STRATEGY INSTITUTIONALISATION AND PERFORMANCE OF STATE OWNED CORPORATIONS IN THE ELECTRICITY SUB – SECTOR IN KENYA

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ABSTRACT

Strategy institutionalisation involves developing an organisational capability to a point where it is fully supportive of a new strategy. To attain Vision 2030, the government recognizes the importance of strategy institutionalisation on  organisational performance. The electricity sub-sector plays an important role in facilitating economic growth of the country. Statistics, however, show that strategic objectives have not been achieved thus affecting the performance of state-owned corporations in the electricity sub-sector. This study investigated the influence of strategy institutionalisation on the performance of state-owned corporations in the electricity sub-sector in Kenya. The specific objectives of the study were; determining the influence of systems, leadership style, and organisational structure and staff skills on the performance of state-owned corporations in the electricity sub-sector in Kenya and to establish the moderating influence of corporate culture on the relationship between strategy institutionalisation and performance of these state-owned corporations. The study was anchored on the Institutional and Organisational Assessment Model, the Stakeholder theory, the Balance Scorecard Theory and the McKinsey Seven S’s Model. The study’s philosophical orientation was positivism. To achieve the objectives, the study used a combination of descriptive and explanatory research designs. A census of seven state-owned corporations in the electricity sub-sector with a total of 512 management employees was conducted. The study used mainly Primary data collected using self-administered questionnaire. Quantitative data was analysed using both descriptive and inferential statistics. Descriptive statistics was used to summarize data while inferential statistics applied multiple regression analysis to test hypothesised relationships. Content analysis was also used for qualitative data. Adjusted R2 was used to measure the amount of variation in the dependent variable explained by the independent variables. The results indicated that systems, leadership style, organisational structure and staff skills had a positive and significant influence on the performance of corporations in the electricity sub-sector in Kenya. Corporate culture was found to have no moderating influence on the relationship between strategy institutionalisation and performance of state-owned corporations in electricity sub-sector in Kenya. Hence, corporate culture was an explanatory variable. The study concludes that strategy institutionalisation dimensions have a positive influence on the performance of the state-owned corporations in the electricity sub-sector in Kenya. The study recommends that chief executive officers should put in place systems that support implementation initiatives, ensuring that tasks to be performed are related to the strategy, and recognise and reward progress in implementation of change. The study suggests that a similar study can be conducted in other corporations in the Energy Sector to further determine the causal links and also explore the influence of corporate culture as an explanatory variable.

CHAPTER ONE INTRODUCTION

     Background to the Study

Several concerns have been raised about the state and performance of electricity sub- sector in Kenya. The concerns touch on a range of issues that include rising consumer prices, inconsistency in supplies, restrictions in the provision of services, conflicts, and environmental concerns. Kenya does not compare well with major trade competitors since the electricity tariffs are relatively high and out of reach for the low-income  group, the major category being from the rural areas (CUTS International, 2009).

The Government of Kenya launched the Last Mile electricity access Project funded by the African Development Bank (AfDB) in May 2015. The statistics by AfDB, however, reveal a 32 percent national electricity access in Kenya, with rural electrification access remaining at 19 percent and per capita consumption of 130kWh compared to the 550kWh average for sub-Saharan Africa (ESI Africa, 2016).

According to Yang, Sun and Martin (2008), implementation of strategy has become the most significant management challenge, which all kinds of corporations face at the moment. The process of strategy formulation, implementation logistics, connection among different units and different levels of strategy, employees, implementers, organization structure, agreements, commitment, communication, and lack  of  resources led to poor implementation of strategies, which has financial implications to the organization (Yang et al., 2008; Rose & Fred, 2014)

Previous studies by Higgins (2005), Olson, Slater and Hult (2005), and Neilson, Martin and Powers (2008) focused on the activities and factors that enhance strategy success. A recent study by Kombo and Njagi (2014) looked at the effect Strategy implementation, operationalised by institutionalisation, on Performance of Commercial Banks in Kenya. There is, however, very little empirical literature available on the relationship between strategy institutionalisation and performance.

The multidimensionality perspective that characterise the Institutional and Organisational Assessment (IOA Model) focuses on organisations from the viewpoint of equilibrium between organisational efficiency, its relevance, effectiveness, and financial viability (IDRC, 1999). The IOA Model identifies that performance of an organisation is a function of certain contextual forces and that organisations exhibit flexibility to external environmental factors. External forces exert changes in organizations’ internal resources, which consequently influence fundamental values within the organisation. Thus, these changes cause widespread changes in organizational culture, climate and modes of operation.