Shared Service Centers and Financial Performance of Panafrican Equipment Group in Kenya

Abstract

Modern firms have realised the need to take advantage of the opportunities in the emerging markets the concept of centralisation and co sharing of service providers gave rise to Shared Services (SS) and Shared Services Centres (SSC). However, little has been done in sub-Saharan Africa. This study sought to address this gap. For this reason, this study seeks to by determine the effects of shared service centres and financial performance of pan African equipment group in Kenya. The study specifically determined the effects of procurement shared services, finance shared services, inventory management shared services and ICT shared services on financial performance of Pan African equipment group in Kenya. The study was anchored on three theories namely: Transaction Cost Economics Theory, Resource Based View Theory as well as Agency Theory. The study adopted descriptive research design on 137 top-level management staff from the four sectors (mining & mineral processing, civil and infrastructure, power and energy and agriculture & forestry) of operating Pan African equipment group in Kenya. For selecting a sample of 86 participants, stratified random sampling method was used. Semi-structured questionnaires were used to collect primary data. The tool of studies was tested. The study used both face and content validity to assess the validity of the research tool while testing the accuracy of the research tool using the alpha (α) coefficient of Cronbach. The research considered a coefficient of 0.6 or more to be sufficient. Research information, including mean results, normal deviation and frequencies, was analysed using descriptive statistics. Analysis of conceptual material was also used for primary data analysis. Regression analysis was also used to analyse the effects finance shared services, inventory management shared services and ICT shared services on financial performance of Pan African equipment group in Kenya. Finally, the research considered ethical considerations where the permission to carry the study was obtained from the company and respective government bodies. The study concluded that Pan African Group significantly embraced procurement, finance, inventory management and ICT shared services. The study concluded that the firm by sharing procurement services it centralized and enhanced efficiency of purchases, pricing, supplier evaluation and quality control which contributed to peak performance. It was further concluded that to a significant extent finance shared services influenced financial performance of the firm. It was concluded that sharing of inventory management services at the firm enhanced effective and efficient inventory planning, costing, quantity and quality management and material optimization hence improving financial performance. It was concluded that database management, automation of processes, information security and network and facilities management services affected financial performance of the firm. It was recommended that enhancing more shared service centres will improve efficiency and effectiveness in service delivery and customer service.