International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (1233-1243), Month: October 2019 - March 2020, Available at: www.researchpublish.com
FINANCIAL RESOURCES, CORPORATE GOVERNANCE AND PERFORMANCE OF REGIONAL DEVELOPMENT AUTHORITIES IN KENYA 1
Ezekiel Wechuli Wanyama, 2Prof John K. Byaruhanga, 3Dr. Shitseswa E. Ayub (PhD) 1
Masinde Muliro University of Science and Technology, Nairobi, Kenya
2
Masinde Muliro University of Science and Technology, Nairobi, Kenya
3
Masinde Muliro University of Science and Technology, Nairobi, Kenya
Abstract: The objective of this study was to determine the influence of corporate governance on the relationship between organizational resources and performance of regional development authorities in Kenya. The specific objectives were to determine the influence of financial resources on the performance of regional development authorities in Kenya and establish the moderating effect of corporate governance on the relationship between financial resources and performance of regional development authorities in Kenya. The study was guided by resource based theory, dynamic capabilities theory and stewardship theory. The study adopted explanatory research design. The study was conducted in six regional development authorities that cover 47 counties. This includes Kerio Valley Development Authority, Ewaso Ngiro South Development Authority, Ewaso Ngiro North Development Authority, Coast Development Authority, Lake Basin Development Authority, Tana and Athi Rivers Development Authority. The targeted population was 169 comprising of chief managers, managers, heads of department and chief accountant. The study used stratified random sampling to select 118. Primary data was collected using structured questionnaires and interview schedules. Pilot study was conducted to test validity and reliability of research instruments. Validity was ascertained using content and construct validity while reliability using Cronbach alpha. Data was analyzed using both descriptive and inferential statistics. The researcher used descriptive statistics that include measure of central tendency; mean and measure of variability; standard deviation, maximum and minimum while inferential statistics included correlation and multiple regressions. The null hypotheses were tested at 5% significance level. The findings revealed that when financial resources changes by a unit, performance changes by 0.236 units (β2=0.236, P=0.011). Corporate governance has significant moderating influence on the relationship between financial resources and performance as indicated by change in R2=0.254, p=0.000 implying that the corporate governance explained up to 25.4% change in performance of regional development authority. However, the interaction effect was not significant. Accountability had insignificant positive moderating effect on the relationship between financial resources while board composition had insignificant negative moderating effect on the relationship between financial resources and performance. The study recommended that regional development authorities ought to reduce overdependence on exchequer to resources but generate their own financial resources. The study also recommended that board should be diverse in terms of gender, relevant industry experience and independent board member from the management. Keywords: Financial Resources, Corporate Governance, Performance, Regional Development Authorities.
I. INTRODUCTION The conditions of performance of state owned corporation constitute a major research theme in strategic management which has been going through a major shift from 1990s to date (Ho & Teo, 2015). A firm is said to enjoy higher performance than competitors when it puts into practice a value creating strategy and hence, the process of creating superiority in performance is consistent with the Resource Based View theory of the organization (Eriksson, 2013). The Resource Based View perspective puts emphasis on firm specific resources and capabilities as elementary sources of competitive advantage which results to high performance (Barney & Hesterly, 2010).
Page | 1233 Research Publish Journals