EFFECT OF FINANCIAL RISKS ON PERFORMANCE OF MANUFACTURING FIRMS IN KENYA

Abstract

The general objective of the study was to determine the moderating role of supply chain adaptability on the relationship between financial flow risks and performance of manufacturing firms in Kenya. The study specifically determined the effect of financial risks and performance of manufacturing firms and to determine the moderating role of supply chain adaptability on the relationship between financial flow risks and performance of manufacturing firms among the manufacturing firms in Kenya. The research design was explanatory survey research design. The target population of this study were 682 manufacturing firms in Kenya. From the target population of 682 firms, a random sample of 169 firms were selected where procurement manager and assistance manager were chosen giving a total sample size of 338. This study used questionnaires to collect data relevant to the study. The variables were tested for reliability by computing the Cronbach alpha statistical tests. Quantitative data collected were analyzed using descriptive statistical techniques which were frequencies, mean, standard deviation. Whereas inferential statistics to be used were, ANOVA/T test, Pearson correlation and the Regression Analysis Model. To test moderating effect the study used hierarchical regression model at 0.05 level of significance. The study established that financial flow risks have a positive influence on the performance of manufacturing firms. In addition, supply chain adaptability significantly moderated the relationship between financial flow risks and firm performance. It is recommended for firms to have adequate visibility into the financial stability of their entire supplier community. Finally, it is important for firms to enforce environmental incident notices at manufacturing sites and undertake environmental and financial due diligence when purchasing or selling goods/services.

Key Words: Supply Chain Adaptability, Financial Flow Risks, Performance of Manufacturing Firms