Understanding the Effect of Subcontracting Practices among Manufacturing Firms in a Developing Economy: Lessons from Kenya

Purpose: The current paper seeks to understand the effect of subcontracting practices among manufacturing firms in Kenya. Methodology: In a correlational survey design of 596 firms, the paper employs Kreycie & Morgan sample tables to select a sample of 234 firms. Primary data were collected sing a structured questionnaire from the heads of procurement departments who make up the unit of analysis. Descriptive statistics and linear regressions guide analysis process. Findings: Results indicate that subcontracting practices has a positive significant effect among manufacturing firms and accounts for 39% variance in performance (R2 =.390, β=.625, p<.05), providing evidence that unit adoption use of the practices improves performance by 0.625 units. Unique Contribution to Theory, Policy and Practice: Study supports knowledge in the systems theory, that subcontracting is an important sub system for alleviating firm performance. The study concludes that improvements in adoption-use of subcontracting practices improves performance in the manufacturing firms. The paper provides interesting discussions that supply chains in business firms can be agents of value creation through there sub-contracting practices, but then recognize that such efforts can only bear fruits if such firms effectively and religiously implement such practices.