Policy Incentives and the Factors Affecting the Growth of Contract Poultry Farming in Kenya: An Empirical Analysis

Bashir Hussein Mohamed^1, , Stephen M. A. Muathe¹ and James M. Kilika¹

¹Department of Business Administration, School of Business, Economics and Tourism, Kenyatta University, Nairobi, Kenya

Cite this paper:
Bashir Hussein Mohamed, Stephen M. A. Muathe and James M. Kilika. Policy Incentives and the Factors Affecting the Growth of Contract Poultry Farming in Kenya: An Empirical Analysis. Journal of Business and Management Sciences. 2026; 14(4):107-111. doi: 10.12691/jbms-14-4-3

Abstract

Kenya's poultry sector contributes materially to agricultural output and food security, yet its registered firms have struggled to grow, held back by costly feed, import competition, disease risk and loose links between processors and the producers who supply them. Contract farming, a standing agreement under which an integrating firm provides inputs, technical support and a guaranteed market while a producer commits to agreed volumes and standards, is widely proposed as a remedy, but the factors that shape the growth of poultry businesses in Kenya have attracted little quantitative study. This study treats contract farming as the contractual, most structured form of value-chain networking and asks whether such networking is among the factors affecting business growth in Kenya, drawing on the nineteen registered firms of Nairobi City County. Anchored on the Upper Echelon Theory, Strategic Leadership Theory and the Resource-Based View, and adopting a descriptive and explanatory cross-sectional survey design, it draws on a proportionate stratified random sample of 209 top echelon and business unit managers, 200 of whom responded, and measures networking through communication, negotiation, shared resources and trust. The firms engaged in networking at a high level (M=3.98; SD=1.007), and multiple regression placed networking as the strongest leadership-driven contributor to firm performance (β=0.282; p<0.05) within a model explaining 72.5% of the variation in performance (Adjusted R²=.725). The correlational evidence pointed the same way (r=.665; p<0.01), and managers' own accounts described growth flowing from supply-chain coordination, negotiated agreements and trusted partnerships with suppliers, research institutions and government bodies, precisely the relationships contract farming formalizes. The study concludes that coordinated, contract-based relationships are among the genuine drivers of poultry business growth, and it advances policy measures, a supportive contractual and dispute-resolution framework, incentives for integrator-producer schemes, and multi-stakeholder platforms linking government, the Food and Agriculture Organization and firms, to help the sector convert coordination into sustained expansion.

Keywords:
contract farming value-chain networking vertical coordination poultry business growth strategic leadership agribusiness policy Kenya

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]	Erdaw, M.M. and Beyene, W.T., “Trends, prospects and the socio-economic contribution of poultry production in sub-Saharan Africa: A review,” World's Poultry Science Journal, 78 (3). 835-852. 2022.
[2]	Etuah, S., Ohene-Yankyera, K., Liu, Z., Mensah, J.O. and Lan, J., “Determinants of cost inefficiency in poultry production: Evidence from small-scale broiler farms in the Ashanti Region of Ghana,” Tropical Animal Health and Production, 52 (3). 1149-1159. 2020.
[3]	Macharia, J.N., Diiro, G.M., Busienei, J.R., Munei, K., Affognon, H.D., Ekesi, S., Muriithi, B., Nakimbugwe, D., Tanga, C.M. and Fiaboe, K.K.M., “Gendered analysis of the demand for poultry feed in Kenya,” Agrekon, 59 (4). 426-439. 2020.
[4]	Kenya National Bureau of Statistics, Economic Survey 2022, KNBS, Nairobi, 2022.
[5]	Kenya National Bureau of Statistics, Economic Survey 2025, KNBS, Nairobi, 2025.
[6]	Kleyn, F.J. and Ciacciariello, M., “Future demands of the poultry industry: Will we meet our commitments sustainably in developed and developing economies?,” World's Poultry Science Journal, 77 (2). 267-278. 2021.
[7]	Omondi, S.O., “Poultry value chain in two medium-sized cities in Kenya: Insights from cluster theory,” Frontiers in Veterinary Science, 9. 601299. 2022.
[8]	Mohamad, M.A. and Chin, O., “Business networking and sustainability of small rural business: Mediating effects of entrepreneurial orientation,” Management Science Letters, 9. 595-606. 2019.
[9]	Vătămănescu, E.M., Cegarra-Navarro, J.G., Andrei, A.G., Dincă, V.M. and Alexandru, V.A., “SMEs strategic networks and innovative performance,” Journal of Knowledge Management, 24 (6). 2020.
[10]	Kazungu, I., “Network linkages and performance of exporting micro and small enterprises in Dar es Salaam, Tanzania: Perspectives in the handicraft industry,” Global Business Review, 24 (6). 1383-1400. 2023.
[11]	Alkahtani, A., Nordin, N. and Khan, R.U., “Does government support enhance the relationship between networking structure and sustainable competitive performance among SMEs?,” Journal of Innovation and Entrepreneurship, 9 (1). 1-16. 2020.
[12]	Food and Agriculture Organization, Poultry Sector Kenya: Value Chain Review, FAO, Rome, 2022.
[13]	Hambrick, D.C. and Mason, P.A., “Upper echelons: The organization as a reflection of its top managers,” Academy of Management Review, 9 (2). 193-206. 1984.
[14]	Shahab, Y., Ntim, C.G., Chengang, Y., Ullah, F. and Fosu, S., “Environmental policy, environmental performance, and financial distress in China: Do top management team characteristics matter?,” Business Strategy and the Environment, 29 (4). 2020.
[15]	Baetz, M.C. and House, R.J., “Leadership: Some empirical generalizations and new research directions,” Research in Organizational Behavior, 1. 341-423. 1979.
[16]	Finkelstein, S., Hambrick, D.C. and Cannella, A.A., Strategic Leadership: Theory and Research on Executives, Top Management Teams, and Boards, Oxford University Press, New York, 2009.
[17]	Mintzberg, H., “Covert leadership: Notes on managing professionals,” Harvard Business Review, 76. 140-148. 1998.
[18]	Katz, R.L., “Skills of an effective administrator,” Harvard Business Review, 52 (5). 90-102. 1974.
[19]	Penrose, E.T., The Theory of the Growth of the Firm, Oxford University Press, Oxford, 1959.
[20]	Wernerfelt, B., “A resource-based view of the firm,” Strategic Management Journal, 5 (2). 171-180. 1984.
[21]	Barney, J., Wright, M. and Ketchen, D.J., “The resource-based view of the firm: Ten years after 1991,” Journal of Management, 27 (6). 625-641. 2001.
[22]	Abbas, J., Raza, S., Nurunnabi, M., Minai, M.S. and Bano, S., “The impact of entrepreneurial business networks on firms' performance through a mediating role of dynamic capabilities,” Sustainability, 11 (11). 3006. 2019.
[23]	Korir, D.J. and Kilika, J.M., “Effect of deployment of strategic leadership in the horticulture industry: A case study of selected flower farms in Kenya,” International Journal of Research in Business and Social Science, 12 (4). 163-174. 2023.
[24]	Yamane, T., Statistics: An Introductory Analysis, 2nd ed., Harper and Row, New York, 1967.
[25]	Saunders, M., Lewis, P. and Thornhill, A., Research Methods for Business Students, Pearson Education, Harlow, 2011.
[26]	Kori, B.W., Muathe, S. and Maina, S., “Financial and non-financial measures in evaluating performance: The role of strategic intelligence in the context of commercial banks in Kenya,” International Business Research, 13 (10). 130. 2020.
[27]	Sataloff, R.T. and Vontela, S., “Response rates in survey research,” Journal of Voice, 35 (5). 683-684. 2021.