Influence of Operational Processes on the Performance of Manufacturing Firms: Empirical Evidence from SMEs in Kenya

Abstract

Manufacturing firms in Sub-Saharan Africa are facing both internal and external pressures from intense global competition, turbulent markets, and the increasing sophistication of manufacturing technologies which influences its performance. This increasing rate of change in the sector is compelling firms to pay attention to the operational processes. Due to this reason, the study sought to determine the effect of operational processes on the performance of manufacturing SMEs in, Kenya. The study adopted an explanatory design had a sample size of 136 firms which was drawn using proportionate stratified sampling. Primary data collection involved the use self–administered questionnaires and instrument validation was achieved through the development of constructs from previous studies, scale development, instrument pre-testing and validation. The instrument was subjected to inter-consistency test using the Cronbach's coefficient with a value ≥ 0.70 affirming that the research instrument was reliable. The results show that operational processes cumulatively explain 37% of the variations in firm performance, therefore, the study concluded that the operational processes have a significant and positive effect on firm performance. The study recommends that the management of these firms should attempt to improve on the strategy processes and contents based on models that have been applied successfully in other contextual areas.

Operational and Financial Capabilities and Performance of Selected Manufacturing Small and Medium Enterprises in Nairobi City County, Kenya

“…Africa's manufacturing sector faces both internal and external obstacles that limit company growth and vary by country, sector, and company size. These comprise, among others, lower labor costs and efficiency, financial accessibility, electricity and the business environment, but Africa's manufacturing sector possesses a conditional edge in terms of increased sales and productivity (Kering et al, 2020). Moreover, dependence on imported industrial supplies indicates the necessity of bolstering value chains to establish connections in the economy both upstream and downstream (KAM, 2018).…”