Influence of Manufacturing Strategy on Financial Performance of Manufacturing Firms in Kenya.

Abstract

The objective of the research is to determine the influence of manufacturing strategy on financial performance, for manufacturing firms in Kenya. This was due to the need to examine the influence of the manufacturing strategy on financial performance of manufacturing firms in Kenya. Manufacturing strategy is viewed from the dimensions of learning and innovation of process and equipment in the manufacturing functionality. The research examines the role of resources and capabilities in manufacturing plants that cannot be easily replicated and for which ready substitutes are not available. Such resources are formed by internal learning where ideas are generated through the learning process within the firm; external learning where the input from suppliers and customers is used in the design of process and equipment and innovation; learning is also integrated in the organization through cross sectional orientation where broad based sources of information is used in idea generation and innovation of process equipment. The study therefore examines manufacturing strategy from the dimensions of learning and process equipment and the integration of the dimensions to result in innovative manufacturing processes and equipment which will result in competitive advantage of the manufacturing firms.The generation of innovative processes which are distinct to manufacturing firms enables these firms to have competitive advantage and high performance. The study is based on resource based theory and organizational learning theory. The study employed cross sectional design for sample size of 30 manufacturing firms in Kenya. Questionnaires were administered to plant managers, marketing managers and human resource managers of the manufacturing firms in Kenya. Confirmatory Factor Analysis was used to analyze the data, the correlations of manufacturing strategy and financial performance were obtained using the software Amos. The results indicate that manufacturing strategy has influence in the financial performance of manufacturing firms. The implication is that resources in the manufacturing functionality which are developed within the firm and not obtained in the factor market are more effective in the achievement of competitive advantage of the manufacturing firms. The research also shows the perfect role of learning in developing imperfectly imitable resources.