Cost Management Practices and Financial Performance of Agro-Processing Firms in Acholi Sub-Region

Abstract

Purpose: Value addition in terms of agro-processing has played a big role in the economic development in emerging markets. This is visible in terms of rural transformation, industrialization, job creation all this significantly making a contribution to achievement of Sustainable Development Goals. Even when the contribution of agro-processing firms is eminent, they have remained financially stressed. Consequent to this reality, this study picked interest in examining the relationship between cost management practices and financial performance of agro-processing firms in the Acholi sub-region. The study specifically investigated the direct relationships among the variables. Methodology: The study was grounded on pragmatic paradigm which allows for triangulation of methods thus mixed-methods approach was used. A cross-sectional design helped in collecting data at one point in time from 242 respondents using questionnaires and interview guides. Both random and non-random techniques were used in selection of agro-processing firms and respondents. Descriptive and inferential techniques were used in data analysis. Findings: The findings revealed that cost management practices significantly and positively influence financial performance of agro-processing firms in the Acholi sub-region (β = 0.642, t = 12.972, p < 0.001) indicating that improvements in cost management practices are associated with enhanced financial performance. Unique Contribution to theory, Practice and Policy: In line with this finding, the study recommends that agro-processing firms should strengthen cost management systems to enhance their financial performance. In line with the theories underpinning this study management of agro-processing firms should constantly aim at enhancing not only their internal capabilities, or even ensuring a fit between internal structures and external environmental conditions, but also aim at economizing on the transaction costs incurred without neglecting the benefits inherent in continuous sensing, seizing, and transforming their resource base to remain viable. The study cautions on the managerial sensitivity on how environmental conditions shape the cost structures and efficiency dynamics of agro-processing firms