Effect of Internal Competencies on the Operational Performance of Manufacturing Firms in Chemical and Allied Industry, Kenya

Abstract

ABSTRACT Internal competencies has emerged as a strategic imperative for manufacturing firms operating in both local and global markets. However, despite increased investments in supply chain systems and organizational capabilities, chemical and allied manufacturing firms continue to experience inefficiencies reflected in delayed deliveries, high operational costs and inconsistent production performance. Therefore, this study examined the relationship between Internal competencies and operational performance of chemical and allied manufacturing firms in Kenya. The study was anchored on the, Resource-Based View theory. The study employed a cross-sectional descriptive research design. The unit of analysis was 94 chemical and allied manufacturing firms while the unit of observation was 282 personnel, comprising of 94 operations managers, 94 supply chain managers and 94 procurement officers. A census technique was adopted and primary data was collected using a structured questionnaire. Piloting of the study was conducted on 28 respondents from 10 chemical and allied non registered firms under KAM in Nairobi County. The validity of the research was ascertained by expert review. Reliability of the instruments was tested using Cronbach’s Alpha. Descriptive statistics were used to summarize the key characteristics of data using mean, standard deviation, minimum and maximum. Ordinary least squares regression analysis was used to examine the relationship between variables at a 5% significance level with the aid of Statistical Package for Social Sciences (SPSS) version 31.0. Linearity, multi-collinearity, normality and homoscedasticity tests was performed to check whether ordinary least squares regression assumptions hold. Data was presented using tables and graphs. The findings revealed that supply chain responsiveness had a positive and statistically significant effect on operational performance (β=0.627, p=0.00<0.05). The study concluded that internal significantly enhances the operational performance of manufacturing firms in the chemical and allied industry in Kenya. The study therefore recommends that firms should support sector-specific training programs and technology upgrading schemes that raise internal competencies across chemical firms. Key words: Internal Competencies, Operational Performance and Chemical and Allied Manufacturing Firms