Effect of Strategic Outsourcing on Performance of Kenya Tea Development Agency Managed Factories in Kenya

Abstract

Strategic management literature show that strategic outsourcing modes are important factors in enhancing firm performance in terms of cost reduction and quality improvement, among other reasons. However, given the dynamic nature of strategic outsourcing modes, the strategic outsourcing modes adopted by tea processing factories have not been studied. Moreover, the extent to which KTDA managed factories apply strategic outsourcing modes is not known. In addition, these studies fail to study the effect of strategic outsourcing modes on performance of factories in the tea sector using causal research design. The purpose of this study was therefore to investigate the effect of strategic outsourcing modes on performance of KTDA managed factories. Specific objectives were to: establish the strategic outsourcing modes adopted by these factories, determine the extent to which strategic outsourcing modes are used by KTDA managed Factories in Kenya, and establish the effect of strategic outsourcing modes on performance of KTDA managed Factories in Kenya. The study was guided by contingency theory in an adapted conceptual framework. A causal research design was employed. The target population was 729 respondents from all 66 KTDA managed factories in Kenya. Proportionate statistical technique was used to select a study sample of 324 respondents. The study used both primary and secondary data. A semi-structured self-administered questionnaire to respondents was used to collect primary data. Secondary data was collected through desk review. Data was analyzed using descriptive and inferential statistics. Data was presented using tables and graphs. A pretest on 10 respondents indicated instrument was reliable at a =.850. The study findings were: management services (mean = 2.8133, SD =1.04345) implying that management services was the most important strategic outsourcing mode; Green leaf delivery (Mean = ( 3.6167, SO = 1.6167) implying green leaf delivery as the strategic outsourcing mode used to the largest extent: and management services (8 = .264, P = .000) and tea processing (8 = - .202, P = .000) imply that these two strategic outsourcing mode significantly predicted performance. Concluded that; management services as the most prevalent strategic outsourcing mode; green leaf delivery was used to the largest extent; and management services and tea processing significantly predicted performance. Recommended that: management service is used continually; green leaf delivery is monitored for quality and management services are enhanced as tea processing is reduced as strategic outsourcing modes in the tea sector.