Ownershp, management and economicp performance two Agro-Industries in Kenya

Abstract

One of the central concerns in the recent development debate has been the impact of different ownership structures on the industrialization process in less developed countries. This thesis investigates the impact of ownership and management structures on the performance of large-scale industrial companies in Kenya's setting. After reviewing relevant literature on the subject, the first research question is:

1. How has the ownership structure of Kenya's modern manufacturing sector developed especially regarding the role of indigenous Kenyan ownership?

This study shows that the growth of the private indigenous industrial sector in the 1970's and 1980's was weaker than was expected by many development researchers. Our task was then to consider the role of other local alternatives for foreign or non-indigenous industrial capital. Two such alternatives were selected as the main subjects of research in this thesis: state-owned fIrms and cooperative companies. In the two case studies in the agro-industrial sector in Kenya, two questions were investigated regarding these ownership modes:

2. Do the public or cooperative ownership modes provide appropriate structures for sustained successful operations in the modern industrial sector in Kenya?

3. What are the crucial management-related factors affecting company performance in the political, social and economic environment in Kenya, and how do these relate to the modes of ownership?

The general conclusion regarding state-owned industrial firms is that while some of companies have been clear failures, others have achieved good results on a sustained basis. The study also shows that there is no reason why the performance formula of the better performing companies cannot be successfully replicated by other public firms. This situation would indicate that the active development of at least parts of the public industrial sector should be seen as a realistic policy option for the future.

Concerning the appropriateness of the cooperative ownership mode for modern industrial operations, the results indicate that the political, social and economic conditions in Kenya make sustained success under this ownership structure uncertain. While major changes would be required in the management structure of the industrial cooperatives, political and social pressures make these changes very difficult. Thus, while in some other LDC's large-scale industrial cooperatives have been successful, in Kenya their development as modern business organizations can still be considered to be in the infant stage.