Effect of Vertical Linkages on Food Quality Management of Beef Small and Medium Enterprises in Kenya

Abstract

In today‟s liberalized and globalized markets, high product quality is required for an enterprise to become more competitive in the local and international market and quality management has become the ultimate weapon. In the food industry, concerns over food safety and quality have been increasing as a result of a number of food safety scares. Governments worldwide have responded to these concerns through encouraging SMEs in the food industry to use quality assurance such as HACCP, ISO 9000, TQM and ISO 22000. In Kenya, the importance of quality is now being recognized. The beef sector in Kenya is small, but beef production is increasing dramatically in line with growing consumption of beef products. To address the increasing demand for beef quantity and quality, SMEs innovativeness in form of closer vertical co-ordination is becoming a prevalent feature for the purpose of enforcing proper quality management. The food industries in Kenya and in particular the beef sector are characterized by weak vertical linkages the result of which firms are suffering from quality related problems such as poor performance of products in the market due to lack of innovativeness, information asymmetries, insufficient raw material supply and customer dissatisfaction. The purpose of this study was to gain an understanding on whether a closer vertical linkage among the beef SMEs enhances food quality management in their enterprises. The study adopted a descriptive survey of 160 beef SMEs comprising beef producers and processors from Kajiado Central in Kenya. Data was collected using a self-administered semi-structured questionnaire to address the research objective of the effects of vertical Linkages on the food quality management of the small and medium beef enterprises in Kenya, guided by the specific objectives of Transaction Uncertainty, information sharing, Transaction Cost and Collaboration Advantage. Structural Equation modeling was adopted to construct the study model while multiple regressions was used to establish the effect of the moderating variable of Enterprise quality policy. It was xxiv observed that transaction uncertainty influenced quality management the most, while Transaction Uncertainty influenced the least. It was found that Enterprise quality policy had a moderating influence on producer and processing SMEs in vertical alignments for quality management. The study therefore concluded that SMEs that vertically align themselves achieve chain-wide competitiveness by better quality management because they have access to information, better risk mitigation strategies, reduced transaction costs and a more collaboration advantage. The study recommended a proactive policy regarding quality management and also SME training in managerial, entrepreneurial as well as technological aspects of quality.