Foreign Direct Investment and Local firm's Performance

MD Wanjere, Ogutu M, Kinoti M, Iraki XN. "Foreign Direct Investment and Local firm's Performance." Advances in Management and Applied Economics. 2021;11(3):57-73.


This paper investigates the effect of FDI on performance of manufacturing firms in
Kenya. Little is documented about the link between FDI variables of capital flow,
advanced production technology, marketing expertise and management know-how
and performance of firms. The study’s sought to establish the effect of each
individual FDI variables on firm’s performance. It also sought to established the
overall effect of the performance manufacturing firms in Kenya. The population of
study comprised 100 companies registered with Kenya Association Manufacturing
as at the time of data collection in 2019 and that had over 10 percent foreign
ownership. The respondents were the CEOs of organization. The study used a
structured questionnaire to collect primary data. Descriptive and inferential
statistics were both used to analyze the data. Data was pretested for normality,
linearity, multicollinearity, autocorrelation and homoscedasticity and the data found
to meet most of these preconditions. The Pearson correlation analysis was employed
to discern not only the strength but also the direction of the interrelationships
involving the variables. The researcher tested the effect of the components of FDI
on performance of manufacturing firms. The study developed one hypothesis and
four sub hypothesis. The results revealed that there was a statistically significant
relationship between FDI and firm performance. This imply that to achieve better
firm performance, the government need to come up with policies geared to
attracting more FDI into the key sectors of the economy.

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