The relationship between industry experience and profitability of firms in the text books publishing sector in Kenya
The study aimed at investigating the relationship between industry experience and firm profitability in the Kenyan publishing sector hence, the researcher adopted a descriptive research design. However, since the researcher was interested in composing a time series based on historical data, historical research was also undertaken. The target population for this study therefore comprised of all Kenyan publishing firms preparing financial statements as at 31st December 2010, registered as members of the Kenya Publishers Association (KPA) and specializing in text books publishing. Primary data was collected by use of a questionnaire as it allowed for more flexible and comprehensive data. The questionnaire was distributed using a drop and pick method whereby data was collected from two key informants, that is the managing director and finance manager from each publishing firm. Secondary data was collected from the following sources: government publications, journals, industry reports, industry publications and individual firm financial statements including but not limited to, profit and loss statements and balance sheet. Research findings indicated that the respondents considered education policy, information policy, book publishing policy, press law, communications networks, initial capital, training costs, printing costs, inflationary factors in the country, alternative sources of knowledge other than books and literacy levels as important in influencing the operations of the Kenyan text book publishing firms, while advertising costs and market base as moderately important in influencing the operations of the firms. Findings further indicated that the relationship between industry experience and profitability of the Kenyan text book publishing firms is a moderate positive relationship based on both return on assets (ROA) and return on earning (ROE). The researcher concluded that despite the variations in the importance of policies, infrastructural development, finance, overall economic development and market developments in influencing the operations of Kenyan text book publishing firms over the thirty year period between 1981 and 2010, the overall relationship between industry experience and profitability of the firms has been a moderate positive one hence, the publishing firms have been able to maintain moderate profitability that is normal in a competitive business environment. Based on the conclusions of this study, the researcher made several recommends with regard to the relationship between industry experience and profitability of the Kenyan text book publishing firms.