The effect of manufacturing capability on firm performance: Empirical evidence from small and medium manufacturing companies in Kigali-Rwanda

Abstract

This research paper examined the effect of the attributes of manufacturing capability on the performance of small and medium manufacturing companies in Kigali-Rwanda. Data were collected from a final sample of 111 small and medium-sized manufacturing firms. To analyze the collected data, a two-step approach to Covariance-Based Structural Equation Modelling (CBSEM) was applied using the Analysis of Moment Structures (AMOS) statistic software version 25.00. Data were inspected for the presence of outliers, multivariate normality, and multicollinearity, while the reliability of the construct was assessed by Cronbach's Alpha, convergent and discriminant validity. The findings revealed that all the attributes of manufacturing capability namely quality, cost efficiency, delivery, and flexibility have a positive and significant effect on the performance of small and medium manufacturing firms. It has been concluded that manufacturing capability contributed positively and significantly to inter-firm performance validating than the resource-based view applicability to SMEs. This study contributed to the existing strategic management literature on how manufacturing capability can enhance firm performance. Therefore, the study recommended that a firm should develop a complete approach of implementing the four dimensions as they should not be considered in isolation rather integrated and combined to leverage and sustain the performance over time.