African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4138

Full Length Research Paper

The relationship between capacity utilization and value chain performance: Evidence from Kenyan tea processing firms

Richard Bitange Nyaoga
  • Richard Bitange Nyaoga
  • 1School of Management Science and Engineering, Dalian University of Technology, Lingong Road 2 Ganjingzi District, Dalian 116024, China, and Egerton University, P.O. Box 536, Egerton, Kenya. 2Department of Accounting, Finance & Management Science, Faculty of Commerce, Egerton University, P.O. Box 13357, Nakuru- Kenya.
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Mingzheng Wang
  • Mingzheng Wang
  • School of Management Science and Engineering, Dalian University of Technology, Lingong Road 2 Ganjingzi District, Dalian 116024, China, and Egerton University, P.O. Box 536, Egerton, Kenya.
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Peterson Obara Magutu
  • Peterson Obara Magutu
  • Department of Management Science - School of Business, University of Nairobi, Nairobi ? Kenya.
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  •  Received: 01 January 2015
  •  Accepted: 05 May 2015
  •  Published: 14 May 2015

Abstract

Tea processing firms have increasingly recognized the role of capacity utilization and management in the creation and maintenance of competitive advantage. This study intended to determine the link between capacity utilization and value chain performance of tea processing firms. Specifically, the study determined the relationship between capacity utilization and value chain performance of tea processing firms in Kenya. To achieve this, a sample of eighty-five (85) Tea processing firms was used. The study adopted a cross-sectional research design. The unit of analysis of the study was the individual tea processing firm. Data were collected from both primary and secondary sources. Multiple linear regression model was adopted to study the linear relationships among the study variables. The study established that the relationship between capacity utilization and the firm’s value chain performance is positive and significant. It is therefore recommended that management of the tea processing firms should improve the capacity utilization of the bottleneck resources if they are to increase the throughput and create competitive advantage of their firms. This study contributes by providing empirical insights from the tea processing on capacity utilization and value chain performance.

Key words: Capacity utilization, value chain performance, tea processing firms.