Supply Chain Governance and Performance of Agro Processing Firms in Kenya

Abstract

In today's interconnected world, where goods and services traverse global boundaries, ensuring ethical and responsible practices within supply chains has become imperative. The concept of supply chain governance encompasses a range of strategies and mechanisms aimed at promoting transparency, accountability, and sustainability throughout the entire supply chain process. Agro processing industry establishes the biggest bit of 38% of Kenya manufacturing sector, but has untapped potential to contribute to employment and gross domestic product growth. The sector is inefficient in terms of value addition to the agricultural produce as Kenya exports raw agricultural produce instead of high-quality value-added products. The study aimed at determining the influence of supply chain governance on performance of agro processing firms in Kenya. The specific objectives were to establish the influence of contractual supply chain governance, relational supply chain governance, transactional supply chain governance, transformational supply chain governance, and moderating effect of information flow on the performance of agro processing firms in Kenya. The study was anchored on five relevant theories: theory of constraints, game theory, transaction cost theory, agency theory and theory of performance. The study adopted a survey research design that enabled the combination of both quantitative and qualitative research approaches. The positivism research philosophy was used in this study. The study targeted 344 agro processing firms in Kenya. The firms were registered with the Kenya Association of Manufacturers and grouped into twelve functional sectors. This study used a census survey. Questionnaires were used to collect data from respondents. A pilot study was carried out on 10% of the entire target population to test the reliability and validity of the research instrument. The data collected was analyzed with the use of SSPS version 25. Data analysis was conducted using descriptive statistics and inferential statistics by use of moderated multiple regression analysis. The study revealed that contractual supply chain governance, relational supply chain governance, transactional supply chain governance and transformational supply chain governance had significant effect on performance of agro processing firms in Kenya. The results indicated that information flow had a statistically significant moderating effect on the independent variables on the performance of agro processing firms in Kenya. The study concluded that contractual supply chain governance, relational supply chain governance, transactional supply chain governance and transformational supply chain governance effect the performance of agro processing firms in Kenya. The study recommends that agro processing firms should implement the supply chain governance system to enhance their productivity and profitability. The study provides future researchers with a useful conceptual and methodological reference to carry out studies in this area of supply chain governance. This study also provides an original framework for agro processing firms to rank the key performance enablers according to supply chain governance in their context and to compare their performance with other firms.