Corporate Governance and Organizational Performance of Referral Hospitals in Kenya: A Case of Kenyatta National Hospital

Abstract

In both developed and developing economic context, an important concern in recent years has been corporate governance due to empirical evidence that organizational performance is significantly affected by corporate governance. Tthis study seeks to determine the effects of corporate governance on the performance of referral hospitals in Kenya with a case of Kenyatta National Hospital. The study objectives included how board composition, stakeholder engagement, transparency and structural considerations affect the performance of Kenyatta National Hospital. The study benefits various groups including the government especially the Ministry of Health, top management of referral hospitals and their stakeholders among others. Theoretically, the study was grounded on agency theory, upper echelon theory and stakeholder theory. A descriptive survey design was adopted; both qualitative and quantitative data was gathered. The target population was 248 staff of Kenyatta National Hospital of which a sample was obtained by the use stratified random sampling method. A combination of both the questionnaire method and secondary data collection sheet were utilized to gather both primary and secondary data respectively, which were subjected to both descriptive and inferential techniques of data analysis. The findings established a positive significant correlation between Board composition, Stakeholder engagement, transparency and Structural considerations has a favorable and significant association with the effectiveness of the Balanced Scorecard for organizations. The Pearson correlation value was more than 0.5, which is an unmistakable sign of a strong association between the variables. Strong Pearson coefficients were obtained from the analysis, and it is clear that each predictor variable has an impact on organizational performance. The model between dependent variable had an R squared of 0.697 meaning that is 69.7% of influence on performance of organizations could be attributed to the independent variables. The regression results produced a value for the multiple regression model that showed that all values had a positive factor. Findings revealed that there was an association between employee performance and Board composition, Stakeholder engagement, transparency and Structural considerations. Leaders should be able to balance between organizational needs and stakeholders’ expectations to achieve a good corporate governance practice of public hospitals. Structures can be influenced by mandate of the organization and the board compositions by the technicality of the role being played by an organization. Policy recommendations include: establishing an independent board of directors to oversee the management of an organization, enhancing shareholder participation in decision-making through mechanisms such as proxy voting; and encouraging ethical behavior and a culture of compliance throughout the organization.