Abstract:
The aim of this study was to examine the direct and indirect effect of absorptive capacity and
supply chain operational capability on performance of manufacturing firms in Nairobi Kenya.
Explanatory research design and random sampling technique was used to collect data with the
aid of a questionnaire from a sample of 200 firms. Reliability the research instrument was tested
using Cronbach alpha. In order to test the hypotheses and the mediation effect, bootstrapping
procedure was followed by testing the direct and indirect effect. The finding shows the
significant direct effect of absorptive capacity on both performance and supply chain operational
capability. Supply chain operational capability was also found to significantly, positively and
directly affect performance. Lastly the result shows that Supply chain operational capability
mediates the relationship between absorptive capacity and performance, hence providing new
knowledge in research literature. Marketers have to recognize the central role of logistic
capability, technological capability and structural capability together with acquiring, assimilating,
transforming and exploiting the available business opportunities to enhance and sustain their
performance in a competitive environment.
