EFFECT OF ETHICAL SOURCING POLICIES ON ORGANIZATIONAL PERFORMANCE IN THE ENERGY SECTOR: A CASE OF KENYA POWER COMPANY LIMITED

Abstract

That the essence of an efficient public sector procurement system no doubt is to create wealth for a nation and ensure good governance and transparency in rendering public services, is not something to be overlooked in the developing economies. Adhering to ethical policies, ethical codes and corporate social responsibilities by a corporate organization such as Kenya Power Company Limited (KPCL) enhances its financial performance and corporate image. Even though the adoption of procurement policies, rules and regulations are laudable, unfortunately compliance with such policies, rules and regulations has been very elusive in the management of corporate affairs. The study objective was to examine the effect of ethical sourcing policies on organizational performance in the energy sector. The specific objectives of the study were to determine the effect of ethical sourcing policies on performance at Kenya Power and Lighting Company; to evaluate the effect of procurement ethical codes on performance at Kenya Power Lighting Company and to examine the effect of corporate social responsibility on performance at Kenya Power and Lighting Company. The study used conceptual framework to show a diagrammatic relationship between the independent variables and the dependent variables. To strengthen the conceptual framework the study used theories such as the agency theory and legitimacy theory. The questionnaire was self-administered to collect primary data whereas the secondary data was obtained from journals and white paper writings and data was analyzed using descriptive statistics. The sample size was determined through stratified random sampling. The target population of the study was 100, comprising of Kenya Power’s 15 management staff, 50 union staff, 35 suppliers. A population size of 80 was arrived at out of which 72 responses were realized. Scheduled Interviews, focus group discussions and observations were used for data collection. The Agency and Legitimacy theories were found to be relevant in this research work because they constituted the road maps to help guide this research from forming research questions, through formation of interview questions, data and content analysis to the conclusions.The Organization is doing its best to improve the sourcing processes so as to improve on its performance. However some lapses and weaknesses exist and more relevant studies are needful. Generally, the adoption of ethical sourcing in the organization’s supply chain will lead to improvements in her economic performance which in turn, positively impact on her competitiveness. The study found out that ethical policy, ethical codes and corporate social responsibility affect organizational performance. The report recommends that the policy makers and all the key players in this vital sector of our economy are to embrace the application of ethical codes in enhancing organization’s performance. The report also recommends corporate social responsibility as a key factor to be considered during sourcing activities as the public service is concerned. The application of viable, flexible and timely ethical policies is also recommended.