ETHICAL STANDARDS AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS: PERCEPTIONS OF EMPLOYEES OF KITUI COUNTY TEXTILE CENTER (KICOTEC), KENYA.

Abstract

The purpose of the study was to investigate the effects of ethical standards on financial
performance of manufacturing firms. The study objectives were; to examine the effects of teamwork
standards, commitment standards, and accountability standards on financial performance
of Kitui County Textile Centre (KICOTEC). Financial performance was perceived in terms of
growth in sales, growth of market share, return on assets and profitability. The study was anchored
on three theoretical foundations: Utilitarian Moral Theory of Ethics, A Virtues Ethical Theory and
Deontological Ethical Theory. Review of empirical literature revealed research gaps which
included the need to evaluate and compare the effects of ethical standards on different sectors,
counties and regions in order to have a cross cultural view and also pave way for comparisons.
The research design was a case study of Kitui County Textile Centre (KICOTEC) in Kenya. The
target population was middle and top level managers of KICOTEC. Simple random sampling was
used to identify 4 managers and 11 supervisors as the sample. Data collection instruments were
close ended and open-ended questionnaires. The researcher used the Statistical Package for Social
Sciences (SPSS) to generate descriptive statistics of the study variables and findings were
presented in tables. The study established that employees held the view that accountability
standards have the greatest effect on financial performance at 90.1% followed by team-work
standards at 87.9% while commitment standards rank third at 86.8%. This study recommends that
start-up manufacturing firms should develop ethical standards to guide their operations so as to
be assured of enhanced financial performance and more emphasis should be on accountability,
commitment and teamwork standards in that order. The researcher recommends that these
findings should be tested further not only among start-up and established manufacturing firms in
various cultural settings, but also among service companies.