AFTERCARE SERVICES AND COMPETITIVENESS OF FOREIGN DIRECT MANUFACTURING FIRMS IN KENYA.
Keywords:
Aftercare services, competitiveness, foreign direct investment, manufacturing firms, energy costs, Kenya.Abstract
This study examined the influence of aftercare services on the competitiveness of foreign direct investment (FDI) manufacturing firms in Kenya and assessed the moderating effect of energy costs on this relationship. Aftercare services were conceptualized in terms of administrative, operational, and strategic support provided by government institutions to facilitate the continued operation, retention, and expansion of foreign investments. The study was anchored on the Resource-Based View and adopted a positivist philosophy and cross-sectional survey design. The target population comprised 325 managers from 65 FDI manufacturing firms across nine sectors in Nairobi Metropolitan, from which a sample of 283 respondents was selected. Primary data were collected using semi-structured questionnaires, while secondary data were obtained from published reports and statistical abstracts. A total of 192 questionnaires were returned, representing a response rate of 67.85%. Data were analyzed using descriptive statistics and regression analysis. The findings established that aftercare services had a positive and statistically significant relationship with the competitiveness of FDI manufacturing firms (R² = 0.322, p < 0.05). However, government support for dispute resolution and asset protection emerged as an important weakness. Energy costs substantially moderated the relationship between innovation strategies and firm competitiveness, with the explanatory power of the overall model increasing from R² = 0.552 to R² = 0.872 after incorporating energy costs. The study concludes that strengthening aftercare services, particularly dispute resolution and asset protection, while reducing electricity and petroleum costs, is essential for improving the competitiveness and retention of FDI manufacturing firms in Kenya.
Downloads
References
REFERENCES]
Alegana, M. H. (2014). The effect of tax incentives on economic growth in Kenya [Master's research project, University of Nairobi].
Beck, S., & Chaves, A. (2011). The impact of taxes on trade competitiveness (Working Paper). Department of Economics, University of Delaware.
Calimanu, S. (2021). What is investment aftercare? fDi Intelligence. Caon, V. (2020). A guide to the key FDI drivers: A look at the most important factors that multinational companies should consider when choosing a foreign location in which to invest. The fDi report.
Fuller, C., & Phelps, N. A. (2004). Multinational enterprises, repeat investment and the role of aftercare services in Wales and Ireland. Regional Studies, 38(7), 783–801.
Government of Kenya (GOK). (2007). Kenya Vision 2030, The popular version. National Economic and Social Council of Kenya.
Johnson, R. (2012). Industrial lighting best practices. US Lamp, Inc.
Kirai, P. (2004). Removal of barriers to energy efficiency and conservation in small and medium scale enterprises (SME) in Kenya. In Industrial energy efficiency project Kenya (Presentation). UNFCCC mitigation in Buenos Aires.
Momaya, K. S., & Ambastha, A. (2005). Technology management and competitiveness: Is there any relationship?
Morisset, J., & Andrews-Johnson, K. (2003). The effectiveness of promotion agencies at attracting foreign direct investment. The World Bank.
Musyoka, N., & Ocharo, K. N. (2018). Real interest rate, inflation, exchange rate, competitiveness and foreign direct investment in Kenya
OECD. (2002). Foreign direct investment for development: Maximising benefits, minimising costs. OECD Publishing.
Phelps, N. A., & Fuller, C. (2001). Taking care of business: Aftercare and the state multinational enterprise nexus in Wales. Journal of Economic Geography, 1(4), 437-456.
Roula, I., & Ahdi, N. A. (2021). The impact of electricity prices and supply on attracting FDI to South Africa.
Singh, E. H. (1995). Energy price increases in developing countries. The World Bank.
UNCTAD. (2001). Transnational corporations. United Nations.
UNCTAD. (2007). Aftercare, a core function in investment promotion. United Nations.
World Bank. (2013). Handbook of statistics.
Yatich, H. K. (2018). Attaining competitive advantage through energy efficiency: A cooperative strategic perspective.