EFFECT OF SUPPLY CHAIN OPERATIONAL CAPABILITIES ON THE RELATIONSHIP BETWEEN ABSORPTIVE CAPACITIES AND PERFORMANCE OF MANUFACTURING FIRMS IN NAIROBI COUNTY

Abstract

The aim of this study was to examine the direct and indirect effect of absorptive capacity and supply chain operational capability on performance of manufacturing firms in Nairobi Kenya. Explanatory research design and random sampling technique was used to collect data with the aid of a questionnaire from a sample of 200 firms. Reliability the research instrument was tested using Cronbach alpha. In order to test the hypotheses and the mediation effect, bootstrapping procedure was followed by testing the direct and indirect effect. The finding shows the significant direct effect of absorptive capacity on both performance and supply chain operational capability. Supply chain operational capability was also found to significantly, positively and directly affect performance. Lastly the result shows that Supply chain operational capability mediates the relationship between absorptive capacity and performance, hence providing new knowledge in research literature. Marketers have to recognize the central role of logistic capability, technological capability and structural capability together with acquiring, assimilating, transforming and exploiting the available business opportunities to enhance and sustain their performance in a competitive environment.