Factors influencing innovative value creation of milled rice by Agro processors within the rice value

97 Pages·2017·1.18 MB·English

by  Githinji Anthony Mwaniki

FACTORS INFLUENCING INNOVATIVE VALUE CREATION OF MILLED
RICE BY AGRO PROCESSORS WITHIN THE RICE VALUE CHAIN IN
MWEA IRRIGATION SCHEME

GITHINJI ANTHONY MWANIKI

A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF
SCIENCE IN ENTREPRENEURSHIP AND INNOVATION MANAGEMENT,
SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI

2017
DECLARATION
I, the undersigned declare that, this research project report is my original work and has
not been submitted to any other college, institution or university.

Signature………………………………………….Date…………………………………..
Githinji Anthony Mwaniki
D66/79472/2015

This research project has been submitted for examination with my approval as
University Supervisor.

Signature…………………………………………Date…………………………………..
Dr. Florence Muindi
Supervisor
Department of Business Administration
University of Nairobi

ii
DEDICATION
I dedicate this research project to my loving and caring family for their unwavering
support and inspiration throughout the entire study period.

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ACKNOWLEDGEMENT
I express sincere gratitude to the key respondents, mainly large scale, medium and small
scale rice processors as well as value creation technical experts for their provision of
rich data despite the short notice provided hence making this analysis possible. Special
thanks go to my supervisor, Dr. Florence Muindi, for her constructive and excellent
guidance in shaping the entire research idea. I give thanks to my lecturers who instilled
knowledge and skills in the entire academic period, not forgetting my fellow students for
the great sharing, comradeship and networking.

I also appreciate the Chief Officer MOA Kirinyaga County Mr. Gachingiri and the
Director Mr. B. Muriithi for their great support in allowing me further my education
despite the busy work schedule. To my wife Grace, Mum Jecinta, sister Mercy and
Lucy, I will forever be grateful. Finally, I give thanks to Almighty God for the strength
and wisdom without which, I would not have managed this work.

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TABLE OF CONTENTS
DECLARATION ............................................................................................................. ii
DEDICATION ................................................................................................................ iii
ACKNOWLEDGEMENT ............................................................................................. iv
LIST OF TABLES ........................................................................................................ viii
LIST OF FIGURES ........................................................................................................ ix
ABBREVIATIONS AND ACRONYMS ........................................................................ x
DEFINITION OF TERMS ............................................................................................ xi
ABSTRACT .................................................................................................................... xii
CHAPTER ONE: INTRODUCTION ........................................................................... 1
1.1 Background of the Study ............................................................................................. 1
1.1.1 Concept of Innovation ........................................................................................ 3
1.1.2 Concept of Value Creation ................................................................................. 4
1.1.3 Concept of Value Chain ...................................................................................... 6
1.1.4 Concept of Agro-Processing ............................................................................... 7
1.1.5 Factors Influencing Innovative Value Creation .................................................. 7
1.1.6 Mwea Irrigation Scheme ..................................................................................... 8
1.2 Research Problem ........................................................................................................ 9
1.3 Research Objective .................................................................................................... 10
1.4 Value of the Study ..................................................................................................... 10
CHAPTER TWO: LITERATURE REVIEW ............................................................. 11
2.1 Introduction ................................................................................................................ 11
2.2 Theoretical Foundation of the Study ......................................................................... 11
2.2.1 Rodgers Diffusion of Innovation Theory ......................................................... 11
2.2.2 Value Chain Theory as Proposed by Porter (1985) .......................................... 12
2.3 Factors Influencing Innovative Value Creation ......................................................... 13
2.3.1 Firm’s Age or Maturity ..................................................................................... 13
2.3.2 Firm’s Size and Stakeholder Attributes ............................................................ 14
2.3.3 Customer Needs and Expectation ..................................................................... 14
2.3.4 Resource Availability ....................................................................................... 15
2.3.5 Product Attractiveness ...................................................................................... 15
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2.3.6 Product Demand ............................................................................................... 15
2.3.7 Market of the Value Created Product ............................................................... 16
2.3.8 Technology Availability ................................................................................... 16
2.3.9 Corporate Culture and Environment ................................................................. 17
2.4 Empirical Review of Innovative Value Creation ....................................................... 17
2.5 The Conceptual Framework ...................................................................................... 18
CHAPTER THREE: RESEARCH METHODOLOGY ........................................... 20
3.1 Introduction ................................................................................................................ 20
3.2 Research Design ........................................................................................................ 20
3.3 Target Population ....................................................................................................... 20
3.4 Sampling Design ........................................................................................................ 21
3.5 Data Collection .......................................................................................................... 22
3.6 Data Analysis ............................................................................................................. 22
CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION ............... 23
4.1 Introduction ................................................................................................................ 23
4.2 General Information ................................................................................................... 23
4.2.1 Respondents’ Category of Agro-Processor ...................................................... 23
4.2.2 Age bracket of the Respondents ....................................................................... 24
4.2.3 Respondents’ Gender ........................................................................................ 25
4.2.4 Respondents’ Level of Education ..................................................................... 25
4.2.5 Registration Status of the Business ................................................................... 26
4.2.6 Number of Years Worked in Rice Agro-Processing/Value Creation ............... 27
4.2.7 Continuous Engagement in Value Creation Activities ..................................... 27
4.2.8 Growing Status of the Enterprise ...................................................................... 28
4.3 Innovative Value Creation Activities ........................................................................ 29
4.3.1 Polishing Rice/White Rice Processing ............................................................. 30
4.3.2 Baking ............................................................................................................... 30
4.3.3 Whole Rice Cookies Preparation ...................................................................... 31
4.3.4 Rice Flour Processing ....................................................................................... 31
4.3.5 Rice Blending ................................................................................................... 32
4.3.6 Feeds Formulation ............................................................................................ 32
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4.3.7 Rice Husk Briquetting ...................................................................................... 33
4.3.8 Making of Rice Biscuits ................................................................................... 33
4.3.9 Deep Frying of Baked Products ........................................................................ 34
4.4 Factors Influencing Innovative Value Creation of Milled Rice ................................ 35
4.4.1 Firms Age of Maturity ...................................................................................... 35
4.4.2 Firm Size and Stakeholders Attributes ............................................................. 36
4.4.3 Customer Needs and Expectations ................................................................... 37
4.4.4 Customer Needs’ Consideration in the Value Creation Process ...................... 38
4.4.5 Demand of the Value Added Products ............................................................. 40
4.4.6 Product Attractiveness ...................................................................................... 41
4.4.7 Market of the Value Created Products .............................................................. 42
4.4.8 Human Resource Availability ........................................................................... 45
4.4.9 Technology availability .................................................................................... 48
4.4.10 Corporate Culture and Environment ............................................................... 49
4.5 Factor Analysis .......................................................................................................... 50
4.6 Discussion of the Findings ......................................................................................... 54
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS58
5.1 Introduction ................................................................................................................ 58
5.2 Summary of the Key Findings ................................................................................... 58
5.3 Theoretical Relationship with the Results of the Study ............................................. 60
5.4 Conclusion ................................................................................................................. 60
5.5 Recommendations ...................................................................................................... 61
5.6 Areas for Further Research ........................................................................................ 62
REFERENCES .............................................................................................................. 63
APPENDICES ................................................................................................................ 66
Appendix I: Questionnaire .............................................................................................. 66
Appendix II: Component Matrix ..................................................................................... 77
Appendix III: Communalities .......................................................................................... 83

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LIST OF TABLES
Table 3. 1: Target Sample Size………………………………………………………….21
Table 4.1: Respondents’ Category of agro-processor ..................................................... 23
Table 4.2: Age bracket of the Respondents ..................................................................... 24
Table 4.3: Respondents’ Gender ..................................................................................... 25
Table 4.4: Respondents’ Level of education ................................................................... 25
Table 4.5: Registration status of the business ................................................................. 26
Table 4.6: Number of Years Worked in Rice Agro-Processing/Value Creation ............ 27
Table 4.7: Continuous Engagement in Value Creation Activities .................................. 27
Table 4.8: Growing Status of the Enterprise ................................................................... 28
Table 4.9: Polished/white rice ......................................................................................... 30
Table 4.10: Baked products ............................................................................................. 30
Table 4.11: Whole rice cookies ....................................................................................... 31
Table 4.12: Rice flour ...................................................................................................... 31
Table 4.13: Blended rice.................................................................................................. 32
Table 4.14: Feeds............................................................................................................. 32
Table 4.15: Rice husk briquettes ..................................................................................... 33
Table 4.16: Rice biscuits ................................................................................................. 33
Table 4.17: Deep fried products, Body Powder and Rice Bran Oil ................................ 34
Table 4.18: Firms Age or Maturity.................................................................................. 35
Table 4.19: Firm Size and Stakeholders Attributes ......................................................... 36
Table 4.20: Consideration of Customer Needs and Expectations ................................... 37
Table 4.21: Market of the Value Created Products ......................................................... 42
Table 4.22: Market Promotion for Value Added Products.............................................. 43
Table 4.23: Price of value added products and Target Market ........................................ 44
Table 4.24: Adequacy of Human Resource ..................................................................... 45
Table 4.25: Offering of capacity/Training by value addition experts ............................. 46
Table 4.26: Financial Capability for value Addition Activities ...................................... 47
Table 4.27: Frequency of changing value creation machinery/Equipment ..................... 48
Table 4.28: Rating of the processing facilities/Machineries/equipment ........................ 48
Table 4.29: Corporate Culture and Environment ............................................................ 49
Table 4.30: Total Variance Explained…………………………………………………..50

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LIST OF FIGURES

Figure 2.1: Conceptual Framework ................................................................................... 19
Figure 4.1: Scree plot for the Perceived factors Influencing Value Creation ................... 53

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ABBREVIATIONS AND ACRONYMS
BDS Business Development Services
FAO Food Agricultural Organization
MDGs Millennium Development Goals
MIAD Mwea Irrigation Agriculture Development
MIS Mwea Irrigation Scheme
MOA Ministry of Agriculture
MOALV&F Ministry of Agriculture, Livestock, Veterinary and Fisheries
MOW&I Ministry of Water and Irrigation
MRGM Mwea Rice Growers Multi-purpose
MT Metric Tonnes
NCPB National Cereals and Produce Board
NGOs Non-Governmental Organizations
NIB National Irrigation Board
NRDS National Rice Development Strategy
VCP Value Chain Process

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