Physical Asset Management Practices, Ethical Leadership and Operational Performance of Manufacturing Firms in Kenya

From time to time, investments in physical assets in most organizations takes the lion share. Therefore, physical asset management practices one of the paramount organizational strategies in the modern world that can lead to the optimization of asset’s lifespan and performance. In the same breadth, ethical leadership is vital in today’s business environment since ethical behavior is stimulated not only resulting in effective asset management but also performance in general. This study therefore sought to analyze the mediating effect of ethical leadership in the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya. In particular, the study examined the five physical asset management practices relating to strategy and planning, risk management, lifecycle delivery, asset information, review and monitoring. Anchoring on stakeholder and stewardship theories, 367 respondents were sampled from the targeted 8064 respondents. Later, data gathered using the structured questionnaires was subjected to descriptive, correlation and regression analysis. In view of operational performance, there was a positive and significant relationships documented given the asset management strategy and planning practice (β = .213, p = .000<.05), asset risk management practice (β = .297, p = .007<.05), asset lifecycle delivery practice (β = .245, p = .002<.05), asset information management practice (β = .196, p = .000<.05) as well as the asset review and monitoring practice (β = .309, p = .001<.05). Furthermore, there was a complementary mediation effect (β = .121; CI = .254, .608) of ethical leadership in the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya. To sum up therefore, manufacturing firms in Kenya could positively enhance operational performance through ethical leadership. The study further highlighted the key implications to theory, practice and future research.