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Mutisya Catherine Ndinda

College of Human Resource and Development,

Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya.

Corresponding Author email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it


Dr. Allan Kihara

College of Human Resource and Development,

Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya


CITATION: Ndinda, M., C. & Kihara, A. (2017). Effect Of E-Commerce On Operation Cost Reductions Of Manufacturing Firms In Kenya: A Case Of Kaluworks Limited. International Journal of Human Resources and Procurement. Vol. 6 (5) pp 295 – 315.


With the realization that e-commerce has a great potential for economic growth, the government of Kenya has committed itself in providing an enabling environment for its growth through initiatives like zero-rating ICT equipment, laying the under-sea fiber cable and establishing legislation like Communication Act 2008. Despite this importance of e-commerce, the adoption of the technology is still low in Kenyan businesses. A significant number of SMEs in Kenya are however ignorant of ICTs and are unaware of their importance in conducting business, even in this era of globalization. Studies indicate that e-commerce helps to manage operation costs but despite that, there is still low adoption of e-commerce. The study hence sought to evaluatethe role of e-commerce in reducing operational cost in an organization. The study specifically aims to establish the effect of Business-to-business e-commerce, Business-to-consumer e-commerce, Consumer-to-business e-commerce and Consumer-to-consumer e-commerce on operation costs of organizations. This study is guided by the systems theory, communication theory, resource based theory and organizational fit theory. The target population for the study was 57 employees that work in the IT department, production department, administrative departments, Sales & Marketing and finished goods department. The study adopted a census survey since the population of the study is small. Therefore the sample size consisted of 57 employees.Statistical Package for Social Sciences computer software was used for analysis. An ordinary least square regression model was used. The study findings indicated thatBusiness-to-consumer e-commerce, Consumer-to-business e-commerce and Consumer-to-consumer e-commerce have a positive and significant effect on operation cost while Business-to-business e-commerce does not significantly affect operation cost reduction. The study recommends that the management of Kaluworks should also consider using Business to consumer e-commerce more in activities such as consumers places their orders online, company placing quotations online, the company placing information on prices of goods online and consumers purchasing physical goods online since it will lead to a significant reduction of operation cost.

Key words: Business-to-business e-commerce, Business-to-consumer e-commerce Consumer-to-business e-commerce, Consumer-to-consumer e-commerce, operational cost




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