EFFECTS OF COVID-19-INDUCED SUPPLY CHAIN DISRUPTIONS ON THE PROFITABILITY OF SMALL AND MEDIUM-SIZED ENTERPRISES IN NAIROBI CITY COUNTY

Abstract

Small and medium-sized enterprises (SMEs) in Nairobi City County faced unprecedented operational challenges during the COVID-19 pandemic, with supply chain disruptions emerging as primary threats to business continuity and profitability. Despite contributing over 80% of employment and 40% of GDP in Kenya, SMEs demonstrated limited resilience to external shocks, particularly those affecting supply chain operations. This study investigated the effects of COVID-19-induced supply chain disruptions on SME profitability in Nairobi City County. The research was anchored on Resource-Based View Theory and Supply Chain Resilience Theory, which explain how organizational resources and supply chain capabilities influence competitive advantage and performance outcomes during crisis periods. A cross-sectional quantitative research design was adopted, targeting 3,000 SMEs across manufacturing, hospitality, retail, health and wellness, and service sectors. Using Yamane's formula, a sample of 97 SMEs was selected through stratified random sampling, achieving an 81.4% response rate. Primary data were collected using semi-structured questionnaires and analyzed through SPSS version 26, employing descriptive statistics and multiple regression analysis. The regression results revealed a strong positive relationship between supply chain disruptions and profitability impacts (R = 0.774), with disruptions explaining 59.9% of variance in profitability changes (R² = 0.599). The regression coefficient (β = 0.842, p < 0.001) indicated significant profitability impacts per unit increase in disruption intensity. ANOVA results confirmed statistical significance (F = 115.823, p < 0.001). The study concluded that COVID-19-induced supply chain disruptions significantly affected SME profitability through increased procurement costs, production delays, and lost sales opportunities. The research recommends supply chain diversification, financial resilience building, digital integration, collaborative networks, and comprehensive policy support frameworks to enhance SME resilience against future disruptions.

Citation: Ngetich, G. K., & Ndede, F. (2025). Effects of Covid-19-Induced Supply Chain Disruptions on the Profitability of Small and Medium-Sized Enterprises in Nairobi City County. Academic Journal of Humanities and Social Sciences Research, 2(1). https://doi.org/10.5281/zenodo.17116619