CONTRACT NEGOTIATION PRACTICES AND PERFORMANCE OF STATE CORPORATIONS IN NAIROBI CITY COUNTY, KENYA

Nahumi Mutua, Dr. Eric Namusonge

Abstract


Negotiation is one of the techniques used by most organizations that help them save money. Not only does negotiation save money for an organization it is also a vital and very important step in the procurement process. The contract are the documents that bind together the buying organization and the supplier therefore during contract negotiation both parties to the contract should be keen and careful because the contract details contain how both parties interacting with each other. The main objective of this study was to establish determinants of contract negotiation on service state cooperation in Kenya. The study was guided by the following specific objectives; to examine if payment terms affect performance of service of state corporations; to determine if procurement laws and regulations affect performance of service state corporations. The theories used in this study included transaction cost theory and institutional theory. A descriptive research design will be adopted in this study.   The study targeted 156 service state corporations in Kenya. The unit of observation included 52 procurement officers, 26 finance officers, 26 quality control officers and 52 legal officers. A simple random sampling approach was used with a sample size of 100 respondents. Questionnaires were used to collect data which was analyzed through SPSS software version 24. A pilot study was carried out to test both reliability and validity of the data collection instrument. The findings of the study were tabulated. Findings show that; there is a moderate significant relationship between payment terms and performance of service state corporations was (r= 0.378, p-value=0.001), a strong positive relationship between procurement laws and regulations and performance of service state corporations was (r = 0.684, p-value=0.001). The study recommends that; the state corporations should adopt e-payment such as Electronic Fund Transfer to enhance level of accountability in the procurement payments. The management of state corporations should ensure that all stakeholders in the supply chain adhere to procurement rules and regulations.

Key Words: Contract negotiation, Payment terms, Procurement laws and regulations, State corporations, Performance

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