SUPPLIER MANAGEMENT PRACTICES AND PERFORMANCE OF COMMERCIAL STATE CORPORATIONS IN NAIROBI CITY COUNTY, KENYA

Sharon Gathaara, Dr. Eric Namusonge

Abstract


State corporations play a great role in socio-economic development since they are they are responsible or delivering key services to the public but they  have been recording poor performance. The general objective of this study was to determine the effect of supplier management practices on performance of commercial state corporations in Nairobi City County, Kenya. The specific objectives were to determine effect of supplier selection and  supplier segmentation. The study was guided by the Resource-Based View, and Transaction Cost Economics. The study adopted a descriptive research design. The study target population was 46 commercial state corporations in Nairobi City County, Kenya. The unit of observation was 414 procurement staff in the state corporations. Taro Yamane's 1967 sampling formula was used to sample 203 respondents. The study used stratified sampling technique. The study used primary data collected using questionnaires.  A pilot study was conducted with 10% of the sample size hence 20 procurement staff.  The study used content and construct validity. To test reliability of the instrument, the researcher used Cronbach alpha. Data was analysed using SPSS Version 28.  The study used descriptive and inferential statistics. Descriptive statistics included frequency, percentage, and mean. Inferential statistics include correlations and regressions. Findings were presented in tables. A pilot test involving 20 senior procurement staff was conducted, achieving a 100% response rate. Descriptive analysis revealed that supplier management practices are perceived positively, with supplier selection and segmentation showing the highest effectiveness. Correlation analysis indicated strong positive relationships between each supplier management practice and organizational performance, with regression coefficients confirming significant impacts (p<0.05) supplier selection (B = 0.312) and supplier segmentation (B = 0.298). The study concludes that robust supplier management practices are critical for enhancing performance, with particular emphasis on the strategic selection and segmentation of suppliers. It is recommended that state corporations utilize data-driven segmentation to optimize supplier relationships and achieve sustainable performance improvements. Future research should explore the role of technology in supplier management to further enhance procurement outcomes.

Key Words: Supplier Management Practices, Performance, Commercial State Corporations, Supplier Selection, Supplier Segmentation


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