Effect of Conflict Management Strategies on the Relationship between Corporate Governance and Organizational Performance in State Corporations in Kenya

Jenifer W Muriuki

doi:10.11648/j.sjbm.20170504.14

Abstract

This study seeks to explore the influence of corporate governance on organizational performance of state corporations moderated by Board Conflict management Strategies in Kenya. A survey design was used to arrive at the expected outcomes in this study. Data was collected from 375 respondents with a response rate of 82.4%. Descriptive and inferential statistics were computed using statistical package of social sciences. Linear regression model was used to determine the relationship between corporate governance and organizational performance. The study revealed that board conflict management strategies are key factor in resolving conflict within the board and in the State Corporation. Once a conflict is resolved, the study found that organization performance changes by 7%. The researcher recommends application of Arbitration, Negotiation and Mediation strategies in resolving a conflict in the state corporation for the effective and efficient service delivery.

Highlights

The Kenya Government in 2002 issued its corporate governance principles assigning new roles and imposing a structure of the board of directors, with a view to improving performance of the state corporations
Some corporate governance scholars (Carter and Lorsch, 2004; Leblanc and Gillies (2005) argue that at the heart of good corporate governance is not board structure, but instead board process especially consideration of how board members work together as a group and the competencies and behaviors both at the board level and the level of individual directors (Deetz 2006)
To assess the moderating effect, hypothesis given below was formulated; Ho: The relationship between corporate governance (Board Leadership) and organization performance of the state corporations is statistically significant moderated by Board Conflict Management Strategies in Kenya

Summary

Introduction

The Kenya Government in 2002 issued its corporate governance principles assigning new roles and imposing a structure of the board of directors, with a view to improving performance of the state corporations. According to Shleifer and Vishney (1994), state owned firms are governed by bureaucrats or politicians that have extremely concentrated control rights without significant cash flow rights since all the profits generated by the firms are channeled to the government Treasury to finance National budget. This is aggregated by political goals of bureaucrats that often deviate from prudent business principles (Repei 2000). The competences and behaviors of the board chairperson are critical in order to unleash a board’s value –creating potential

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Conclusion