Corporate Sustainability Strategies and Performance of Multinational Manufacturing Firms in Kenya

Abstract

The manufacturing industry is important in the economic growth of Kenya, but multinational manufacturing corporations keep facing fluctuating performance, despite the increasing regulatory and stakeholder pressure to practice sustainability. Research on the influence of sustainability strategies on the performance of firms in Kenya is scarce in terms of empirical research. This study analyzed how corporate sustainability strategies influence the performance of multinational manufacturing companies in Kenya. In particular, identified the effect of the sustainability strategies of the environment, social, and governance sustainability strategies on the performance of firms. The general objective of the study was to assess how corporate sustainability strategies influence firm performance, while the specific objectives were to determine the effect of environmental sustainability strategies, examine the effect of social sustainability strategies, and assess the effect of governance sustainability strategies on firm performance. The study was based on triple bottom line theory, stakeholder theory, resource-based view theory, and legitimacy theory. The study adopted a quantitative cross-sectional explanatory design, which sampled 116 multinational manufacturing companies in Kenya. The collection of primary data was carried out with the help of structured questionnaires that were administered to the senior managers. Descriptive statistics and multiple regression analysis with the help of SPSS were used for data analysis. The results indicated that the three corporate strategies were found to be significant and positive to the performance of the multinational manufacturing companies in Kenya. Social sustainability was found to be the best predictor of the firm performance (β = 0.386, p < 0.05); environmental sustainability showed the highest coefficient (β = 0.241, p<0.05); and governance sustainability showed the highest coefficient (β = 0.184, p<0.05). The overall regression model was statistically significant and accounted for 63.1% of the variance in firms' performance (R2 = .631), suggesting that the three types of corporate strategies collectively had a significant impact on firms' performance. The study also concluded that all the null hypotheses were rejected, which means that the three strategies of environmental sustainability, social sustainability, and governance sustainability have a significant positive effect on individual firm performance. They found that corporate strategies are critical to the performance of the multinational manufacturing companies in Kenya. Social sustainability strategy and governance sustainability strategy were the next most influential factors affecting firm performance, followed by environmental sustainability strategy. The study reveals that corporate sustainability strategies have a significant impact on the performance of the companies, of which environmental sustainability is the strongest predictor, followed by social sustainability and governance sustainability. It suggests the reinforcement of energy efficiency, waste management, pollution control, employee welfare, occupational safety, community involvement, transparency, accountability, and ethical leadership. The Government of Kenya and other stakeholders should create enabling policies to encourage sustainable practices and good governance to improve the competitiveness, resilience and sustainability of multinationals manufacturing companies in Kenya