FOREIGN DIRECT INVESTMENT AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS REGISTERED WITH KENYA ASSOCIATION OF MANUFACTURERS
Abstract
Manufacturing firms in Kenya have been marred with unprecedented losses even despite government concerted efforts to attract the inflows of foreign direct investors in the manufacturing sector. The worst-hit include: Mumias Sugar Company that recorded a net loss for the periods of 2017 and 2018, East African Portland Cement that also posted net loss for the financial year 2019, Nzoia Sugar Ltd, Sony and Chemelil both recorded losses in the financial year 2014/15. Therefore, it is on this grounds that this research sought to establish the relationship that exist between foreign technological flow and financial performance while consecrating the moderating effect of political was informed by two main theories that include resource-based theory and agency theory. It was also anchored on pragramatic philosophy. The study used both correlational cross-section survey design targeting firms in the manufacturing sector that are registered by Kenya Association of Manufacturers. This study covered the data obtained from 2017 to 2021. A census was conducted on all the 81 targeted firms. The research employed data from first hand and auxiliary sources guided by questionnaire and data collection sheet respectively. The study instrument had been pilot tested to ensure it was valid and reliable enough. A test for normality and autocorrelation was also carried out, after which the collected data was analyzed quantitatively using descriptive and inferential statistics. The data was presented in form of tables, charts and narratives. The study established that foreign technological flow were significant predictors of financial performance moderated by political risk. The study concludes that foreign direct investment is a significant enabler of financial performance moderated by political risk. The study recommended that ICT managers of the manufacturing firms in Kenya should leverage the soft and hard technological flows to support the processes and enhance financial performance of their firms.
Key Words: Foreign Direct Investment, Market Diversification
CITATION: Abdullahi, I., Warui, F., & Kosgei, M. (2022). Foreign direct investment and financial performance of manufacturing firms registered with Kenya association of manufacturers. The Strategic Journal of Business & Change Management, 9 (2), 837 – 845.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i2.2303
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