his encouragement, support and
inspirations throughout the study. Special thanks are also extended to my fellow
employees for their encouragement.
viii
ABSTRACT

This study aims at investigating key factors that determine competitive advantage in
Tanzania using Structural Equation Modelling (SEM) method. The study uses cross-
section survey design and non-probability sampling method; and data were collected
from Dar es Salaam, Arusha and Tabora using a case study of textile and apparel
industry. The sampling unit used were the employees of the industry knowledgeable
on industry dynamics and with at least college education. The study proposes two
inter-related micro and macro competitive advantage models. In the first place,
exploration of the key underlying dimensions of both models was done using
Exploratory Factor Analysis. Thereafter, based on the extracted principal
components, SEM method using Confirmation Factor Analysis was used to find out
whether the parameters of the micro model that involve Porter‘s Five Forces, Value
Chain Management practices and Core Competencies; and macro model involving
Porter‘s Diamond Model, produces significant CFA fit indices. The major findings
are that, both the micro and the macro models are confirmed to be determinants of
competitive advantage in Tanzania, as predicted by the theory. Furthermore, the
results demonstrate linkage among the determinants. The diamond conditions, value
chain management practices and core competency are indeed measures of
competitive advantage. The determinants are considered to be key inputs for the
strategic fit in the design of sustainable competitive advantage strategies for firms.
Furthermore, the textile and apparel industry and government need to collaborate to
improve diamond conditions to provide enabling environment necessary for
competitive advantage. Lastly, with some adjustment, the model can also be
replicated to other industries as well, in improving their competitive advantage.
ix
TABLE OF CONTENTS

CERTIFICATION ..................................................................................................... ii
COPYRIGHT ............................................................................................................ iii
DECLARATION ....................................................................................................... iv
DEDICATION ............................................................................................................ v
ACKNOWLEDGEMENT ........................................................................................ vi
ABSTRACT ............................................................................................................. viii
LIST OF TABLES .................................................................................................. xvi
LIST OF FIGURES ................................................................................................ xix
LIST OF APPENDICES ........................................................................................ xxi
LIST OF ABBREVIATIONS ............................................................................... xxii
CHAPTER ONE ........................................................................................................ 1
INTRODUCTION ...................................................................................................... 1
1.1 Background ...................................................................................................... 1
1.2 Statement of the Problem ................................................................................. 9
1.3 Objectives ....................................................................................................... 11
1.3.1 General Objective ........................................................................................... 11
1.3.2 Specific Objectives ......................................................................................... 11
1.4 Research Questions ........................................................................................ 12
1.5 Significance of the Study ............................................................................... 13
1.6 Delimitation of the Study ............................................................................... 14
1.7 Outline of the Thesis ...................................................................................... 14
x
CHAPTER TWO ..................................................................................................... 15
LITERATURE REVIEW ........................................................................................ 15
2.1 Overview ...................................................................................................... 15
2.2 Definition of Key Concepts ......................................................................... 15
2.2.1 Conceptual Definitions ................................................................................ 16
2.2.1.1 Competitiveness ........................................................................................... 16
2.2.1.2 Competitive Advantage ............................................................................... 18
2.2.1.3 Industry Structure......................................................................................... 19
2.2.1.4 Textile and Apparel Industry ....................................................................... 20
2.2.1.5 Sustainable Competitive Advantage ............................................................ 21
2.2.2 Methodological Definitions ......................................................................... 23
2.2.2.1 Latent Construct ........................................................................................... 23
2.2.2.2 Factor Analysis ............................................................................................ 23
2.2.2.3 Exploratory Factor Analysis ........................................................................ 23
2.2.2.4 Confirmatory Factor Analysis ...................................................................... 24
2.2.2.5 Structural Equation Modelling ..................................................................... 24
2.2.2.6 Measurement Model .................................................................................... 25
2.2.2.7 Structural Model .......................................................................................... 25
2.2.2.8 Endogenous Construct or Variable .............................................................. 26
2.2.2.9 Exogenous Construct or Variable ................................................................ 26
2.2.2.10 Absolute Fit Indices ..................................................................................... 26
2.2.2.11 Incremental Fit Indices ................................................................................ 28
2.3 Theoretical Literature Review ..................................................................... 29
2.3.1 Porter‘s Five Forces ..................................................................................... 29