Corporate Environmental Responsibility, Firm Characteristics and Performance of Large Manufacturing Firms in Kenya

Abstract

Large Manufacturing firms are critical to the economic development of a nation and the wellbeing of its citizens. Most of the large manufacturing firms in Kenya have recently recorded a decline in performance. The purpose of this study was to examine the relationship between corporate environmental responsibility and the performance of large manufacturing firms in Kenya. The specific objectives were to evaluate the influence of environmental impact assessment, environmental awareness, environmental regulations compliance, and energy efficiency on the performance of large manufacturing firms in Kenya. Moreover, it examined the moderating influence of firm characteristics on the relationship between corporate environmental responsibility and performance of large manufacturing firms in Kenya. The study was anchored in systems theory, need chain theory, regulations theory, efficiency theory, and resource-based theory. The study applied mixed research design. The target population was 499 large manufacturing firms in Kenya. Proportionate and stratified random sampling was used to select 84 manufacturing firms, from which 336 respondents were drawn. The study used descriptive and inferential statistics to analyze the results with help of SPSS version 28. The study found that each environmental factor varied significantly in its impact on the performance of large manufacturing firms. Environmental impact assessment had a negative effect on performance, environmental awareness positively influenced performance but accounted for a slightly lower variance. Environmental regulations compliance also showed a positive impact, with a higher explanatory power for performance variance. Energy Efficiency exhibited the strongest positive influence on firm performance. The study concluded that environmental impact assessment negatively affects the performance of large manufacturing firms due to implementation costs and operational disruptions. Environmental awareness positively influences performance by improving stakeholder relationships and market positioning. Environmental regulations compliance enhances performance through risk reduction and improved market access. Energy efficiency strongly improves performance via cost savings and operational improvements. The results revealed that firm characteristics moderated the relationship between corporate environmental responsibility and the performance of large manufacturing firms, theoretically extending our understanding of how organizational attributes influence the environmental responsibility-performance relationship in developing economies. This study extends environmental responsibility frameworks to developing economy contexts and provides actionable insights for manufacturing firms, policymakers, and industry associations seeking to enhance performance through environmental initiatives. The study recommends that firms apply corporate environmental responsibility practices while emphasizing the need for policies that enforce environmental awareness and compliance with assessment and efficiency standards.