Abstract:
The current challenges facing most the processing firms has been attributed to capacity utilization and operations constraints. This paper sought to establish the mediation role of capacity utilization in the relationship between operations constraint management and value chain performance among tea processing firms based on perspectives from Kenya. The study sought to answer the following research question: Is there a mediating role played by capacity utilization on the relationship between operations constraint management and value chain performance of tea processing firms in Kenya. The study adopted a cross-sectional research design. The unit of analysis for this study was the individual tea processing firm. A sample of eighty-five (85) tea processing firms was used where the respondents were all the factory accountants, production managers, and the environmental representatives. Multiple regression and correlation analysis were used to analyze the data. Our results show that the moderating effect of capacity utilization in the relationship between operations constraints management and the firm’s value chain performance is a significantly strong positive correlation as 81.0% of the variance in the firm’s value chain performance is explained by both capacity utilization and operations constraints management. This implies that by applying the Theory of Constraints (TOC) philosophy in the decision-making process in managing capacity, managers will be able to improve the capacities of the bottleneck resources hence increase the throughput and create competitive advantage.
