Reverse Logistics, Process Innovation, Operational Performance and Competitive Advantage of Manufacturing Firms in Kenya

Abstract

Today globally, countries and manufacturing entities alike are concerned with environmental sustainability. Execution of reverse logistics strategies has been contemplated as a feasible alternative to mitigate the negative environmental effects of manufacturing. However the question has been whether implementing reverse logistics creates competitive advantage for manufacturing entities. Literature has also suggested that process innovations result in improved operational performance in the achievement of competitiveness. Specifically, the study objectives were to establish the influence of reverse logistics on competitive advantage; determine the influence of operational performance on the relationship between reverse logistics and a firm’s competitive advantage; determine the influence of process innovation on the relationship linking reverse logistics and gaining internal operational proficiency; examine the conditional indirect effect on the relationship among reverse logistics, process innovation and operational performance on a firm’s competitive advantage; and examine the joint effect of reverse logistics, process innovation and operational performance on a firm’s competitive advantage. Appropriate hypotheses were developed from the specific objectives respectively. Using a positivist philosophy and correlation cross-sectional survey design, primary data were collected among 340 KAM registered manufacturing firms in Kenya using a structured questionnaire. A response rate of 44.4 percent was attained. In data analysis, Covariance-based, SEM was used. Results from the hypotheses tests revealed a statistically significant influence of reverse logistics on a firm’s competitive advantage. Secondly, operational performance significantly mediated the association linking reverse logistics and a firm’s competitive advantage. Third, the relationship linking reverse logistics and gaining internal operational competency was not significantly moderated by process innovation. Fourth, process innovation and the operational performance had a partial moderated-mediation influence on the association linking reverse logistics and competitive advantage. Finally only operational performance had a significant and positive influence in the joint model. The study thus confirmed that implementation of reverse logistics strategies will lead firms to experience increased customer loyalty, increased market share, improved brand recognition and an increase in revenues. It further confirmed that when resources are mobilized uniquely, they create comparative advantage consequently leading to competitive advantage. The study recommended that manufacturing firms should implement reverse logistics as an integrated intervention consisting of outsourcing, collaborative enterprising, green strategies and closed-loop supply chain approaches to achieve organizational and environmental benefits. The study further recommended that implementation of reverse logistics should be guided by a process that requires identifying the uniqueness of resources the organization has and strategically placing these resources in a manner that builds comparative advantage. Policymakers within the manufacturing sector in Kenya should improve the regulatory framework to upscale application of reverse logistics strategies. The research identified replication of the study using direct measures for all the study variables and in other contexts as possible future research streams. Further making intra-industry or intra-sectoral comparisons would also be useful in generating knowledge on the implementation of reverse logistics.