Effect of Discriminatory Public Procurement Practices on Organizational Performance: A Survey of Public Sector Corporations in Kenya

Abstract

The purpose of this study was to investigate the effects of discriminatory public procurement practices on organizational performance in the Kenyan public sector. This study sought to evaluate the effect of reservation practices on the performance of State Corporations in Kenya. The study was guided by the following objectives; to determine the effect of preferencing practices on the performance of State Corporations in Kenya; ascertain the effect of indirect practices on the performance of State Corporations in Kenya and; assess the effect of supply side practices on the performance of State Corporations in Kenya. This study adopted both qualitative and quantitative research design. The population of interest for this study was State Corporations in Kenya. Data collection was undertaken by surveying all State Corporations in Kenya. The study interviewed 139 procurement managers from the corporations, out of which 100 responded. Both primary and secondary data was used for the study. Data analysis methods employed included quantitative and qualitative procedures. In addition, a multiple linear regression model of effects of discriminatory public procurement practices versus organizational performance was applied to examine the relationship between the variables. The model treated organizational performance as the dependent variable while the independent variables were discriminatory public procurement practices including; reservations, preferences, indirect practices and supply side practices. The study concluded that reservations, preferences and indirect practices, positively influenced the performance of State Corporations in Kenya. As part of recommendation, Kenya needs to undertake a sectoral analysis in order to determine which scheme to use for each of the different sectors, while at the same time applying additional measures to ensure the improvement of the developmental impacts of public procurement for the national economy. Such measures include making sub-contracting to Kenyan firms obligatory, downsizing contracts to volumes that local businesses can manage, addressing providers’ concerns over bidding costs by reducing bureaucratic barriers, and providing better feedback to local providers and bidders.