Effect of budgeting process on the operational performance of freight forwarding firms in Kenya
Date
2023
Authors
Njomo, F. W.
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Freight forwarders are an integral part of international trade facilitation and their performance is key to national growth and economic development, contributing up to 7.1% of the country’s GDP. However, their contribution has declining in recent years with increased competition, increasing transport costs, poor infrastructure and slow reforms in customs regulations impacting the sector’s overall performance. This has resulted in dismal operational performance which necessitated this study to seek to examine the relationship between budgeting process and the operational performance of Freight Forwarding Firms in Kenya. The survey specifically analyzed the effect of budget planning and formulation, budgeting control and evaluation, participatory budgeting and firm characteristics effect on the operational performance of Freight Forwarding Firms in Kenya. The research was grounded on theory of budgeting and the stakeholder theory. A positivist research philosophy was used in this study with a descriptive research design applied in solving the research problem. The population for the study was the 1676 firms operating within Nairobi County in the FWA service provision. A sample of 399 firms was selected for inclusion in the study. Both structured and open-ended questions was utilized in the collection of research data. The research applied physical and electronic data collection techniques. Collected study data was analyzed using a mix of descriptive and inferential analysis. The findings were presented in charts and tables. Out of the sample firms the research obtained 77% responses which was considered sufficient and representative for quantitative analysis. The research overall findings led to the conclusion that budgeting process has a positive and significant relationship with the operational performance of the firms. Further, the research concluded that there was a significant moderating effect of firm characteristics on the relationship between budgeting process and operational performance. Independently, the study found out a significant effect of budget planning and formulation as well as budgetary control, monitoring and evaluation on operational performance of the firms. The study concluded there was no significant effect of participatory budgeting on the operational performance of the firms. Recommendations are that firms should adopt new standards, formulating new policies that are aligned to the firm’s goals and ensuring there is an overall understanding of the budgeting process within the firm. The study recommends that the companies should leverage on the prior annual budgetary planning reports to make sensible forecasting on the capacity of the firm which is key to attainment of firm goals. The study also recommends that firms should look at setting up budgeting committee at functional levels as a way of ensuring the various departments have a harmonious participatory role in the budgeting process as this can significantly improve firm performance.
Description
Full- text thesis
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Citation
Njomo, F. W. (2023). Effect of budgeting process on the operational performance of freight forwarding firms in Kenya [Strathmore University]. http://hdl.handle.net/11071/13448