Influence of Corporate Governance on Organizational Performance of State Corporations in Kenya

Jenifer W Muriuki

doi:10.11648/j.sjbm.20170504.12

Abstract

Decision making failures in Kenyan Parastatal Boardrooms has more to do with independence of mind and competences as well as behaviors of directors sitting around the boardroom tables. This includes how they work together, their degree of transparency and accountability as decision-making groups and the team production culture in task performance. This study seeks to explore the influence of corporate governance on organizational performance of state corporations in Kenya. A survey design was used to arrive at the expected outcomes in this study. Out of a population of 187 State Corporation, a sample size of 125 was considered with 375 respondents. Data was collected using questionnaires. 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 the Board Strategic Involvement, board CEO-Chair Collaboration and Board Members knowledge & skills respectively are statistically significant (P-value=0.000). This implies that the three variables together influence organization performance of state corporations and account for 68% variation on performance. Board Leadership and Board Team production Culture (together) were not statistically significant at 5% level.

Highlights

Kenya has experienced turbulent times with regard to its corporate governance in the last two decades resulting to generally low corporate profits
The study examined the relationship between board chairperson leadership and organizational performance of state corporations in Kenya
This can lead to improved service delivery to the general public since majority of corporation are about service to the general citizen

Summary

Introduction

Kenya has experienced turbulent times with regard to its corporate governance in the last two decades resulting to generally low corporate profits. As a result of this state corporations in the country have attracted a great deal of attention regarding their performance and the way they are being Governed (Ramon 2001). In most state corporations in Kenya, their lacks accountability, authority stewardship leadership direction and control. Empowering boards of directors of Kenyan corporations to exercise effective monitoring of management continues to be a formidable challenge for the Kenya Government. This study adds new knowledge on what boards need to do in terms of action in order to discharge their responsibilities more effectively, the Kenya Government seems to have failed in the way boards are designed and appointed in Kenyan state corporations. The purpose of this study was to assess the influence of corporate governance on organizational performance of the State Corporations in Kenya.

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Conclusion