INFLUENCE OF STRATEGIC CONTINGENT ORGANIZATIONAL FACTORS ON PERFORMANCE OF LARGE MANUFACTURING FIRMS IN KENYA

Abstract

Even though Kenya has been praised for its robust economy and that is set to become one of the top five fastest-growing in sub-Saharan Africa, manufacturing output remains low compared to other sectors. Kenyan manufacturers have registered stagnation and declining profits of over $330 million annually and government loses of $67 million in potential tax revenue for the last five years due to contingencies. It is estimated that manufacturing companies have lost 70 per cent of their market share in East Africa and this has resulted in some firms announcing plans to shut down their plants and shift operations to Egypt. The general objective of the study was to establish the influence of strategic contingent organizational factors on performance of large manufacturing firms in Kenya by reviewing organizational structure as the study variable with legal and regulatory environment as the moderating effect. The study adopted a mixed research design of cross-sectional research design and descriptive survey design and the research philosophy was positivism. The study population study was 499 large scale manufacturing companies with a sample size of 217 managers from each of the 217 companies. Data was collected through the administration of questionnaires to the relevant managers. The findings of the study revealed that majority of the companies had a written down IT policy, high rate of both IT software and hardware adoption in their companies and also train to sharpen their IT skills. The findings also indicated that IT hardware adoption, IT software adoption and training employees to sharpen their IT skills are positively and significantly related with ROE. The findings of the study also revealed that written down IT policy, IT software adoption and training employees to sharpen their IT skills was positively and significantly related to profit before tax while IT hardware adoption , IT software adoption and training employees to sharpen their IT skills had a positive and significant relationship with ROA. The study concluded that information technology has significant effect on performance of large manufacturing firms in Kenya. The sub-constructs of information technology that is written down IT policy, rate of both IT software and hardware adoption and sharpen of IT skills influence performance positively.The study recommended that large manufacturing firms in Kenya should have an improved information technology system as it leads to better performance. The firms should have written down IT policy, high rate of both IT software and hardware adoption and frequently sharpen IT skills of the employees through training.