INVESTMENTS IN TECHNOLOGICAL INNOVATION AND FINANCIAL PERFORMANCE OF SMALL-SCALE TEA INDUSTRY IN KENYA
Abstract
The Agricultural sector in Kenya has been facing the challenge of increased costs as a result of outdated technology. In an attempt to reduce its costs tea sector has invested heavily in technology. The purpose of this study was to establish the effect of technological innovation investment on financial performance of small-scale tea industry in Kenya. The study variable was investment on fermentation innovation on the financial performance of small-scale tea firms in Kenya. This study was anchored on; Schumpeterian Theory on Innovations, Efficiency Theory, Technology Acceptance Model and Theory of Innovation Diffusion. The targeted population was 66 small scale tea factories. Secondary data for a period of 5 years was used for analysis using a panel regression model. Person correlation results indicated that investment on investment technological innovations, are positively and significantly associated with financial performance of small-scale tea industry.Innovations affects financial performance of small-scale tea firms. The study recommends the management can consider acquiring more fermentation machinery and modern machinery that can be cost effective.
Keywords: Profits, Investment, Technology, small-scale tea farmers.
References
Ali, M. J., Mukulu, E., Kihoro, J. M., & Nzulwa, J. D. (2016). Moderating Effect of Firm Size on the Relationship between Functional Integration and Firm Performance. International Journal of Academic Research in Business and Social Sciences, 6(9), 38-57.
BasuM, A., Bera, B., & Rajan, A. (2010). Tea statistics: global scenario. Inc. J. Tea Sci, 8(1), 121-124.
Schumpeter, JA, 1934 (2008), The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle, translated from the German by Redvers Opie, New Brunswick (USA) and London (UK): Transaction Publishers. Journal of comparative research in anthropology and sociology, 3(2), 1-13.
FAO. (2015). Analysis of price incentives for tea in Malawi. Technical notes series. Mafap: Cameron,
Food and Agriculture Organization Statistics (FAOSTAT), available at http://faostat.fao.org/ (accessed between June and September 2014).
Gichungu, Z. N., & Oloko, M. A. (2015). Relationship between bank innovations and financial performance of commercial banks in Kenya. International journal of education and research, 3(5), 443-456.
Gunarathne, A. N., & Peiris, H. M. P. (2017). Assessing the impact of eco-innovations through sustainability indicators: the case of the commercial tea plantation industry in Sri Lanka. Asian Journal of Sustainability and Social Responsibility, 2(1), 41-58.
Han, Y., Xiao, H., Qin, G., Song, Z., Ding, W., & Mei, S. (2014). Developing situations of tea plucking machine. Engineering, 6(06), 268-273
Jayamanne, V. S., Wijeratne, M., & Wijayaratna, C. M. (2002). Adoptability Of New Technology In The Small-Holdings Tea Sector In The Low Country Of Sri Lanka. Journal of Agriculture and Rural Development in the Tropics and Subtropics (JARTS), 103(2), 125-131.
Kagira, E. K., Kimani, S. W., & Githii, K. S. (2012). Sustainable methods of addressing challenges facing small holder tea sector in Kenya: A supply chain management approach. J. Mgmt. & Sustainability, 2, 75.
Kalunda, E. (2014). Financial inclusion impact on small-scale tea farmers in Nyeri County, Kenya. World Journal of Social Sciences, 4(1), 130-139.
Kiai, R. M., & Wambui, J. W. (2015). Impact of innovation on the financial performance of KTDA managed tea factories: A case of Meru and Kirinyaga counties.
Kimathi, C. K., & Muriuki, F. M. (2013). A showcase of Smallholder Agriculture in the EAC: The case of the Smallholder tea sector in Kenya. In International Symposium and Exhibition on Agricultural Development in the East African Community, Kampala, Uganda.
Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), 1785-1824.
llinson, V., Nkonya, E., Schroeder, T. & Norman, D. (2013). Factors Affecting Adoption of Improved Production Technologies and Interface of Out-Reach Efforts with Farmers. Journal of Agricultural Resources, 46(1), 54-93.
Matazarre, H. (2015). The Effect of the Applying Modern Methods of Tea Cultivation on the Quality of Iranian Produced Tea. Journal of Business and Management, Volume 17, Issue 5, PP 58-61.
Monroy L., Mulinge W., Witwer M., (2012). Analysis of incentives and disincentives for tea in Kenya. Technical Notes Series, MAFAP, FAO, Rome
Mose, G. N., Mbeche, R., & Ateka, J. (2016). Institutional Innovations for Smallholder Agricultural Production Systems in Kenya: A Case of Smallholder Tea Subsector. European Journal of Sustainable Development, 5(3), 461-475.
Mucheke, C. M. (2015). Capacity Utilization, Quality of Tea and Returns to Ktda Factories In Kenya. (Unpublished Thesis, University of Nairobi).
Mustari A., & Shammi A. (2015). Tea Production and Trade Advances in Bangladesh: A Comparative Analysis in Global Market. Journal of Business and Management, 17 (6), 10-20
Niresh J.A., & Velnampy, T., (2014). Firm Size and Profitability: A Study of Listed Manufacturing Firms in Sri Lanka. International Journal of Business and Management, 9(4), 57-64
Ofoegbu, A. D. (2010). Effect of Product Innovation on the financial performance of commercial banks in Nigeria.The empirical evidence. Journal of finance, 20, 16-57
Penrose, E. T. (1959). The theory of the growth of the firm. New York: Sharpe.
Schumpeter, J. A. (2017). Theory of economic development. Routledge.
Schumpeter, J.A. (2004). The theory of economic development. Cambridge, Massachusetts: Harvard University Press.
Sewang, P. S. Winder, K., & Zhang, S. B. (2014). Effect of Innovation on the Financial Performance of Small and Medium Sized Enterprises in China. The Empirical Evidence. Journal of Finance, 10, 25-59.
Singh, J. Y., & Yadav, D. P. (2013). Return on Capital Employed-A Tool for Analyzing Profitability of Companies. International Journal of Techno-Management Research, 1(01), 1-13.
Śledzik, K. (2015). Schumpeter's theory of economic development: an evolutionary perspective.
Takano, R., & Kanama, D. (2019). The growth of the Japanese black tea market: how technological innovation affects the development of a new market. Journal of Economic Structures, 8(1), 1-13.
Wanjira, W. J., Kubaison, S. & Nzomo, M. (2016). Effect Of Innovation On Performance Of KTDA Managed Factories In Meru County, Kenya. International Journal Of Advanced Research in Engineering & Management, 2(4), 44-52.
World Bank, (2010), Doing Business Report, World Bank Washington DC
Xiao, H.R., Qin, G.M. & Song, Z.Y. (2011). Study on Developing Strategy of Mechanization of Tea Producing. China Tea. Global international journal 2 (6), 7-10.
Zheng, N.H. and Wang, Z.K. (2011). Mechanization of Tea Picking: Break Out the Bottleneck of Tea Industry. Chinese country Technology and Science, 12 (9) 14-17.
