Effect of Value Stream Costing on the Performance of State-Owned Enterprises in Kenya

Value Stream Costing is acritical challenges in cost management systems that obscure value creation processes and impede strategic decision-making capabilities. This study examined the effect of value stream costing on the performance of state-owned enterprises in Kenya. The research employed a mixed-methods approach with data collected from 320 respondents across 52 commercial state enterprises, achieving an 88% response rate, supplemented by 20 key informant interviews. The findings reveal that value stream costing practices have achieved moderate to good implementation levels, with particular strengths in lead time reduction and profitability assessment capabilities. Regression analysis indicated that value stream costing significantly predicts organizational performance, enabling rejection of the null hypothesis. Qualitative findings revealed tangible benefits including improved resource allocation and enhanced departmental analysis capabilities, though implementation challenges included organizational resistance, technical infrastructure limitations, and extensive training requirements. The study concludes that value stream costing represents a viable pathway for enhancing public sector performance in Kenya's state-owned enterprises, requiring comprehensive organizational transformation. The research recommends systematic implementation through phased approaches, investment in employee training and technology upgrades, and development of supportive policy frameworks. Keywords: Value stream costing, lean accounting, state-owned enterprises, organizational performance, Kenya.