Shortage Gaming and Performance of Food and Beverage Manufacturing Firms in Kenya.

The food and beverage manufacturing sector in Kenya faces persistent challenges related to demand variability, perish ability, and inadequate cold chain infrastructure, which amplify inefficiencies within supply chains. A major driver of these inefficiencies is shortage gaming, a phenomenon where customers exaggerate orders during actual or perceived shortages in anticipation of rationing. This behaviour distorts demand signals, complicates production planning, and increases inventory and operational costs, thereby undermining firm performance. The purpose of this study was to assess the relationship between shortage gaming, as a dimension of the bullwhip effect, and the performance of food and beverage manufacturing firms in Kenya. The study adopted a descriptive research design anchored in a post-positivist philosophy, targeting 217 food and beverage firms registered with the Kenya Association of Manufacturers. A sample of 208 respondents comprising logistics and procurement managers was selected using Yamane’s formula and simple random sampling. Primary data was collected through structured and unstructured questionnaires, and reliability was confirmed using Cronbach’s Alpha (α ≥ 0.7). Data analysis employed descriptive statistics, Pearson correlation, and multiple regression analysis with the aid of SPSS software. The findings revealed that shortage gaming significantly influences firm performance. Customers’ exaggerated orders and promotional mechanisms such as discounts and rebates were found to create artificial demand spikes, leading to inefficiencies in production planning and inventory management. Regression results indicated a strong positive correlation (R = 0.871) and high explanatory power (R² = 0.759), confirming that 75.9% of the variation in firm performance is explained by shortage gaming practices. The study concludes that shortage gaming has a significant and positive effect on profitability, sales volume, and market share. It recommends enhancing supply chain visibility, adopting transparent rationing policies, and strengthening supplier partnerships to mitigate opportunistic ordering behaviours and improve performance.