The Effect of Technology on the Financial Performance of Construction Consulting Firms in Nairobi County

Abstract

The diffusion of innovation theory states that adoption of technology by individuals is based on the individual`s perception with respect to comparative advantage occasioned by used of technology. This then forms the basis for which firms` view innovativeness, complexity, compatibility and relative advantage of adopting technology. Technology Acceptance Model (TAM) on the other hand centers on the how external factors influence the adoption of technology such as user`s behavioral expectations. Disruptive Innovation Theory centers on how technology completely changes the way in which a firm conducts its business whereby the methods of operations typically adopted by the firm are completely reviewed with the adoption of new technology. These theories have generated interest in conducting research on the effect of technology on performance of firms. Various researchers have established a positive correlation between adoption of technology and performance of firms. This study was conducted on construction consulting firms seeking to establish the effect of technology on their financial performance. The study focused on a four year time period between years 2014 to 2018. Data was obtained through questionnaires based on value of net profit, total assets total investments in software, hardware and networking infrastructure, leverage ratio and no. of directors per firm. The study used ANOVA f tests, scatterplots and VIF tests to establish linear regression. The study used linear regression analysis to measure the relationship. The study concluded that technology had a positive relationship with financial performance. The study suggested level of innovation be measured against financial performance for registered contractors operating within Kenya as an area of further study.