Foreign Direct Investment and Local Firm’s Performance

Abstract

This paper investigates the effect of FDI on performance of manufacturing firms in Kenya. Little is documented about the link between FDI and performance of local firms in Kenya . The study has sought to establish the overall effect of FDI on the performance-manufacturing firms in Kenya. The population of study comprised 100 companies registered with Kenya Association Manufacturing as at the time of data collection in 2019 and that had over 10 percent foreign ownership. The respondents were the CEOs of organization. The study used a structured questionnaire to collect primary data. Descriptive and inferential statistics were both used to analyze the data. Data was pretested for normality, linearity, multicollinearity, autocorrelation and homoscedasticity and the data found to meet most of these preconditions. The study developed hypothesis which was tested using simple linear regression to establish the effect of FDI on performance of manufacturing firms. The results revealed that there was a statistically significant relationship between FDI and firm performance. This imply that to achieve better firm performance, the government need to come up with polices geared to attracting more FDI into the key sectors of the economy.