ENVIRONMENTAL REGULATIONS COMPLIANCE AND PERFORMANCE OF LARGE MANUFACTURING FIRMS IN KENYA
Abstract
Purpose of the study: The study examined the relationship between environmental regulations compliance and performance of large manufacturing firms in Kenya. Environmental regulations compliance is a critical aspect of responsible business operations, involving several key components that contribute to environmental protection and legal compliance.
Research methodology: The study applied descriptive and correlational research designs. The target population for the study was 499. A questionnaire was designed, and experts in the fields of strategic management were used to determine the validity and reliability of the data collection instruments. Proportionate and stratified random sampling was used. The unit of analysis included large manufacturing firms, while the unit of observation included managers from middle level management and top-level management. The study used descriptive and inferential statistics to analyze the results with help of SPSS version 22.
Findings: The study found significant correlations between environmental regulations compliance and performance of large manufacturing firms in Kenya with a Pearson coefficient of 0.404. Environmental Regulations compliance also showed a positive impact (Beta = 0.580, p = 0.001), with a higher explanatory power for performance variance (R² = 0.163).
Conclusion: The study concludes that environmental regulations compliance had a positive influence on the performance of large manufacturing firms. The positive relationship between compliance and performance underscores the value of integrating sustainable practices into the core business strategies.
Recommendations: The study recommends that large manufacturing firms should comply with environmental regulations as it positively affects performance. It is recommended that manufacturing firms take proactive steps to ensure full compliance with all relevant environmental laws and regulations. Additionally, obtaining and maintaining all necessary environmental permits should be prioritized, as these are fundamental to legal operations and can prevent costly disruptions or penalties associated with non-compliance.
Keywords: environmental regulations compliance, performance, large manufacturing firms, Kenya
References
Ayres, I., & Braithwaite, J. (1992). Responsive Regulation: Transcending the Deregulation Debate. Oxford University Press.
Baldwin, R., Scott, C., & Hood, C. (2012). A Reader on Regulation. Oxford University Press.
Dayuan, L, Cuicui,C, Zhang, L., Xiaohong, C., Shenggang, R. & Yini, Z. (2021). Effects of Corporate Environmental Responsibility on Financial Performance. Journal of Cleaner Production, 166 (3), 1323-1334
Dyduch, J., & Krasodomska, J. (2021). Determinants of corporate social responsibility disclosure: An empirical study of Polish listed companies. Sustainability, 9(11), 1934.
Emuebie, E. M. E. K. E., Olaoye, S. A., & Ogundajo, G. O. (2021). Effect of Social and Environmental Disclosure on the Performance of Listed Consumer Goods Producing Companies in Nigeria. International Journal of Applied Economics, Finance and Accounting, 11(1), 35-47.
Hsu, H. (2021). Environmental awareness and firm performance. Advances in Economics, Business and Management Research (AEBMR), 26, 483-487.
Kibogy, J. C. (2021). The Effect of Corporate environmental responsibility on Organizational Performance: A Case of Bamburi Cement Limited (Doctoral dissertation, Daystar University, School of Business and Economics).
Levi-Faur, D. (2005). The global diffusion of regulatory capitalism. The Annals of the American Academy of Political and Social Science, 598(1), 12-32.
Makori, D. M., & Jagongo, A. O. (2020). Environmental accounting and firm profitability: An empirical analysis of selected firms listed in Bombay stock exchange, India.
Menike, L. M. C. S. (2020). Impact of Environmental Disclosure on Firm Performance: An Empirical Analysis of Food, Beverage and Tobacco Sector Companies Listed in Colombo Stock Exchange, Sri Lanka. International Journal of Academic Research in Business and Social Sciences. 10(10), 518-536.
Mikial, M., Marwa, T., Fuadah, L., & Meutia, I. (2019). The Effects of Environmental Performance and Environmental awareness on Financial Performance in Companies Listed on the Indonesia Stock Exchange.
Muloli, M. M. (2020). Effects of Corporate Social Responsibility on Firm Performance: Implication for Banking Sector in Tanzania.
Mwangi, M., & Mwiti, J. K. (2020). The effect of voluntary disclosure on stock market returns of companies listed at the Nairobi securities exchange. Journal of Finance, 2(16),42-57
Nawawi, M. N., Samsudin, H., Saputra, J., Szczepańska-Woszczyna, K., & Kot, S. (2022). The effect of formal and informal regulations on industrial effluents and firm compliance behavior in Malaysia. Production Engineering Archives, 28(2), 193-200.
Nederhand, J., & Klijn, E. H. (2019). Environmental regulations compliance in public–private partnerships: Its influence on the innovative character of projects and on project performance. Administration & Society, 51(8), 1200-1226.
Ntiamoah, E. B., Egyiri, P. O., & Kwamega, M. (2020). Corporate social responsibility awareness, firm commitment and organizational performance. Journal of Human Resource and Sustainability Studies, 2020.
Orodho, J.A. (2019). Elements of Education and Social Sciences, Research Methodology (2nd Edition), Maseno; Kenzja Publishers.
Sendawula, K., Turyakira, P., Ikiror, C. M., & Bagire, V. (2021). Regulatory compliance and environmental sustainability practices of manufacturing entrepreneurial ventures in Uganda. Asia Pacific Journal of Innovation and Entrepreneurship, 15(1), 62-74.
Somjai, S., Fongtanakit, R., & Laosillapacharoen, K. (2020). Impact of management responsibility, environmental management accounting and green innovation on firm performance: An empirical investigation. International Journal of Energy Economics and Policy, 10(3), 204.
Stigler, G. J. (1971). The theory of economic regulation. The Bell Journal of Economics and Management Science, 2(1), 3-21.
TATA CHEMICALS MAGADI LIMITED (2021). Annual Report And Financial Statements For The Year Ended 31 March 2021. Retrieved from https://www.tatachemicals.com/upload/content_pdf/18-tata-chemicals-magadi-limited-march-2021.pdf
Wang, L., & Yan, Y. (2022). Environmental regulation intensity, carbon footprint and green total factor productivity of manufacturing industries. International Journal of Environmental Research and Public Health, 19(1), 53-67.
Yoo, S., & Heshmati, A. (2019). The effects of environmental regulations on the manufacturing industry’s performance: a comparison of green and non-green sectors in Korea. Energies, 12(12), 22-39.
Zubcic, J., & Sims, R. (2020). Examining the link between enforcement activity and corporate compliance by Australian companies and the implications for regulators. International Journal of Law and Management, 53(4), 299-30.
