EFFECT OF CONTRACTUAL GOVERNANCE PRACTICES ON SUPPLIER PERFORMANCE: A SURVEY OF STATE CORPORATIONS IN NAKURU COUNTY, KENYA

Abstract

The public sector procurement consumes a significant portion of the Gross Domestic Product (GDP) in both
developing and developed countries estimated to vary to about 20% in developed countries and up to 36% in
developing countries. In Kenya, it is estimated to constitute about 10% of the GDP making it the single largest
spender on procurement. There is evidence to suggest that there are challenges in supplier performances in
relation to lead times, product quality, and contract management aspects. Therefore, the main objective of the
study is to establish the effect of contractual governance practices on supplier performance in state
corporations in Kenya focusing on Nakuru County. It was established that contract specifications do not
significantly affect supplier performance in state corporations in Nakuru County since the t-value (2.842) was
significant with a p-value <0.05. Therefore, contract specifications significantly affect supplier performance in
state corporations in Nakuru County. Governance Structure influence on Supplier Performance was statistically
significant at 0.05 significance level with a t-value of 2.732. Similarly, contract management teams had
statistically significant influence on supplier performance at t-value (7.115) and p value less than 0.05. The
study recommends a further study on the effect of contractor-supplier relationship on quality of goods and
services supplied.