Management Processes and the Performance of Selected Manufacturing Firms in Nairobi City County, Kenya
Kiptum, Kering Victor
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Manufacturing firms are facing intense pressure from both internal and external factors which influences their performance outcomes. In particular, the increasing competitiveness based on quality, cost and service, alongside the inefficient functional-based structures, has called for a shift in managerial paradigm to the management processes framework. Due to these challenges, the study evaluated the effect of management processes on the performance of selected manufacturing firms in Nairobi City County, Kenya and had the following objectives; determine the influence of operational processes, marketing processes, human resource processes and technological processes on firm's performance; assess the mediating effect of firm's current state on performance and assess the moderating effect of firm's strategic orientation on performance. The study was underpinned by the resource-based view, dynamic capability cognition and institutional theories, the Chicago Model. The study adopted a positivist philosophical foundation with an explanatory design. The study targeted 439 manufacturing firms from which a sample of 136 firms was selected based on a proportionate stratified sampling. The questionnaire was the main data collection instrument and its validation was achieved through a review by a panel, pilot testing and factor analysis. The questionnaire was subjected to an inter-consistency test using the Cronbach's coefficient with a value ≥ 0.70 which indicated the reliability of the instrument. Analysis of data was accomplished through descriptive statistics while the inferential statistics was conducted at 0.05 significance levels, and all the outputs presented in tabular format. The diagnostic tests conducted before regression analysis indicated that all the assumptions were not violated. The study achieved a 32% response rate from different sectors. The correlation analysis indicated that firm performance positively correlated with all the elements of management processes (operational, marketing, human resource and technological) and the firm's strategic orientation and the firm's current state. The regression analysis showed that composite management processes constructs were statistically significant, (F (4, 39) = 42.23, p <0.00) in explaining 81% variance in firm performance with operational processes, β = 0.2314 (t = 2.11, p< 0.05); marketing processes, β = 0.3474(t= 3.29, p< 0.05); human resource processes, β = 0.2193, (t = 2.18, p< 0.05); and technological processes, β = 0.2602(t = 2.48, p< 0.05). Besides, the mediating effect of firm’s current state was statistically significant, (F (2, 41) = 97.40, p <0.05), in explaining 83% in firm performance while the moderating effect of firm’s strategic orientation was statistically significant, (F (3, 40) = 76.05, p <0.05) in explaining 85% variance in firm performance. Based on these results, the study rejected all the null hypotheses and concluded that the management processes constructs; operational, marketing, human resource and technological have a significant effect on firm performance. The firm's current state mediates on the relationship between management processes and firm performance, while the firm's strategic orientation moderates the relationship between management processes and firm performance. The study recommends the following; the firm's management should attempt to integrate new management techniques and models and realign their functions towards processes. The policy recommendations are; the promotion of education – industry linkages, improvement in firm's managerial capabilities through job placements, the establishment of sectoral linkages and clusters, the entrenchment of cottage industry and the identification of the nation's core manufacturing competence. Theoretical contributions include the development and examination of the construct 'management processes’. The study was limited to manufacturing firms in Nairobi City County and business performance measures. Suggestions for further studies include; a nationwide study, use of other performance measures and a study on the other sectors in Kenya.