Moderating Effect of Information Communication Technology on Supply Chain Risks and Firm Performance among Manufacturing Firms in Kenya

Abstract

Manufacturing firms in Kenya contribute greatly to the economic development of the country. Developments in Information Communication Technology (ICT) are creating possibilities for moderating risks along the supply chain by creating platforms for effective decision support tools. However, the performance of the manufacturing firms has been decreasing in the past few years due to numerous risks whose outcome affect their supply chain, thereby undermining the sectors ability to contribute to the Gross Domestic Product (GDP) and attainment of Kenya‟s vision 2030. This study sought to investigate the moderating effect of ICT on supply chain risks and performance among manufacturing firms in Kenya. Cross-sectional survey design was adopted as the research design for this study using both qualitative and quantitative approaches. The target population was 94 firms in Kiambu County who were both members and potential members of the Kenya Association of Manufacturers (KAM). The study used stratified random sampling to pick a sample size of 76 manufacturing firms which represented 12 industrial sectors in manufacturing firms. Data was collected using questionnaires. Descriptive statistics was used aided by Statistical Packages for Social Sciences version 21 to compute percentages of respondents‟ answers. Inferential statistics using linear regression and correlation analysis was applied to assist examining relationship between the research variables. It was established that statistically, there was no significant relationship between information flow risk and performance among the manufacturing firms in Kenya. ICT use as a moderator of the relationship between financial flow risk and performance among the manufacturing firms in Kenya was also not significant. Financial flow risk did not significantly predict the performance of manufacturing firms in Kenya. ICT use was also not a significant moderator of the relationship between financial flow risk and performance of the manufacturing firms in Kenya. Material flow risk did not significantly affect the performance of the manufacturing firms in Kenya. ICT use was also not a significant moderator of the relationship between material flow risk and performance of the manufacturing firms in Kenya. On organization characteristic risks, organizational characteristic risks significantly influenced the performance of the manufacturing firms in Kenya. ICT use also moderated the relationship between organization characteristic risks xix although the moderation was not statistically significant. All the independent variables (information flow risk, financial flow risk, material flow risk and organization characteristic risk) were not significant predictors of the performance of the manufacturing firms in Kenya except organizational characteristic. However, the model on the joint moderation effect of ICT use on the relationship between supply chain risks and firm performance was found to be significant, this could have been due to organizational characteristic risk. Therefore, the study recommends that manufacturing firms should leverage on ICT use to enhance performance of their firms.