Physical Asset Management Practices, Ethical Leadership And Operational Performance Of Manufacturing Firms In Kenya

Physical Asset Management Practices, Ethical Leadership and Operational Performance of Manufacturing Firms in Kenya

Dr. CPA Peninah Tanui Melly^*, Mr. Stephen Kimei, Dr. Nehemiah Chenuos

Alupe University, Kenya

^*Corresponding Author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.908000591

Received: 31 July 2025; Accepted: 06 August 2025; Published: 23 September 2025

ABSTRACT

From time to time, investments in physical assets in most organizations takes the lion share. Therefore, physical asset management practices one of the paramount organizational strategies in the modern world that can lead to the optimization of asset’s lifespan and performance. In the same breadth, ethical leadership is vital in today’s business environment since ethical behavior is stimulated not only resulting in effective asset management but also performance in general. This study therefore sought to analyze the mediating effect of ethical leadership in the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya. In particular, the study examined the five physical asset management practices relating to strategy and planning, risk management, lifecycle delivery, asset information, review and monitoring. Anchoring on stakeholder and stewardship theories, 367 respondents were sampled from the targeted 8064 respondents. Later, data gathered using the structured questionnaires was subjected to descriptive, correlation and regression analysis. In view of operational performance, there was a positive and significant relationships documented given the asset management strategy and planning practice (β = .213, p = .000<.05), asset risk management practice (β = .297, p = .007<.05), asset lifecycle delivery practice (β = .245, p = .002<.05), asset information management practice (β = .196, p = .000<.05) as well as the asset review and monitoring practice (β = .309, p = .001<.05). Furthermore, there was a complementary mediation effect (β = .121; CI = .254, .608) of ethical leadership in the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya. To sum up therefore, manufacturing firms in Kenya could positively enhance operational performance through ethical leadership. The study further highlighted the key implications to theory, practice and future research.

KEYWORDS: Physical Asset Management Practices; Ethical Leadership; Operational Performance; Manufacturing Sector

INTRODUCTION

Most organizations in this progressively dynamic business environment not only seek to drive operational performance but also achieve sustained competitive advantage. Indeed, stiff competition has pushed firms to devise new ways to generate continuous profits as well as competitiveness (Al-Najjar, 2007). From the resource-based view of the firm, resources are essential and powerful tool to earn competitiveness in the market. As such, the management’s main task is mainly on identification, development, nurturing and protection of the crucial firm’s resources (Barney, 1991). More importantly, these resources are expected to meet the evaluation criteria set, that is, need to be valuable, rare, imperfectly imitable and non-substitutable. From the organization’s resources basket, assets can be singled out. Assets thus are elements which may either be physical, core or acquired but have a significant value (Ouertani, Parlikad and McFarlane, 2008; Suakanto, Nuryatno, Fauzi, Andreswari and Yosephine, 2021). Ideally, assets can be classified as either be current or non-current. Though current assets are prone to high levels of financial risks and depreciation as a result of inflation, they are highly liquid (Stupnytska, Volodina, Holovachenko and Sariieva, 2022). On the other hand, non-current assets are the source of economic benefits as they generate income for the firm for several years (Kozachenko, 2020). Furthermore, assets according to Hastings and Hastings (2021) can be further classified under categories as tangible or physical, intangible, financial, human and information. In the same breadth, Amadi-Echendu, Willett, Brown, Hope, Lee, Mathew, Vyas and Yang (2010), highlights asset classes inform of a pyramid whereby, physical or engineering of real assets taking the lion’s share are located in the base with financial assets as shares, derivatives and exotic securities above it.

Physical assets are lauded as they aid an organization under various sector in attaining value (De Almeida, Vieira, Silva and e Castro, 2021), boosting of productivity and market competitiveness (Moeng, 2013). Consequently, significant amount are invested given the elements under the physical assets category (Moeng, 2013). In the process, there is need to obtain a balance given the physical assets’ costs and risk (R. E. Brown and Humphrey, 2005). However, asset management in general in the modern times has been described as challenging (Emmanouilidis and Komonen, 2013) given the complications emanating from aspects as technological advancements (Parida and Stenström, 2021), variation in climate, ever increasing insufficiency of resources and environment dilapidation (K. Brown, Laue, Tafur, Mahmood, Scherrer and Keast, 2014).  Therefore, in order to optimize asset’s performance and lifespan on tangible assets, physical asset or engineering asset management is a critical component of organizational strategy. Basically, physical asset management entirely in an organization  takes into consideration all kinds of assets (Maletič, Maletič, Al-Najjar and Gomišček, 2020a) apart from being a broader aspect for managing assets (Amadi-Echendu et al., 2010) for maximization of value from the assets (Alsyouf, Alsuwaidi, Hamdan and Shamsuzzaman, 2021). In this case, all the operational, technical, maintenance and strategic process are both well-coordinated and systematic in nature (Hastings and Hastings, 2021). Through physical asset management, a firm is better placed in deriving immense financial success (Botha, 2015), powering of the going concern (Gavrikova, Volkova and Burda, 2020), sustainable competitive advantage (Alsyouf et al., 2021; Gavrikova et al., 2020), organizational goals (Oluwaremi and Memba, 2016) and business performance in general (Schuman and Brent, 2005).

Manufacturing sector in most cases is termed as asset-intensive in nature. Physical asset management in this sector is considered as an important ingredient for enhancing performance, production, safety as well as efficiency (Amadi-Echendu, 2004; Emmanouilidis and Komonen, 2013). In this regard, any laxity in the management and maintenance of assets is a red flag that will lead to lose of the firm’s profit share (Al-Najjar, 2007). Asset management effectiveness in an organization  is anchored on main pillars as information, engineering and management (R. E. Brown and Humphrey, 2005), level of uncertainty, competitiveness (Maletič, Maletič, Al-Najjar, Gotzamani, Gianni, Kalinowski and Gomišček, 2017), internal control, leadership commitment  among others (Syaifudin, Ritchi and Avianti, 2020). From the stewardship theory view, managers are termed as stewards of the organization’s assets thereby act in the best interests of the owners (Donaldson and Davis, 1991). Thus, leadership not only affects the practices (Babakus, Yavas, Karatepe and Avci, 2003) but also the end result of an organization (Kieu, 2010; Madanchian, Hussein, Noordin and Taherdoost, 2016). The leadership have the ability to impact on the organization’s physical asset management through the values and beliefs (Adoko Obicci, 2022). In the recent past, ethical leadership has emerged as one of the pillars of both performance and competitive advantage (Alabdullah and AL-Qallaf, 2023). Thus, given the multifaceted and high-stakes world of asset management, ethical leaders play a critical role in guiding decision-making processes, ensuring compliance, and fostering trust among stakeholders. Anchoring on this background, the study conceptualized that physical asset management practices impacts of the operational performance of firms through ethical leadership within the manufacturing sector context.

The Kenya’s Manufacturing Sector

After the year 2022 general elections in Kenya, the government through the Bottom-up Economic (BETA) model has sought to build the economy on a strong economic (Republic of Kenya, 2023). In this case therefore, the main agenda is directed towards lowering of cost of living and decent living by all citizens. To attain this, manufacturing sector has been identified as one of the key sectors. According to the Kenya’s Economic Report (2023), this sector has been lauded for creating employment, fighting poverty, continuous supply of overtime hence stabilization of consumer prices. After the Covid-19 pandemic, the manufacturing sector in Kenya as observed in the economic report for the year 2023 has been on recovery momentum but this was impeded by suppressed performance of the agricultural sector following the prolonged draught, sustained strengthening of the dollar, high interest rate and spillover effects of the Russia-Ukraine war. Despite these, the sector accounted for 44.3% of the total industrial output as well as 11.7% wage employment. In the medium term therefore, the Kenya’s manufacturing sector is expected to grow on average by 5.8% by the year 2025 (Kenya’s Economic Report, 2023). This possible through adoption of the value chain approach that aims at addressing the manufacturing sector’s growth blockages.

Problem Statement

According to Heizer and Render (2004), operational performance from the manufacturing perspective is identified based on the firm’s ability to undertake certain key tasks. These include meeting of delivery capacity, order cycle time, boosting the efficiency as far as raw material utilization is concerned as well as minimization of the operating costs. Thus, operational performance of the manufacturing sector in Kenya is paramount given its valuable contributions to employment, reduction of poverty levels, economic growth as well as country’s competitiveness in general. On the contrary, the deceleration in the manufacturing sector growth due to constrained manufacture has been reported (Kenya’s Economic Report, 2023). Despite the sector being the pedestal, the sector is reported to have grown by 2.7% in the year 2022 as compared to 7.3% in 2021. Consequently, the sector’s share in the country’s overall economic growth stood at 0.24%. In order to enhance persistent growth of 5.8% by 2025, the Kenyan government banks on the value chain approach that addresses the challenges pulling back the manufacturing sector’s growth (Kenya’s Economic Report, 2023).

Ideally, physical asset management has been documented as key especially in attaining financial success (Botha, 2015), availing of clearly outlined asset utilization methods (Oluwaremi and Memba, 2016) as well as minimization of operational risks (Moeng, 2013). Where ethical leadership is manifested in asset management, an organization is in a better position to enhance its complete performance (Eccles, Ioannou and Serafeim, 2014).  The study thus directed the attention to assessment of physical asset management practices that may drive significant improvements in the operational performance within the manufacturing context. However, the link between physical asset management practices and operational performance was analyzed via ethical leadership. This is because ethical leadership in the modern business environment has been prioritized as to navigate the arising complexities and attainment of sustained performance. As a result, most organizations now seek maintaining high ethical standards that can drive long-term performance and sustainability.

From the existing literature, the relationship between asset management and performance has been a subject of considerable research within various industries for instance in Denmark (Nielsen, 2015), Indonesia (Banjarnahor and Bukit, 2023; Suzan and Putri, 2023), Nigeria (Oghenekohwo, Anastesia and Moses, 2019; Oluwaremi and Memba, 2016) and Kenya (Amira, 2023; Anjichi, 2014; Muli, 2023; Rahima, 2023; Thuku, 2015). Additionally, ethical leadership has been linked to performance (Alkhadra, Khawaldeh and Aldehayyat, 2022; Maak and Pless, 2006; Madanchian et al., 2016)  as well to asset management (Adoko Obicci, 2022; Eccles et al., 2014). In order to address the existing gap, the study examined the mediating effect of ethical leadership in the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya. Specifically, the study will examine the physical asset management practices as asset management strategy and planning, asset risk management, asset lifecycle delivery, asset information management and asset review and monitoring.

Study’s Theoretical Framework

The firm exists so as to fulfil diverse goals ranging from financial to non-financial. First and foremost  managers according to stewardship theory are the stewards of the organization’s assets (Donaldson and Davis, 1991). As such, managers in any firm are expected to act in the best interest of the shareholders at all times by directing attention the critical asset management aspect. Indeed, any firm that cares about its stakeholders is considered successful in the long run. Through physical asset management, there is sustainable enhancement of the stakeholders’ value (Amadi-Echendu et al., 2010). Secondly from the stakeholder theory perspective, organizations are not only expected to serve the interests of its shareholders but also the stakeholders (Freeman, Harrison and Wicks, 2007). As put across by Henegar and Wilkinson (2015),  stewardship is evident given efficient and effective utilization of resources belonging to an individual, business or society. Hence, ethical leadership comes into the equation as it seeks to promote equal and fair treatment of the firm’s employees, customers, suppliers, and the community at large. This will in turn nurture trust and loyalty that will then translate into better financial performance. Therefore, both the stewardship and stakeholder theory formed the basis of conceptualizing the study’s variables.

Empirical Review and Hypothesis Development

Physical Asset Management Practice

Physical asset management is defined to comprise of score of well-coordinated activities that aims at realization of value from the organization’s assets (Alsyouf et al., 2021; Hastings and Hastings, 2021; Sandu, Varganova and Samii, 2023). According to Amadi-Echendu (2004), physical asset management is both holistic and wider in scope as compared to asset maintenance. Hence, it’s a strategy entailing unified processes that creates active assets management (Galusha, 2001), contributes to the decision making process (Krugler, Chang-Albitres, Pickett, Smith, Hicks, Feldman, Butenko, Kang and Guikema, 2007), guide the asset related activities control and planning (El-Akruti, Dwight and Zhang, 2013), enhances the resource allocation that is cost effective (Kuhn, Jasek, Carson, Theiss, Songchitruksa, Perkins, Yang and Mwakalong, 2011) and utilization of assets (Mitchell, Bond, Nodianos and Brotherton, 2002). Through asset management, an organization can own appropriate assets to its needs hence effectively and efficiently deliver its capabilities (Hastings, 2010). Per se, the firm’s financial performance control (Purba and Bimantara, 2020), survival and viability (Parida and Stenström, 2021) depends mainly on the asset management. Anchoring on the management, information and engineering aspects (R. E. Brown and Humphrey, 2005), asset management is a strategy to earn competitive advantage (Alsyouf et al., 2021; Gavrikova et al., 2020) and lift the firm’s performance to another level  (Bleazard and Khu, 2001).

Over time, physical asset management research in general has been conducted in different countries. In United Arab Emirates (UAE), Alsyouf et al. (2021) examined the impact of the implementation of International organization for standardization (ISO) 55000 asset management standard on organizational performance. Through this standard therefore, an organization was found to manage its assets effectively and efficiently. Consequently, better organizational performance given all the key performance indicators (financial, customer, business processes, learning and growth) was attained. In the public sector context, Naief (2017) assessed the asset management practices in Saudi Arabia. From the findings, these practices were below expectations in most ministries beside that there was lack of awareness of these practices among the public servants. In line with this, the majority of the public sector was found to overlook the existing professional standards governing the asset management practices. Within the public sector context, asset management issues among the government agencies in Malaysia was attributed to the maintenance practices, training policy and asset misappropriation (Tajudin, Norziaton and Ismail, 2021).

Physical asset management has been analyzed in relation to performance over time. In Denmark, Nielsen (2015) conducted a survey of all Danish firms in 2014. In particular, the study assessed asset management intensiveness measured using net physical assets, physical asset turnover and proportion. Based on the findings, there was a positive link between physical asset management and financial performance. In Nigeria, Oluwaremi and Memba (2016) investigated the relationship between asset management and financial performance of 74 listed manufacturing firms between 2005 and 2014. The asset management proxies comprised of fixed asset, cash, inventory and account receivable management while financial performance was measured using return on assets (ROA). From their findings, there was a positive and significant relationship between asset management and financial performance. Within the same country, Oghenekohwo et al. (2019) found a significant relationship between asset management efficiency measured using asset, inventory and working capital turnover given profit after tax of building as well as construction companies. In Indonesia, Purba and Bimantara (2020) found a positive and significant effect of asset management (fixed asset turnover) on financial performance (ROA) of six listed companies between 2013 and 2017.

Maletič et al. (2020a) examined physical asset management in relation to operational performance of 138 international and local organizations among European countries (Slovenia, Poland, Greece, Sweden, Turkey and Slovakia). In this study, online questionnaires, physical asset management aspects analyzed comprised of strategy and planning, risk management, lifecycle delivery, asset information and asset review. In the end, physical asset management positively influenced the operational performance of organizations under study. Gamariel and Antoine (2021) conducted as case study by analyzing the asset management in view of logistical performance of Strong construction limited. Among the asset management aspects analyzed were asset maintenance, compliance with standards and budget allocation funds. Using a combination of questionnaires, interview and document analysis, data collected from 66 sampled respondents was analyzed.  From the findings thereafter, there was a positive autocorrelation between asset management and logistical performance. Another case study at PT Perkebunan Nusantara IV company in Indonesia by Banjarnahor and Bukit (2023) analyzed the effect of asset management on performance. In this study, asset management was analyzed based on concepts as asset inventory, legal audit, asset valuation, fixed asset optimization cost, asset monitoring and control. From a sample size of 38 respondents, asset management was found to positively and significant affect the company performance. Suzan and Putri (2023) assessed the relationship between asset management alongside intellectual capital on financial performance of 19 companies listed under the food and beverage subsector between 2008 and 2021 in Indonesia.  On the contrary, there was no significant impact of asset management on financial performance.

Under the Kenya’s context, asset management has been analyzed in different sectors. In the financial sector for instance, asset and liability management has been examined in view of financial performance of the commercial banks (Amira, 2023; Anjichi, 2014; Makau and Memba, 2014) and  microfinance banks (Thuku, 2015). Within the financial sector, Rahima (2023) assessed the asset management strategies as cashflow, mortgage loan, treasury bill and stock control in view of financial performance of saving and credit cooperative societies (SACCOs) in Imenti North subcounty. In the SME sector, Onyango (2014) narrowed down to the current asset management practices within Nairobi County. On the other hand, Murimi, Ombaka and Muchiri (2019) opted to evaluate the performance and physical resources (production facility, information and communication technology (ICT) infrastructure, natural resources and marketing infrastructure) among the small and medium manufacturing enterprises in Kenya. Moving on, asset and liability management in relation to financial performance of the building and construction sector in Kenya was looked into by Muli (2023). In particular under the asset and liability management, this study examined the effect management of current assets, current liabilities, fixed assets and long-term liabilities on financial performance. Based on the research gap identified from these studies therefore, the study assessed the mediating effect of ethical leadership in the relationship between physical asset management practices and operational performance of the manufacturing sector in Kenya. As such, the physical asset management practices analyzed comprises of the asset management strategy and planning, asset risk management, asset information management and asset review and monitoring.

Asset Management Strategy and Planning Practice and Operational Performance

In the current turbulent environment, most organizations have realized the need of managing its assets strategically not only to earn sustainable completive advantage but also to enjoy the long-term survival (Gavrikova et al., 2020). According to these authors therefore, there is need for interconnection of strategies across all the levels in the firm. As such while taking into consideration the external pressures, competitive environment and budget constraints, the primary focus needs to be on the configuration and management of all the asset portfolio. According to Diop, Abdul-Nour and Komljenovic (2021), the strategic approach to asset management purely focuses on the asset management strategies alignment with those of the corporate, business and functional levels of the organization. Thus, asset management strategy outlines the activities that are necessary in attaining the objectives set in asset management as well as the corporate strategies and objectives (K. Brown et al., 2014). Asset management plan on the other hand brings to the light the organization’s decisions relating to asset acquisition, utilization, maintenance and disposal. As pointed out by Hastings (2010), asset management plan in an organization outlines the resources, activities, timescales and responsibilities required for the asset or group of assets to attain the specific objectives, that is, delivering the expected level of service over a given period of time. In this case, these plans are based on the activities relating to the maintenance, repairs, overhaul and replacement.

From the strategic point of view therefore, an organization can hold the strategic asset management plan (SAMP). According to De-Almeida-e-Pais, Raposo, Farinha, Cardoso, Lyubchyk and Lyubchyk (2023), SAMP is vital and the heart of an organization as it not only converts the organizational objectives into the asset management objectives but also indicates the role of the asset management system and support provision. On the other hand, SAMP is described as a document that describes how organizational objectives must be converted to asset management objectives and the approach for developing the asset management plans (Pais, Farinha, Cardoso and Raposo, 2022), directs how the asset management is organized and operated within and organization (Hastings, 2010). Basing on the SAMP, an organization is able to minimize both the operation and maintenance costs (Pais et al., 2022). Moreover as opined by Karar (2023), an organization through  effective asset management strategy or plan can maximize its performance, asset value, minimize risks, achieve strategic objectives, optimize asset lifecycle costs, improve asset reliability, and mitigate risks. Using the Kenyan context, the study therefore sought to test H₀₁; Asset management strategy and planning practice does not significantly relate with the operational performance of manufacturing firms in Kenya.

Asset Risk Management Practice and Operational Performance

Basically given the organization’s resources, activities and processes, risk  is described as a collection of diverse factors (Wu and Olson, 2010). Given the risk element therefore, most firms nowadays ways of managing associated risks of extreme and rare events that has led to the growing complexity of both the business and operational environment (Komljenovic, Gaha, Abdul-Nour, Langheit and Bourgeois, 2016). Asset managers have been force to embrace risk management and technology use in the asset management process (Thorpe, 2010) hence the popularity and importance risk management as far as assets are concerned (Wijnia, 2012).  Risk management in general has been opines by Rausand (2013) unceasing process relating to identification, analysis and evaluation of risk. According to Pačaiová and Grenčík (2014) as well as Liu and McNeil (2020), risk management is an integral part of asset management in an organization. This is because in sustainable asset management, risk modelling as well as analysis is essential for organization to escape the negative effects on the environment and society at large, attain competitive, maximize its returns (Badurdeen, Shuaib and Liyanage, 2012). Thus, given an organization’s asset management system, risk management is an important ingredient (Maletič, Pačaiová, Nagyová and Maletič, 2020b).

Asset risk management is a critical aspect of organizational strategy aimed at identifying, assessing, and mitigating risks associated with tangible assets.  In asset management, risk assessment is paramount especially in identifying the unexpected asset failures, their consequences and comparison with the firm’s risk tolerance criteria (Syed and Lawryshyn, 2020). From the enterprise risk management perspective, risks management tools include risk identification, analysis, evaluation, management, communication, monitoring and provision of feedback (Liu and McNeil, 2020). Maletič et al. (2020b) assessed the impact of asset risk management on performance of industrial manufacturing companies. From their findings, the study concluded that integrating risk management practices into the companies’ asset management processes improves performance. Organizations with robust asset risk management are in a better position to reduce significantly the asset failures, downtime and improve its operational performance in the long run (M. Wang, Tan and Li, 2015). Consequently, effective asset risk management practices are essential for safeguarding organizational resources, minimizing potential losses, and enhancing overall performance. Consequently, the study sought to test H₀₂; Asset risk management practice does not significantly relate with the operational performance of manufacturing firms in Kenya.

Asset Lifecycle Delivery Practice and Operational Performance

Physical assets are part and parcel of the society given their key functions (Ruitenburg, Braaksma and van Dongen, 2017). Hence, an organization will continue enjoying the returns from assets as long as they are well maintained (Pais, Farinha, Cardoso and Raposo, 2020). Most asset related decisions in an organization takes into account the asset hierarchical control and lifecycle (Roda and Macchi, 2016). Given the latter decision, the main aim of asset management as a structured program of the organization is to reduce the lifecycle costs associated with assets (Harlow, 2001). Generally, asset lifecycle management thus is one of the strategic and multidisciplinary practice asset management that looks into the complete lifetime of an asset (Ruitenburg et al., 2017). According to Wilke (2022), physical asset lifecycle management (PALM) in an organization seeks to not only extend the useful life of assets but also reduce the ownership costs and maximize their returns.  Other than the PALM concept, organizations need to understand the main codependent processes of the asset lifecycle. These according to Ouertani et al. (2008) include the beginning life that mainly entails designing and creation of the assets, the middle life that is mainly the asset usage stage and lastly the end of life where asset is retired for all its operations. Contrary to Ouertani et al. (2008),  Hastings (2010), enumerate the asset lifecycle to comprise of business need or opportunity identification, preacquisition analysis, acquisition and commissioning, logistic  support provision, operation and maintenance and finally disposal or end of life stage.

As pointed out by Harlow (2001), asset management follows the classical management lifecycle that entails planning, directing, measurement and controlling steps.  Moreover, a typical asset lifecycle  encompasses stages as the planning, acquisition, operation, maintenance, and disposal of tangible assets throughout their lifespan (Jasiulewicz-Kaczmarek, Antosz, Zhang and Ivanov, 2023). According to these authors, the industry 4.0 technologies as the cyber physical systems (CPS), internet of things (IOT) and digital twin (DT) offer the communication, information and intelligence technologies that support all these stages of asset lifecycle. In the same breadth, Mattioli, Perico and Robic (2020) brings to light the asset management lifecycle phases while describing the artificial intelligence based asset management. These phases thus include the acquisition that mainly deals with asset technical and financial analysis and acquisition monitoring. The subsequent phases include the deployment (installation, initialization, testing and commissioning of new assets), utilization and monitoring (support of asset’s health, longevity and capability), retirement or disposal (managing of assets no longer useful). All in all, the asset lifecycle plan (ALCP) according to Ruitenburg et al. (2017) outlines all the interventions relating to the asset lifecycle management  so as to drive the assets value in the organization. In a nutshell, effective asset lifecycle delivery enables organizations to optimize resource allocation, minimize downtime, and maximize asset value throughout their lifespan. In the long run, effective management of the asset lifecycle is crucial for optimizing asset performance, minimizing costs, and maximizing value creation. In this regard therefore, the study sought to test H₀₃; Asset lifecycle delivery practice does not significantly relate with the operational performance of manufacturing firms in Kenya.

Asset Information Management Practice and Operational Performance

Generally, an effective asset information management involves the collection, storage, analysis, and dissemination of asset-related data throughout the asset lifecycle. Asset information management therefore is vital as far as the optimization of organizational performance is concerned. Given the asset information management, an organization is able to generate accurate, timely, and relevant information about assets is available to support decision making processes. Given the fact that data quality is essential in asset management, Woodall, Gao, Parlikad and Koronios (2015) presents the seven critical information quality dimensions for an organization to consider. These dimensions comprise of consistency, timeliness, interpretability, accuracy, relevance, accessibility and believability. Moreover, the recent technological advanced in asset management systems has enabled organizations to collect and conduct real time analysis of massive asset related data, provide treasured perceptions into asset performance, maintenance needs, and lifecycle costs (M. Wang et al., 2015). Through the asset information management core system (AIMCS), integration of core data relating to assets, controlling of asset information publishing process, asset data governance and asset information dissemination to stakeholders is possible (Marcovaldi, 2018).

Asset information management strategy according to Ouertani et al. (2008) comprises mainly of the identification of key information required and its effective management. Within this context, the authors further give note that asset information management classes include the bottom up and top-down perspectives. Therefore, asset information under the bottom-up perspective encompasses of the asset location and condition monitoring based on asset characteristics. Alternatively, top-down perspective, asset information permits the identification of asset information requirements based on the key performance indicators by the asset managers. According to Evans and Price (2020), organizations have asset management information system is a holistic model comprising of processes and procedures. This therefore facilitates real time provision of business insights, minimization of costs and risks associated with misuse of organization data, information besides content. Other than collecting information relating to all inventory assets, asset management information system is capable of providing the asset depreciation computations (Setiawan, Kurniadi, Aulawi and Kurniawati, 2019). Per se, asset information system boosts performance in an organization by improving the compliance, revenue streams, competitiveness while curtailing both the costs and risks (Roe, 2019). The study thus sought to test H₀₄; Asset information management practice does not significantly relate with the operational performance of manufacturing firms in Kenya.

Asset Review and Monitoring Practice and Operational Performance

In an organization, asset review and monitoring are essential components of effective asset management practices. This is because they jointly allow an organization to track the performance, condition, and utilization of their tangible assets. In line with  Ouertani et al. (2008), asset monitoring is paramount as it aid in monitoring of asset’s condition and improving of asset reliability by predicting effectively the asset failures. Additionally, asset monitoring not only guide in planning and scheduling of asset repairs, replacements and redeployments but also contributes largely in maximization of asset’s through put and performance in general. Anke and Främling (2005) too echoes that asset monitoring is powerful as it permits predictive maintenance and reliability of manufacturing or production processes in an organization. With the help of technology, integrated asset monitoring and maintenance systems can be produced in an organization to replace traditional systems used (Clarke, 2011). In this case, asset monitoring system optimizes maintenance plans, predict unavoidable downtime and improve asset availability. More importantly as (Clarke, 2011) put across, a more sophisticated asset monitoring system includes alerting systems that informs about when components fails or need replacements, persistent storage system that prompts review of asset’s past and current behavior. Furthermore, the sophisticated asset monitoring system comprises the automated reactive scheduling for real time creation of maintenance plans, fault modelling, asset management and procurement systems. Therefore, through regular reviewing and monitoring assets, organizations can identify inefficiencies, mitigate risks, and optimize resource allocation to improve overall performance. The study sought to test H₀₅; Asset review and monitoring practice does not significantly relate with the operational performance of manufacturing firms in Kenya.

Mediating Effect of Ethical Leadership

Leadership generally is one of the concepts that contributes immensely to realization of asset value (Chattopadhyay, 2021) and success in the organization (Bloom and Abel, 2015; Chattopadhyay, 2021; Yusuf, 2024). In this case, both the management’s leadership qualities and skills matter given organization’s prosperity (Kharkheli and Gavardashvili, 2023). Ethical leadership thus involves adhering to high moral standards, making principled decisions, and creating a culture of integrity within an organization (M. E. Brown, Treviño and Harrison, 2005). As pointed out by Nguyen, Nguyen and Hoai (2021), ethical leadership is one that is based on values and norms. While Gavrikova et al. (2020) asserts that leadership is anchored on the ethical standards,   Northouse (2021) on the contrary ascertains that ethical leadership is based on key principles as honesty, respect for others, service to others, demonstration of justice and ability to build community. As for Langlois, Lapointe, Valois and de Leeuw (2014), ethical leadership is grounded on morals and beliefs alongside three interdependent ethics as justice, care and critique. Hence, any ethical leader is viewed by Treviño, Brown and Hartman (2003) and   M. E. Brown et al. (2005) as both  a moral person and a moral manager.

According to transformational leadership theory by Bass and Riggio (2006), transformational leaders inspire and motivate their followers through high moral and ethical standards. In this regard, these categories of leaders foster an environment where ethical behavior is encouraged, leading to improved employee morale and productivity, which can positively influence financial performance. From the existing literature, ethical leadership has been linked positively with performance employee morale as well as job satisfaction (Bedi, Alpaslan and Green, 2016),customer loyalty and brand equity (M.-S. Kim and Thapa, 2018) and mitigation of legal and regulatory compliance risks (J. Kim, Kang and Lee, 2023). In most cases as pointed out by Bormann and Rowold (2016), investment in ethical initiatives lead significantly to long-term gains despite upfront costs. In a similar view by Groves and LaRocca (2011), long term gains of ethical leadership are substantial even though short term financial impacts may not be evident. In a study conducted in the Pakistan’s banking sector,  ethical leadership significantly improves organization performance (Maak and Pless, 2006). Consistent to this findings,  ethical leadership was found to positively influence organization performance (Alkhadra et al., 2022; D. Wang, Feng and Lawton, 2017).

 In asset management, leadership is essential constituent especially in integrated planning (Kellick, 2014). Adoko Obicci (2019) in a study conducted in local governments the mid North subregion of Uganda found out that authentic rather than toxic leadership positively relates with the physical asset management practices. The study thus identified the levels of authentic leadership to include relational, self-awareness, transparency, balanced processing and internalized moral perspective. Firms with ethical leaders are in a better at identifying and mitigating risks which can protect and enhance asset value (Cheng, Ioannou and Serafeim, 2014). Since asset management firms operate in a highly regulated environment, ethical leadership ensures adherence to regulations and reduction of risks associated legal penalties (Christensen, Hail and Leuz, 2021). In asset management firms with high ethical standards and transparency, clients are  likely to invest and remain loyal (Krüger, 2015). Similarly, those firms that prioritize corporate social responsibility could attract socially conscious investors thereby improving asset management (Liang and Renneboog, 2017). Having looked at studies linking ethical leadership, asset management and performance, the study sought to fill the existing gap by testing H₀₆; Ethical leadership does not significantly mediate the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya.

CONCEPTUAL FRAMEWORK

Figure 1 illustrates the conceptualization of the study variables. First and foremost, physical asset management practices as the independent variable comprised of the five levels namely asset management strategy and planning, asset risk management, asset lifecycle delivery, asset information management, asset review and monitoring practices. All these practices are linked to operational performance (dependent variable) via ethical leadership (mediating variable). In this case, ethical leadership indicators include ability to listen to employees, disciplines employees fairly, ethical, fair decision making, trustworthy, caring, discuss business ethics and values, role model, success based on results and involvement in decision making. On the other hand, operational performance aspects involved those relating to unit cost of manufacturing, cost of poor quality, percentage of internal scrap and rework, on – time delivery performance, lead time and change of product mix flexibility.

Figure 1; Conceptual Framework of the Study

Source: Researchers (2023)

RESEARCH METHODOLOGY

In order to examine the relationship between physical asset management practices, ethical leadership and operational performance, the study adopted descriptive survey research design. Moreover, post positivist research paradigm as it allows different views, tools and methods to investigate and reinvestigate the same phenomenon under different context (Maksimovic and Evtimov, 2023). As per the Kenya Association of Manufacturers (KAM), manufacturing firms reside across the Nairobi, lower Eastern, North Rift, South Rift, Nyanza, Western, Coast and Central regions. Thus, the study targeted 896 of these manufacturing firms whereby the key respondents were from the nine (9) head of departments. These main departments targeted include marketing/sales, production/manufacturing, human resource/personnel, information and communication technology (ICT), finance/accounts, security, maintenance, stores and procurement. Based on this, the target population was 8064 out of which 367 were sampled based on the Krejcie and Morgan (1970) sample size determination table.  Structured questionnaires were used to collect data that was later subjected to descriptive, correlation and regression analysis. Table 1 summarizes the variable measures for each study variable whereby five-point Likert scale items were used as adopted from previous studies.

Table 1: Measurement of Study Variables

Source: Researcher’s Conceptualization from Previous Studies

Data Analysis Description

First and foremost, Pearson correlation analysis was conducted followed by descriptive analysis based on each variable questionnaire items. This was then followed by regression analysis to test the direct relationship between physical asset management practices and operational performance of manufacturing firms as indicated by hypotheses H₀₁, H₀₂, H₀₃, H₀₄ and H₀₅ as illustrated in model beneath;

$$
\begin{aligned}
OP &= \beta_{0} + \beta_{1}AMSPP + \beta_{2}ARMP + \beta_{3}ALDP + \beta_{4}AIMP + \beta_{5}AREMP + e \\
\\
OP &:\ \text{Operational Performance} \\
AMSPP &:\ \text{Asset Management Strategy and Planning Practice} \\
ARMP &:\ \text{Asset Risk Management Practice} \\
ALDP &:\ \text{Asset Lifecycle Delivery Practice} \\
AIMP &:\ \text{Asset Information Management Practice} \\
AREMP &:\ \text{Asset Review and Monitoring Practice} \\
\beta_{0} &:\ \text{Intercept} \\
\beta_{1} \text{ to } \beta_{5} &:\ \text{Beta Coefficients for asset management practices} \\
e &:\ \text{Random Error Term}
\end{aligned}
$$

Lastly, mediation effect (hypothesis H₀₆) of ethical leadership in the relationship between physical asset management practices and operational performance among manufacturing firms. In this case, mediation analysis was in line with the conditions (path a₁, b₁ and c’) within each procedures outlined by MacKinnon, Coxe and Baraldi (2012). Consequently, paths highlighted in Figure 2 were tested following these conditions.

Figure 2: Mediation Analysis Conceptualization

Source:  MacKinnon et al. (2012)

Note: X (Physical Asset Management Practices – Independent Variable); M (Ethical Leadership – Mediating Variable); Y (Operational Performance – Dependent Variable); Paths a₁, b₁, c and c’ represents the Regression Coefficients

Following the mediation analysis procedures by MacKinnon et al. (2012), the study first tested the relationship between physical asset management practices (X) and ethical leadership (M) under path a₁. This was followed by the second test ethical leadership and operational performance nexus given path b_1. Under the third procedure, the significance of the relationship between physical asset management practices and operational performance given ethical leadership as the mediating variable (path c’). Lastly, the study tested the mediation effect (product given regression coefficient a₁ and b₁).

STUDY FINDINGS AND DISCUSSIONS

Response Rate and Research Instrument Reliability Test

In the study, 367 questionnaires were issued to the respondents given the manufacturing firms sampled out of which 321 (87.47%) were returned and used for analysis. Moving on, Table 2 indicates that the Cronbach Alphas for all the questionnaire items were above recommended coefficient of 0.70.

Table 2: Cronbach Alpha Coefficient for the Questionnaire Items

Source: Field Data (2023)

Pearson Correlation Analysis

In Table 3, there is positive correlation between physical asset management practices (r = .611, probability value (p)<.05) as well as ethical leadership (r =.623, p<.01) given the operational performance of manufacturing firms in Kenya. Moreover, it is observed that physical asset management practices positively correlate with ethical leadership as shown by (r = .649, p< .05).

Table 3: Study Variables Correlation Analysis

NOTE: OP (Operational Performance); PAMP (Physical Asset Management Practices); EL (Ethical Leadership); * (Significance at the 0.05 level); ** (Significance at the 0.01 level)

Source: Field Data (2023)

Descriptive Statistics for the Physical Asset Management Practices

First and foremost, as indicated in the Appendix I, majority of respondents under the asset management strategy and planning practice were in agreement that their firms undertake analyses of asset management policy to determine future production capacity (Mean (M) = 15.06, Standard Deviation, SD = 3.35). This was closely followed by respondents (M = 14.57, SD = 2.96) who concurred that the firm apply asset management policy. Secondly, significant number of respondents (M = 14.26, SD = 2.32) under the asset risk management practice were in agreement that their firms analyze equipment failure causes and effects to address risk. Thirdly under the asset lifecycle delivery practice, majority of respondents as indicated given the M = 14.10 and SD = 2.08 that their firms assure execution of maintenance processes within all assets’ life cycle phases. Close to this was the agreement by respondents (M = 13.65, SD = 2.22) that there is continuous modernization of assets in accordance with the firm’s renewing or revision plans. Fourthly, the study sought the level of agreement given the statements relating to asset information management practice. From the finding therefore, majority of the respondents were of the opinion that their firms undertake benchmarking to support asset management activities (M = 14.23, SD = 1.88) followed by those who opined that their firms search for external sources such as partners, customers, research institutions in order to obtain the newest knowledge and expertise (M = 13.47, SD = 2.64). Lastly given the asset review and monitoring practice, majority of the respondents (M = 14.26, SD = 3.98) agreed that their firms regularly review overall effectiveness of asset management activities. Close to this, another significant number of respondents as indicated by M = 13.36 and SD = 3.31 confirmed that their firms monitor organization’s asset management performance.

Descriptive Statistics for Ethical Leadership

Appendix II presents the findings relating to the descriptive analysis of ethical leadership variable. From these findings, majority of the respondents (M = 15.18, SD = 1.43) were in agreement that ethical leadership was evident in their firms as the leaders’ disciplines employees who violate ethical standards. This was closely followed by those respondents who agreed to the fact that their leaders discuss business ethics or values with employees as well as setting an example of how to do things the right way in terms of ethics as shown by (M = 15.12, SD = 1.92) and (M = 15.06, SD = 3.14) respectively.

Descriptive Statistics for the Operational Performance

The study analyzed data in Appendix III relating to operational performance descriptively and found out that majority of the respondents (M = 15.27, SD = 3.91) agreed that the Percentage of internal scrap and rework has decreased during the last 3 years. This was closely followed by the respondents who concurred that cost of poor quality has decreased during the last 3 years (M = 14.42, SD = 3.62) besides those who agreed that the average lead time (from order to delivery) has improved during the last 3 years (M = 14.6, SD = 2.39). On the contrary, the least number of respondents given the M = 12.98 and SD = 3.24 agreed the flexibility to change product mix in their firms has improved during the last 3 years.

Hypotheses Testing Results Given the Linkage between Physical Asset Management Practices and Operational Performance of Manufacturing Firms in Kenya

Prior to testing the mediation effect of ethical leadership, the study sought to establish the direct relationship between the physical asset management practices and operational performance of manufacturing firms in Kenya. In this regard therefore, Table 4 presents the model summary given the test of hypotheses relating to the physical asset management practices as asset management strategy and planning, asset risk management, asset lifecycle delivery, asset information management, asset review and monitoring.

Table 4: Model Summary

Source: Field Data (2023)

From Table 4, it is evident that the co-efficient of adjusted regression square (R²) of .453 denotes that physical asset management practices (independent variable) explains 45.3% variation in the operational performance (dependent variable) of manufacturing firms in Kenya.

Table 5: Analysis of Variance (ANOVA)  

Source: Field Data (2023)

In Table 5, the independent variables were found to statistically and significantly predict the dependent variable as supported by F (4, 316) = 262.140, probability value, p.001 < 0.05. As a result, the regression model was statistically significant given the physical asset management practices and operational performance of manufacturing firms in Kenya. Furthermore, the study utilizing Table 6 findings tested the hypotheses H₀₁, H₀₂, H₀₃, H₀₄ and H₀₅ specifically given the physical asset management practices in view of the operational performance. The first hypothesis tested was H₀₁: Asset management strategy and planning practice does not significantly relate with the operational performance of manufacturing firms in Kenya. From the findings in Table 6, there was a positive and significant relationship between asset management strategy and planning practice and operational performance as indicated by β = .213 and p = .000 <.05 respectively. In this regard, as asset management strategy and planning practice is increases, operational performance tend to increase by 0.213 units. H₀₁ was rejected and concluded that asset management strategy and planning practice significantly relates with the operational performance of manufacturing firms in Kenya hence concurs with Karar (2023).

Table 6: Physical Asset Management Practices and Operational Performance Regression Coefficients

Source: Field Data (2023)

Secondly, the study tested was H₀₂: Asset risk management practice does not significantly relate with the operational performance of manufacturing firms in Kenya. The findings documented after analysis indicate that asset risk management practice positively (β = .297) and significantly (p = .007 <.05) relate with operational performance. As such, one unit increase in asset risk management practice leads to increase in operational performance by 0.297 units. Moving on, the study rejected H₀₂ and concluded that asset risk management practice significantly relates with the operational performance of manufacturing firms in Kenya. This finding thus supported those by M. Wang et al. (2015) as well as Maletič et al. (2020a). Thirdly, the study proceeded and tested H₀₃: Asset lifecycle delivery practice does not significantly relate with the operational performance of manufacturing firms in Kenya. As indicated in Table 6, there was as positive and significant relationship between asset lifecycle delivery and operational performance (β = .245, p = .002 <.05). This will be interpreted that operational performance rises by 0.245 units following one unit increase in operational performance. Moreover, H₀₃ was rejected and thus arriving at the conclusion that there is a significant relationship between asset lifecycle delivery practice and operational performance of manufacturing firms in Kenya which is at per with findings Ruitenburg et al. (2017).

The study tested fourth hypothesis H₀₄: Asset information management practice does not significantly relate with the operational performance of manufacturing firms in Kenya. The findings on the contrary indicated a positive (β = .196) as well as significant (p = .000 <.05) relationship between asset information management practice and operational performance. Accordingly, the results implies that one unit increase in asset information management practice results to increase in operational performance by 0.196 units. In line with the finding, H₀₄ was rejected and concluded that asset information management practice does relate significantly with the operational performance of manufacturing firms in Kenya. More importantly, the finding supported that by Roe (2019). Lastly, H₀₅: Asset review and monitoring practice does not significantly relate with the operational performance of manufacturing firms in Kenya. Given the operational performance, there was both a positive and significant relationship with asset review and monitoring practice (β = .309; p = .001 <.05). This implies that as asset review and monitoring practice is increased, operational performance tend to increase by 0.309 units. In the end, the study rejected H₀₅ thereby concluding  in support of Anke and Främling (2005) together with Clarke (2011) that asset review and monitoring practice significantly relates with the operational performance of manufacturing firms but in the Kenyan context.

Mediating Effect of Ethical Leadership in the Physical Asset Management Practices -Operational Performance Linkage Among Manufacturing Firms in Kenya

In order to conduct mediation analysis, the steps put forth by   MacKinnon et al. (2012) were followed. In this regard, the study in the first condition tested the relationship that existed between physical asset management practices (independent variable) and ethical leadership (mediating variable). In Table 7, this nexus is indicated under Model 1 whereby the Beta coefficient (β) and probability value (p) for path a₁ is β = .261 and p = .008 <.01 respectively. This therefore indicates that in support of Cheng et al. (2014) along with Adoko Obicci (2022), there exists a positive and significant relationship between physical asset management and ethical leadership among manufacturing firms in Kenya. Moreover, the R² findings indicates that physical asset management practices accounts for 30.9% variations in ethical leadership. The study proceeded to test the second mediation analysis condition, that is Model 2 (path b₁ and c’). To begin with, there was a positive and significant nexus between ethical leadership (mediating variable) and operational performance (dependent variable) of manufacturing firms in Kenya as indicated by β = .463 and p = .000 <.05. In this case, ethical leadership explains 36.1% variations in operational performance. This finding therefore adds in on those finding by Maak and Pless (2006), Bedi et al. (2016), D. Wang et al. (2017) and Alkhadra et al. (2022). Indeed, both Groves and LaRocca (2011) and Bormann and Rowold (2016) opines that long term as opposed to short term gains derived from ethical leadership in an organization are substantial.

Table 7: Mediation Analysis Results

1. Level of Significance: *p< 0.05 and **p< 0.01
2. PAMP (Physical Asset Management Practices – Independent Variable); OP (Operational Performance – Dependent Variable); EL (Ethical Leadership- Mediating Variable); p (Probability Value); CI (Confidence Interval)

Source: Field Data (2023)

Given the third mediation analysis condition (path c’), there existed a positive (β = .302) and significant (p = .024<.05) relationship between physical asset management practices (independent variable) and operational performance (dependent variable). The total effect given Model 3, that is, testing the linkage between physical asset management practices and operational performance in presence of ethical leadership is however better as the results in Table 7 outlines a 16.69% increase in β from .302 (p = .024<05) to .423 (p = .001<.01). This further implies that physical asset management practices accounts for 47.6% variations in operational performance. All things considered, in the absence of ethical leadership, direct link between physical asset management  and performance of firms have been documented in Denmark (Nielsen, 2015), Nigeria (Oluwaremi and Memba, 2016), among selected European Countries (Maletič et al., 2020a) and Indonesia (Banjarnahor and Bukit, 2023; Purba and Bimantara, 2020). Given that all the conditions were met, the study thus tested H₀₆; Ethical leadership does not significantly mediate the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya. From the findings, the mediation effect was positive (β = .121) and significant given the lack of zero in the lower and upper bound confidence intervals (.254, .608). As a result, H₀₆ was rejected and concluded that ethical leadership significantly mediates the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya. Since the path c’ (.302) and mediation effect (.121) were all positive, the mediation was therefore complimentary in line with Zhao, Lynch Jr and Chen (2010) descriptions.  In a nutshell, Figure 3 therefore summarizes the findings given path a₁, b₁ and c’.

Figure 3: Mediation Analysis Path Findings

1. Level of Significance: *p< 0.05 and **p< 0.01
2. PAMP (Physical Asset Management Practices – Independent Variable); EL (Ethical Leadership- Mediating Variable); OP (Operational Performance – Dependent Variable)

Source:  Field Data (2023)

CONCLUSION

Physical asset management in most organizations is a vital constituent that aids in optimizing both the performance and lifespan of assets. Therefore, an effective physical asset management covers all activities relating to the planning, acquisition, operation, maintenance, and disposal of physical assets with the sole aim enhancing the overall performance of the organization. Given the continuous evolvement of asset management, importance of ethical leadership continues to grow as it helps the firm navigate the complexities of the modern financial landscape and enhance its performance in the long run. This is because ethical leaders prioritize transparency, accountability, and integrity, which are essential for building trust with clients and stakeholders. As such, this study sought to examine the mediating effect of ethical leadership in the nexus between physical asset management practices and operational performance of manufacturing firms in Kenya. First and foremost, the study established positive relationship between physical asset management practices and operational performance. These five practices analyzed comprised of the asset management strategy and planning, asset risk management, asset information management and asset review and monitoring. Furthermore, there was a complementary mediation effect of ethical leadership in the relationship between physical asset management practices and operational performance of manufacturing firms in Kenya.

STUDY IMPLICATIONS

Theoretical Implications

From the stakeholder theory standpoint, organizations should equally serve the interests of both the shareholders and stakeholders. On the other hand, stewardship theory proponents emphasize on the fact that managers in any organization are considered as stewards of the organization’s assets hence expected to act in the best interests of the shareholders or owners. This study accordingly linked physical asset management practices to operational performance through ethical leadership thereby contributing to both the stakeholder and stewardship theories. As stewards, ethical leaders play a crucial role in physical asset management practices as they direct their attention towards the sustainable growth and value creation. Intrinsically, these leaders promote fair treatment and ethical decision-making that in long run can enhance the reputation and continuous operational performance.

Practical Implications

In Kenya, operational performance of manufacturing firms is enhanced through diverse physical asset management practices as the asset management strategy and planning, asset risk management, asset information management and asset review and monitoring. First based on the findings therefore, the management could enhance the asset management strategy and planning practice by aligning its asset management practices with business objectives, fostering a culture of continuous improvement in order to crack new opportunities for asset efficiency gains, innovation, and growth. Secondly given the importance of asset risk management practice as far as operational performance is concerned, the managers could enhance this further by crafting a detailed asset risk management framework that integrates risk assessment, mitigation strategies, and monitoring mechanisms as well as fostering a culture of risk awareness and accountability by providing training and education to employees at all levels of the organization.

Third, the management is expected to foster collaboration and communication across departments to ensure alignment of asset lifecycle delivery activities with organizational goals and objectives. The fourth implication is that management of the manufacturing firms could provide training and development opportunities to equip employees with the necessary skills and competencies for effective asset information management. Lastly, the study recommends the development of a comprehensive asset review and monitoring strategy that encompasses regular assessments, performance metrics, and technology-enabled monitoring solutions. In the findings, physical asset management practices through ethical leadership significantly improves the operational performance of manufacturing firms in Kenya. However, realizing these benefits, there is need for holistic approach that encompasses strategic alignment of all the physical asset management practices in the firm. More importantly for continuous improvement of operational performance, leaders must actively work to embed ethical values into the organizational culture through policies, training, and consistent behavior.

Recommendations for Future Research

In this research, there are a number of suggestions for future scholars and researchers. To begin with, the future studies could expound the scope by assessing the variable linkage in other sectors in the economy other than manufacturing sector. Geographically, the scope could be enlarged through a comparative study given the countries under East Africa Community (EAC). Unlike this study, mediation analysis can be done given each of the physical asset management practices namely the asset management strategy and planning, asset risk management, asset information management and asset review and monitoring. Since the study dwelled on physical assets, future research could opt for practices relating to intangible assets. Moreover, there is need to take into consideration the contingency factors that impact on effectiveness of physical asset management practices such as leadership commitment, environmental uncertainty and competitiveness. As for measurement of variables this study analyzed operational performance for the last three years given the manufacturing unit cost, average lead time, cost of poor quality, on time delivery, flexibility to change product mix, percentage of internal scrap and rework. Thus, future research could consider different financial rather than operational performance indicators. Besides the ten ethical leadership measures adopted from M. E. Brown et al. (2005), other studies may consider measures by Langlois et al. (2014) relating to justice, critique and care. On the other hand, those measures under the ethical leadership at work (ELW) questionnaire by Kalshoven, Den Hartog and De Hoogh (2011) may be handy. In particular, the 46 items under the EWL questionnaire are based on the seven ethical leaders’ behaviors as integrity, fairness, people orientation, ethical guidance, role clarification, power sharing and concern for sustainability.

CONFLICT OF INTEREST

There was no conflict of interest reported by the authors.

FUNDING

There was no financial support inform of grants or any other received.

Appendix I: Descriptive Statistics for Physical Asset Management Practices (PAMP)

Source: Field Data (2023)

Appendix II: Descriptive Statistics for Ethical Leadership (EL)

Source: Field Data (2023)

Appendix III: Descriptive Statistics for Operational Performance (OP)

Source: Field Data (2023)

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