EFFECT OF PRODUCT DESIGN ON OPERATIONAL PERFORMANCE OF SUGAR FIRMS IN KENYA

Abstract

Product design is a key indicator of a successful operational performance realization and is gaining robust momentum among Sugar Firms as a survival and growth strategy. The Sugar Firms in Kenya contribute approximately 26% directly to the Gross Domestic Product (GDP) and an additional 25% indirectly through agro-based and associated industries linkages. However, they have experienced a significant decline of milled sugar production from about 635,700 tonnes in 2015 to 491,100 tonnes in 2018 according to Kenya National Bureau of Statistics in 2019. This decline was mainly attributed to the high cost of production stemming from inefficiencies across the value chain from inadequate research and extension leading to the design of production systems that are inefficient. Despite the vast contribution of the Sugar Firms to the economy, this problem ofinefficient production system has not been solved and thus the Sugar Firms performance continues to spiral downward leading to the dissolution of some firms, downscaling of operations etc. Reviewed the studies also, established a weak relationship between product design and operational performance and warrants investigation. It is in this regard that this study purposes to establish the effect of product design on operational performance of Sugar Firms in Kenya. The research was guided by the resource-based view theory and transaction cost theory. A census survey was conducted targeting all 164 managers and assistant managers of Sugar Firms in Kenya. A pilot study was conducted of 14 participants constituting of managers and assistant managers of seven departments in Transmara Sugar Company to test for reliability using Cronbach‘s alpha, with a threshold of 0.70, indicating satisfactory instrument reliability. The Cronbach's Alpha reliability coefficient obtained in this study was 0.849. Primary data was collected using questionnaires. A multiple linear regression model was applied to establish the association among explanatory variables in this study. The results established that product design significantly affects operational performance (β =0.742, p=.000), hence, adoption of a one-standard deviation increase in product design yields a significant 0.742 unit increase in operational performance for Sugar Firms. Indicating a positive and significant association between the two variables. Hence, the study offers a products design model that can assist in enhancing operational performanc