Effects of Supply Chain Integration on Firm Performance in Kenya

Abstract

The effects of supply chain integration on firm performance have received considerable attention from scholars and practitioners. The extant literature is largely driven by the typical view that a greater level of integration leads to better firm performance. However, previous studies were conducted primarily in mature market economies, which have significant differences in political, social, and economic systems compared to emerging economies. The findings of these studies may not be valid when applied to the context of emerging economies. As such, understanding of the effect of SCI in emerging economies remains limited. There has been a vibrant manufacturing sector in Kenya with a vast supply chain that has remained unexplored by researchers. The objective of this study was to assess the effect of supply chain integration on the performance of manufacturing firms in Kenya. The study was designed as a descriptive study of manufacturing firms. From a population of 735 firms, a sample size of 74 firms was selected using disproportionate stratified sampling technique. Primary data was collected in this study where questionnaires were prepared and administered to the operational managers in manufacturing firms in Kenya. Analysis was aided by the SPSS and both descriptive and regression analyses methods were used to provide results which were then presented in tables and charts as was necessitated by the data. The study found that operational coordination, customer orientation, and competitor orientation had positive and significant impacts on sales growth, return on investment, market share, and earnings growth, p < 0.05. This leads to the conclusion that supply chain integration affects performance of manufacturing firms in Kenya. The study recommends that manufacturing firms in Kenya that wish to enhance their supply chain performance as well as that of their overall bottom-line should take cognizance of the fact that this can be achieved through proper supply chain integration with their key partners. This can be done through more information sharing, efficient operational coordination, better customer orientation and superb competitor orientation.