Supply Chain Strategic Alliances and Performance of Manufacturing Firms in Kenya

Abstract

This study seeks to investigate the influence of supply chain strategic alliances and performance of manufacturing firms in Kenya. The study specifically investigated the effect of supply chain technical alliances, supply chain marketing alliances, supply chain innovation alliances and supply chain cost and risk sharing alliances on the performance of manufacturing firms in Kenya. Likewise, the moderating effect of business environment on performance of manufacturing firms in Kenya was assessed. The study adopted a mixture of descriptive research design and explanatory research design. The targeted population of this study is comprised of 596 manufacturing companies in Kenya. A proportionate stratified random sampling method was used based on the manufacturing sectors as well as with the help of Fisher’s formula to arrive at 234 manufacturing firms. Primary data was collected using self-administered questionnaires which were tested for validity and reliability. The dependent variables tested had a Cronbach alpha of above 0.7, the moderating variable had a Cronbach alpha of more than 0.7, this means that they all met the threshold to be adopted to the main study. Validity was tested using KMO, the corresponding significance values of the KMO values were significant since they fell under the 0.05 threshold for testing significance (p-value < 0.05). Quantitative data was analyzed using both descriptive and inferential statistics and with the help of SPSS version 25. Correlation and regression analysis were used to show the relationship between the dependent variable and the independent variables. The results are presented using tables, charts, frequencies, percentages and graphs. From the findings, the study concludes that there is positive and significant influence of supply chain technical alliances (P=0.000; β =0.575; R2=0.423), supply chain marketing alliances (P=0.000; β =0.703; R2=0.463), supply chain innovation alliances (P=0.000; β =0.680; R2=0.374) and supply chain cost and risk sharing alliances (P=0.000; β =0.794; R2=0.46) on the performance of manufacturing firms in Kenya, (P=0.000; R2 =0.735). The study likewise concludes that there is a positive and significant moderating influence of business environment on the relationship of supply chain strategic alliances and performance of manufacturing firms in Kenya (P=0.000; R2 =0.773). These findings generate knowledge on how these strategic alliance formations contribute towards performance of manufacturing firms in the Kenyan context, which expands the conceptual scope of the set of studies done on strategic alliances. Thus, the study recommends that manufacturing firms should put into consideration to monitor and define its strategic partnership to improve performance in productivity, market share and profitability. The findings are in line with the Network Theory that forming alliances along the supply chain improves the performance of firms. The study has certain limitations; a cross-sectional survey approach method was used for the study and data was collected at only one point in time, this may bias the findings; single respondent was used in data collection, which may bias or determine the nature of responses. Future research directions include a replication of study in a longitudinal approach while using path analysis or structural equation models and consideration of other sectors, firm characteristics and resource constraints.