Determinants of Competitiveness of Electrical and Electronics Manufacturing Enterprises in Kenya

Abstract

Within the globalising business environment, competitiveness in the electrical and electronics sector is underpinned by technology and innovation developments supporting fragmented production processes. This research endeavoured to establish the determinants of the competitiveness of electrical and electronic manufacturing enterprises in Kenya. The specific objectives of the study were to investigate the effects of technology, innovation, regulations and market access on sector competitiveness moderated through the moderating effect of the operational environment. With over ninety percent of the Kenyan electrical and electronic manufacturing enterprises located within Nairobi; the study sample was drawn from the target population among firms located within Nairobi and its environs, employing more than 10 persons. A correlational survey design was used to investigate the associations between the dependent and independent variables. A 30% sample of manufacturers was drawn using a combination of stratified systematic process while purposeful sampling was applied to the facilitators. Both primary and secondary data formed the basis of analysis. Parametric methods used SPSS packages in data cleaning, instrument validation and estimation of the contributions and effects of the independent variables on competitiveness. The study established that the Kenyan electrical and electronics manufacturing sector was predominantly SME based concentrating in the production of low value-added products and services, attracting low technology and knowledge intensity. Further, the study established the positive and significant effects of technology, innovation and market access in determining the electrical and electronics sector competitiveness. These were heightened with the inclusion of the moderating variable-operational environment. The role of regulations became significant with the inclusion of the moderating variable. To facilitate the transformation of the electrical and electronics sector’s strategic fit into the globalised fragmented production systems, the study recommended policy reforms in the business environment in support of strategic partnerships with multinationals/trans-nationals (MNCs/TNCs); the establishment of a technology fund for upgrading the technology for industry to access funding for technology upgrading; family-based businesses going public to facilitate use of investment funds from the capital markets and the promotion of an innovative culture to sustain continuous industry renewal. The study brings out the customer appeal characterised by cheap-priced short shelf-life products requiring continuous renewal in order to remain competitive. Information access is critical in the liberalised global business environment. The submarine fibre optic backbone infrastructure investments providing international connectivity coupled with extensive countrywide fibre optic connectivity puts the Kenyan industry in an advantageous position to integrate into the global value chains. Further areas of research can be to focus on what keeps away electrical and electronic investors from Kenya, including strategies for unlocking the stringent culture of family-based business ownership.