Relationship Between Labour Practices and Firm Productivity in The Export Processing Zones in Kenya

Abstract

The main purpose of this study was to test the relationship between labour practices and firm productivity in the export processing zones in Kenya. Specifically, the study investigated relationship between labour contract, labour relations, labour management and labour satisfaction practices and firm productivity which is obtained by additional unit of labour. A survey research design was used to get both primary and secondary data in Mombasa Export Processing Zone in Kenya. Structured questionnaires and oral interviews were administered to the respondents accordingly to provide data on firm productivity. An analytical research methodology was also used to analyze secondary data while an ex post facto research design used to report things as they are. A mixed research methodology was used during data presentation where both descriptive and inferential statistics were used to make inferences and draw conclusions. Reliability of instruments and the content validity were judged by the supervisors and the field experts during the pilot study where test and re-test method was used to obtain the reliability of instruments α alpha = 0.836. The null hypothesis formulated was that there is no relationship between labour practices and firm productivity in the EPZs in Kenya. The study sample was determined using Cochran sampling frame for the large population of above 10,000 characters yielding to a sample size of 384 respondents. Pearson Coefficient of Correlation was used to measure the degree of association among several (k) set of ranking (N) objects or items between independent variable and dependent variable. while the null hypothesis was tested using F-ratio 2 way Fisher‘s ANOVA Test at p <0.05 Level of Significance Type 1 error (α =.05) where p -value (β = 0.95) The research findings using the standardized coefficient revealed a positive relationship between labour practices and firm productivity in the EPZs in Kenya However, further analysis test was done using unstandardized coefficients which revealed only two attributes of the independent variable Labour Contract and Labour Management statistically predicted the firm productivity in the EPZs hence, the null hypothesis was rejected while, the two attributes of the independent variable Labour Relations and Labour Satisfaction did not statistically predict firm productivity in the EPZs. The researcher therefore, recommends further study on other forms of labour relations either formal or informal and their influence on firm productivity in firms with multiple and complex web structure of management. To conclude; firms driven by market pressures need to add in their goals improved quality and productivity, greater flexibility, continuous innovation, and the ability to change in responding rapidly to market needs and demands. Effective HRM is also very vital for the attainment of these goals with improved quality and productivity linked to motivation which can be achieved through training, employee involvement and improving both extrinsic and intrinsic rewards.