How Do Economic, Social and Institutional Factors Shape Firm-Level Energy Efficiency in Kenya’s Manufacturing Sector?
DOI:
https://doi.org/10.65336/WJEBM.2026.3803Keywords:
Efficiency, Manufacturing, Stochastic Frontier Analysis.Abstract
Despite the pivotal role of manufacturing sector in industrialization and sustainable development, it continues face a high energy intensity of energy. Rising energy expenditures continues to undermine competitiveness, and long-term sustainability. The paper evaluated key drivers of firm-level energy efficiency in Kenya’s manufacturing firms. Data ware obtained from World Bank Enterprise Survey (WBES) collected by IPSOS Kenya Limited and published by World Bank in 2025.The WBES is a nationally representative and publicly available firm-level survey of formal private sector enterprises. Following the inclusion and exclusion criteria, 377 firms were found to meet eligible for final analysis while the firms that didn’t meet the eligibility were dropped from the analysis. The empirical findings show that there is heterogeneity in energy efficiency among manufacturing firms. According to the stochastic frontier estimates, energy efficiency indicate that capital intensity, electricity expenditure, labour costs, research and development (R&D) expenditure, export orientation, firm age, and access to production subsidies exert statistically significant positive effects on energy efficiency. Conversely, firm size exhibits a statistically significant negative relationship with energy efficiency, suggesting the presence of scale-related inefficiencies. Firm ownership and the gender of the top manager were not found to significantly influence energy efficiency.
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