Strategy Institutionalisation and Performance of State

Home , Institutionalisation

STRATEGY INSTITUTIONALISATION AND PERFORMANCE OF STATE

OWNED CORPORATIONS IN THE ELECTRICITY SUB - SECTOR IN

KENYA

KIRUI CALEB CHERUIYOT, BED (MOI), MBA (KU)

D86/CTY/PT/28906/2013

A Thesis submitted to the School of Business in Partial Fulfillment of the

Requirement for the Award of the Degree of Doctor of Philosophy in Business

(Strategic Management) , Kenyatta University

November, 2016 ii

DECLARATION

This thesis is my original work and has not been presented for a degree in any other university. No part of this thesis should be reproduced without authority of the author or/and Kenyatta University.

Signature………………………………………………..Date………………………

Kirui Caleb Cheruiyot Department of Business Administration

We confirm that the work reported in this thesis was carried out by the candidate under our guidance as the appointed University supervisors.

Signature………………………………………………..Date………………………

Dr. Stephen M.A Muathe (PhD) Department of Business Administration, School of Business, Kenyatta University

Signature………………………………………………..Date………………

Dr. Mary Ragui (PhD) Department of Business Administration School of Business Kenyatta University

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DEDICATION

This thesis is dedicated to my father Stephen Rono Kipkirui and my late mother Pastor

Linner Rono. You have been my source of inspiration and strength in my entire academic life.

ACKNOWLEDGEMENT

I give honour and thanks to the Almighty God for giving me good health, strength, perseverance and the enthusiasm during the period of study. I also wish to give Special thanks to my supervisors; Dr. Stephen M. A Muathe (PhD) and Dr. Mary Ragui (PhD) who have been of great assistance to me at all stages of conceptualizing this study, I will always remember their guidance, encouragement, patience and insightful suggestions at each and every stage.

I acknowledge the support by the Management and staff of the State Owned Corporations for providing me with the much needed information for the study. I would also like to thank my employer for funding this research through the grant I received through the Dean, School of Business.

I also acknowledge the support of the staff in the School of Business for being accessible whenever I sought clarification regarding this thesis. I acknowledge the support I received from Dr. Jane Wanjira, Dr. Rosemary James, Dr. James Kilika, Dr. Hannah Bula, Dr. Eddie Simiyu, Dr. Samuel Maina, Dr. Elishiba Murigi, Dr. Peter Wambua and Dr. David Kiiru. I also thank my colleagues in the Ph.D. programme namely Ms. Perris Chege, Mr. Nahashon Langat, Mr. Joshua Tumuti, Ms. Lydia Gachengo and Mr. Josphat Kyalo who were keeping track on my progress and encouraging me.

I most sincerely thank my wife Sophie and our children Calvin, Cheryl, and Chrystal for the sacrifices they made when I had to be away during this process. I also thank my sisters Beatrice, Caro and Joyce and my brother Manu for the encouragement and support they accorded me. I am also truly indebted to my friends for their moral and unwavering support during the course of this study. May the Lord God bless you most abundantly!

TABLE OF CONTENTS

Declaration ...... ii Dedication ...... iii Acknowledgement ...... iv Table of Contents ...... v List of Tables ...... ix List of Figures ...... x Operational Definition of Terms ...... xi Abbreviations and Acronyms ...... xiv Abstract ...... xvi CHAPTER ONE: INTRODUCTION ...... 1 1.1 Background to the Study ...... 1

1.1.1 Organisational Performance ...... 3 1.1.2 Strategy Institutionalisation ...... 5 1.1.3 Kenya’s Electricity Sub-sector ...... 8 1.2 Statement of the Problem ...... 12

1.3 Objectives of the Study ...... 14

1.3.1 General Objective ...... 14 1.3.2 Specific Objectives ...... 14 1.4 Research Hypotheses ...... 15

1.5 Significance of the study ...... 15

1.6 Scope of the Study ...... 17

1.7 Limitations of the Study ...... 17

1.8 Organization of the Thesis ...... 18

CHAPTER TWO: LITERATURE REVIEW ...... 19 2.1 Introduction ...... 19

2.2 Theoretical Review ...... 19

2.2.1 The Stakeholder Theory ...... 19

2.2.2 The Balanced Scorecard Theory ...... 21 2.2.3 McKinsey Seven S’s Model ...... 22 2.2.4 Institutional and Organisation Assessment Model (IOA) ...... 24 2.3 Empirical Literature Review ...... 26

2.3.1 Systems and Organizational Performance ...... 26 2.3.2 Leadership and Organizational Performance ...... 28 2.3.3 Organisational Structure and Organisational Performance ...... 29 2.3.4 Influence of Staff - skills on Organizational Performance ...... 30 2.3.5 The moderating role of Corporate Culture on the relationship between Strategy Institutionalisation and Performance ...... 32 2.4 Summary of Literature and Research Gaps ...... 35

2.5 Conceptual Framework ...... 41

CHAPTER THREE: RESEARCH METHODOLOGY ...... 43 3.1 Introduction ...... 43

3.2 Research Philosophy ...... 43

3.3 Research Design ...... 44

3.4 Empirical Model ...... 45

3.5 Operationalisation and Measurement of Variables ...... 49

3.6 Target Population ...... 50

3.7 Sample Size and Sampling Design ...... 51

3.8 Data Source and Collection Instruments ...... 54

3.9 Validity and Reliability ...... 54

3.10 Data Collection Procedure ...... 56

3.11 Data analysis Methods ...... 57

3.11.1 Quantitative Data Analysis ...... 57 3.11.2 Qualitative analysis ...... 63 3.12 Ethical Issues ...... 63

vii

CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSSION ...... 65 4.1 Introduction ...... 65

4.2 Response Rate, Respondents Features and Firm Characteristics ...... 65

4.2.1 Response Rate ...... 65 4.2.2 Respondents Characteristics ...... 66 4.3 Descriptive Statistics ...... 69

4.3.1 Systems ...... 69 4.3.2 Staff -Skills ...... 70 4.3.3 Leadership style ...... 72 4.3.4 Organizational Structure ...... 74 4.3.5 Corporate Culture ...... 76 4.4 Diagnostic Tests ...... 79

4.4.1 Normality test ...... 79 4.4.2 Test for Linearity ...... 80 4.4.3 Bartlett's Test of Internal consistency ...... 81 4.4.4 Test of Sampling Adequacy ...... 82 4.4.5 Multicollinearity Test ...... 83 4.4.6 Homeskedasticity Test ...... 84 4.4.7 Specification Test ...... 85 4.5 Testing of Hypotheses ...... 85

4.5.1 Test of Hypothesis One ...... 88 4.5.2 Test of Hypothesis Two ...... 89 4.5.3 Test of Hypothesis Three ...... 90 4.5.4 Test of Hypothesis Four ...... 91 4.5.5 Test of hypothesis Five ...... 93 4.6 Qualitative Data Analysis ...... 97

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS100 5.1 Introduction ...... 100

5.2 Summary ...... 100

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5.3 Conclusions ...... 103

5.5 Recommendation for Policy Implication ...... 106

5.6 Suggestions for Further Research ...... 108

REFERENCES ...... 110 APPENDICES ...... 118 Appendix I: Questionnaire Letter of Transmittal ...... 118 Appendix II: Questionnaire (State Owned Corporations) ...... 119 Appendix III: List of State Owned Corporations in the Electricity Sub-Sector ...... 124 Appendix IV: Research Authorization ...... 125 Appendix V: Research Permit ...... 126

LIST OF TABLES Table 2.1: Previous Studies and Knowledge Gaps ...... 36 Table 3.1: Moderation Decision – Making Criteria ...... 49 Table 3.2: Operationalisation and Measurement of variables ...... 50 Table 3.3: Distribution of the Management Employees in State-Owned ...... 51 Corporations in Electricity Sub- Sector ...... 51 Table 3.4: Sample Size ...... 53 Table 3.5: Reliability Test ...... 56 Table 3.6 Tests of Hypotheses ...... 62 Table 4.1: Response Rate ...... 65 Table 4.2: Respondent Characteristics ...... 66 Table 4.3: Respondents Firm and Firm size Characteristics ...... 68 Table 4.4: Descriptive Statistics on Systems ...... 69 Table 4.5: Responses on Staff -Skills ...... 71 Table 4.6: Descriptive Statistics on Leadership style ...... 73 Table 4.7: Responses on Organizational Structure ...... 74 Table 4.8: Perceptions on Corporate Culture ...... 76 Table 4.9: Responses on Performance ...... 78 Table 4.10: Normality Test ...... 80 Table 4.11: Linearity Test ...... 81 Table 4.12: Bartlett’s Test ...... 82 Table 4.13: Kaiser-Meyer-Olkin Test ...... 83 Table 4.14: Multicollinearity Test ...... 83 Table 4.15: Homoskedasticity Test ...... 84 Table 4.16: Specification Test ...... 85 Table 4.17: Influence of strategy Institutionalisation on Corporations Performance .... 86 Table 4.18: Regression of Performance on Strategy Institutionalisation and Corporate Culture ...... 94 Table 4.19: Regression Results of Performance on Strategy Institutionalisation, ...... 96 Corporate Culture and Interactive Terms ...... 96 Table 4.20: Qualitative Data Analysis ...... 98

LIST OF FIGURES

Figure 2.1: Organisational Assessment Model ...... 26 Figure 2.2: Conceptual Framework ...... 41

OPERATIONAL DEFINITION OF TERMS

State owned corporation: An incorporated entity that is solely owned by the

government or its agents for commercial purposes,

strategic functions, regulation or state agency.

Electricity sub-sector: Comprises companies engaged in exploration,

generation, distribution, and regulation of

electricity.

Leadership style: Refers to a leader’s approach in articulating

strategy, providing vision, implementing plans and

motivating people.

Corporate Culture: The set of norms, behaviors, beliefs and customs

that exist within the population of a sovereign

nation and guide the members in embracing

teamwork, commitment and competitiveness in

achievement of organisational goals.

Performance: The extent to which an organisation

institutionalizes its strategies to attainment of its

goals and objectives while remaining efficient,

effective and relevant.

xii

Organisational Structure: It is the framework around which a group is

organized and provides a guide on the rules and

procedures, communication and decision making

autonomy for organisational members.

Strategy: The direction and scope of an organization over

the long-term, which achieves advantage for the

organization through its configuration of resources

within a changing environment, and fulfills

stakeholder’s expectations.

Strategy implementation: The translation of chosen strategy into

organizational action so as to achieve strategic

goals and objectives.

Strategy institutionalisation: A phase in strategy implementation that is aimed

at integrating systems, staff-skills, leadership style,

organization's culture and structure in

strengthening organisational performance.

Staff- Skills: A group of essential abilities that involve the

development of a knowledge base, expertise level

and mindset that is increasingly necessary for

success at any level within a business

environment.

xiii

Systems: The procedures and processes that are used in the

organisation and include documentation, initiatives

supported and accountability.

xiv

ABBREVIATIONS AND ACRONYMS

ADF : African Development Fund

BSC : Balanced Scorecard

ERC : Energy Regulatory Commission

GDC : Geothermal Development Company

GOK : Government of Kenya

IDRC : International Development Resource Centre

IEA : Institute of Economic Affairs

IOA : Institutional and Organisation Assessment Model

IPPs : Independent Power Producers

KenGen : Kenya Electricity Generation Company Limited

KETRACO : Kenya Electricity Transmission Company

KIPPRA : Kenya Institute of public Research and Analysis

KNEB : Kenya Nuclear Electricity Board

KPLC : Kenya Power and Lighting Company Limited

MOE : Ministry of Energy

OCAI : Organizational Cultural Assessment Instrument

OPA : Organisational Performance Assessment

PhD : Doctor of Philosophy

REA : Rural Electrification Authority

REP : Rural Electrification Programmes

ROA : Return on Assets

ROI : Return on Investment

SPSS : Statistical Package of Social Sciences

T & D : Transmission & Distribution

NACOSTI : National Commission for Science and Technology

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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

1.1 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.

Strategy institutionalization is one of the phases in strategy implementation that features an organisation developing its capabilities to a point where it fully supports the new strategy. According to Burgelman, Grove and Meza (2006), strategic actions provide the foundation for reality of a strategy. Thus, strategic statements cannot define a strategy unless they are put into action. Strategic actions involve action-oriented activities such as establishing a match between strategy and organizational structure,

3 communicating the intentions of a strategy across the organisation, deigning proper systems of rewarding employees; ensuring strategy is in line with culture, and selecting effective organisational leadership (Kombo & Njagi, 2014).

1.1.1 Organisational Performance

Organizational performance is conceptualized and measured differently by different authors. Mahdani, Mohammed, Ali and Ismael (2012) measured organizational performance in terms of achievement of goals and objectives. David (2005) conceptualised performance based on financial and nonfinancial indicators from both objective and perceptual sources.

Yasir, Zulqarnain, Muhammad and Aslam (2013) measured organizational performance using only one aspect of financial measures; Return on Investment (ROI). Trien and

Amon (2011) aimed at understanding the function of state ownership on performance of a firm using accounting returns (ROA and ROI) as the measures of performance.

However, it is imperative to note that measuring organizational performance based on financial indicators alone has come under increasing criticism.

Mbako and Charles (2012) combined both profitability and efficiency measures by defining performance in terms of Profitability, Return on Assets, Capital Productivity

(Asset Turnover), Value Created per equity, labour productivity (Revenue per employee) and operational efficiency (debtor and creditor days) in their study on State

Owned Enterprises. They, however, mention that whilst other measures like customer

4 satisfaction, delivery on social objectives and rate of access to services would have been more ideal, this could not be fit into the context of their study since these were industry specific.

While financial measures are only able to reflect firm current and past performance, non- financial measures such as the level of customer satisfaction, employees' morale, and improvements in internal processes provide employees with information on the contribution of actions to the achievement of the strategic goals of an organisation

(Ittner, Lacker & Randall, 2003). Non-financial measures can be easily understood by all employees and thus a more appropriate criterion to be used for performance evaluation (Kaplan & Norton, 2005).

After review of organizational performance literature especially on non-profit and state- owned organizations, it is realized that the financial parameters have been used to measure performance. Marc and Adriana (2010) observe that the primary use of financial data constitutes evaluating the performance of non-profit organisations.

Measuring organizational performance in terms of financial indicators alone has come under increasing criticism because the information contained in them is not comprehensive to conclusively establish organisational performance. Kaplan and

Norton (2005) addressed the inadequacies of traditional financing measurement system by introducing the non-financial measures of performance in the balanced scorecard

(BSC) approach.

Customer satisfaction is formed and influenced by various factors, which in turn affect company performance. From the perspective of the company and its management, it is essential that the business can (directly or indirectly) affect (at least some) factors of customer satisfaction. It is, therefore, vital for the enterprise management to identify the factors of customer satisfaction and, when possible, to influence them so that the performance of the company may increase (Suchánek & králová 2015).

According to Mahdani et al. (2012), non-financial measures are not affected by biasness. Their usefulness for single-industry studies is enhanced by the uniformity inherent in them when used to measure inter-firm performance. The most common examples of non-financial measures identified by Mahdan et al. (2012) include goal achievement, level of customer satisfaction, and perceived success. This study adopted the non-financial measures of performance, operationalised by goal achievement, customer satisfaction, efficiency, relevance and effectiveness for purposes of the uniformity of measurement across all the state-owned corporations in the electricity sub- sector.

1.1.2 Strategy Institutionalisation

According to Ramesh (2013), Strategy implementation involves two actions; operationalising the strategy and institutionalising the strategy. Institutionalizing the strategy involves putting the strategy into action that is, permeating or incorporating the strategy into the day to day life. Strategy institutionalization involves developing an organizational capability to the extent where it fully supports the new strategy. It is

6 geared towards improving organizational performance as measured against the predetermined outputs and objectives (Kombo & Njagi, 2014).

Institutionalisation of strategy consists of the structure of the organisation, leadership of the CEO and key managers and the fit between strategy and the company's culture

(Ramesh, 2013). According to Kombo and Njagi (2014), this involves action-oriented activities such as organisational communication of strategic intentions, establishing a match between strategy and organizational structure, designing effective reward systems, matching strategy with culture, and putting in place the most effective leadership.

In unstable environments, it has been greatly observed that the capacity to execute strategies hastily and successfully may indicate difference between program’s success and failure (Hauc & Kovac, 2000). Implementing a strategy successfully has a significant effect on the performance of organization and is vital for the attainment of operational efficiency and consequently, the realization of organisation's effectiveness

(Hrebiniak & Joyce, 2005).

Johnson (2004) identified that 66 percent non-implementation of corporate strategy.

Crittenden and William (2008) posit that the core cause of this problem exist in the strategy-to-performance gap. However, the more likely source is believed to be in the process of formulation-to-implementation. The criticality of strategy implementation requires managers to be careful during development of appropriate and effective

7 strategy; caution is practised through assigning sufficient resources to activities and tasks that are closely related to the actual implementation (Homburg & Flesser, 2000).

The need for further research in the area of strategy implementation has been a concern among majority of past researchers (Hambrick et al., 1989; Al-Ghamdi, 1998; Beer &

Eisenstat, 2000; Higgins, 2005). Regardless of majority of the executives having identified the criticality of careful implementation as a success factor, there is a general failure among most companies when it comes to successful execution of the formulated strategy.

Different researches concerning strategy implementation in the past decades have concentrated on factors and activities that enhances the success of a strategy executed

(Neilson, Martin & Powers, 2008; Higgins, 2005; Olson, Slater & Hult, 2005) or to provide a warning about the common causes of failure during strategy implementation

(Al-Ghamdi, 1998; Beer et al., 2000). There is a however little focus on the development of an organisation capability to an extent that it can fully support a new strategy. This study intended to fill this gap by looking at strategy institutionalisation and performance of state-owned corporations in the electricity sub- sector in Kenya.

Rose and Fred (2014) noted that inadequate funding; lack of clear knowledge of the strategy among the members of the project team; inadequate communication, proper systems and processes to support the implementation of strategy; lack of supportive organizational culture, appropriate organizational structure; poor reward systems;

8 inadequate capacity, political influence or interference; lack of top management commitment; lack of stakeholders involvement and staff resistance to change were some of the challenges that affected strategy implementation in state-owned corporations in the electricity sub-sector and other sectors alike .

Literature review revealed that many studies have mainly concentrated on operationalisation of strategy and limited research has been carried out on institutionalisation more so in the electricity sub-sector in Kenya. Kepha (2010) for instance emphasized the importance of good leadership, resources, organization culture and corporate social responsibility activities that were found to be very critical to success in implementation of corporate strategies at KenGen. In reviewing and consolidating the literature, four distinctive dimensions of strategy institutionalisation; systems, leadership style, organizational structure and organizational culture have been selected for the purpose of this study.

1.1.3 Kenya’s Electricity Sub-sector

The incorporation of the electricity sub-sector in Kenya took place in 1979 when

Kenyan Government realized that energy was a major contributor in the development process of the country (KPLC, 2010). Prior to formation, electricity sub-sector issues were scattered over several ministries. The power sector in Kenya has experienced unbundling caused by the Electricity Power Act of 1997. Further reforms such as the need to semi-privatize and the creation of new institutions following the enactment of the Energy Act of 2006 (KPLC, 2010) also immensely contributed to the process of unbundling.

The restructuring of Kenya’s Electricity sub-sector has been executed as per the sessional Paper No.4 of 2004 and the Energy Act No.12 of 2006 (GOK, 2009).

Institutionally, the electricity sub-sector in Kenya consist of Kenyan Power and

Lighting Company (KPLC), Geothermal Development Company (GDC), the Energy

Regulatory Commission (ERC), Rural Electrification Authority (REA), Kenya

Electricity Transmission Company (KETRACO), Kenya Electricity Generating

Company (KenGen), and Kenya Nuclear Electricity Board (KNEB). This study, however, focused on generation, distribution and electricity infrastructure by the corporations in the electricity sub-sector.

KPLC is one state company that dominates the distribution of electricity in Kenya.

However, Ard, Kant and Elske (2014) noted that is not functioning well in several respects. To get a power purchase agreement (PPA), a period of at least three years lapses for most independent power producers (IPP's). The implication of this is that some of the projects are started before a obtaining a PPA. This leads to uncertainties on the investment and limits the accuracy with which the profitability of such projects can be established. Further, KPLC is said to have received Kshs. 3 billion from customers for purposes of connecting them with power; however, the connection rate has remained low. This is evidenced by the fact that customers are made to wait for years amid deficient net metering or in some cases even non-existent.

Africa Infrastructure Country Diagnostic (2008) identifies that the annual sale revenues of firms in Kenya have gone low by about 7.0 percent because of unreliable electricity supply, which has consequently reduced the annual GDP growth by about 1.5 percent.

African Development fund (ADF) (2010) reports a further current average of KShs. 2

Billion per year (USD 26 million) cost of transmission technical losses.

The electricity sub-sector strategic objectives, as per the Energy Regulatory

Commission (ERC) include reducing power losses, constituting to up-scale power generation through increased capacity, to increase access to electricity and in particular expanding access in rural areas, to increase use of new and renewable energy sources, and to secure fossil fuel resources (ERC, 2014). African Development fund (ADF)

Statistics, however, show that these strategic objectives have not been achieved as expected as evidenced by the low electrification ratio; electricity has been accessible to only 20 percent of the population and a per capita consumption of 130 kWh against 550 kWh in the Sub – Saharan Africa (ADF, 2010).

International Energy Agency (IEA) report also indicates only 121 kWh per capita power consumption and 15.3 percent countrywide electricity access of the total population with only 3.8 percent electricity access among the rural population. Currently, the demand for electricity stands at 1,191 MW. However, the effective installed capacity under normal hydrology is 1,429 MW. The capacities to generate power from Hydro,

Geothermal, baggase (co-generation) and the wind amount to 52.1 percent, 13.2percent,

1.8 percent and 0.4 percent respectively (IEA, 2015).

The International Energy Agency (IEA) notes that the infrastructure for tramsmitting and distributing power in Kenya is fairly weak. The core cause of weak infrastructures

11 is limited investments in power upgrading systems. The economy, therefore, loses approximately 20 percent of net power generated. As per IEA (2015), further consequences of poor infrastructural developments include material damage and losses in production resulting from extreme voltage fluctuations and intermittent power outages that amount to a monthly average of 11,000.

IEA (2015) further adduces evidence that fossil-based thermal contribution stands at

32.5 percent. Projection for peak load growth was expected to amount to about

2,500MW and 15,000 MW by 2015 and 2030 respectively. According to MOE (2014), meeting this demand requires a gradual increase in the projected installed capacity to

19,200 MW by 2030.

Power system weaknesses that characterise Kenya’s power sub-sector backed by high power costs form IPPs inflate the cost of operating businesses in Kenya. Abdullah and

Markandya (2012) further argue that weak transmission and distribution (T&D) infrastructure has resulted to exacerbating capacity problems in addition to increasing thermal generation and leading to a simultaneous ballooning in consumer electricity bills.

The Kenya Institute for Public Policy Research and Analysis (KIPPRA) statistics reveals that Kenya’s Electricity sub-sector is confronted with challenges related to poor and declining performance (KIPPRA, 2010). The sector, despite being considered a key enabler to achieving vision 2030, has consistently fallen below expectations mainly due

12 to poor implementation of strategies, inhibiting realization of sustainable economic growth. KIPPRA (2010) further reports over-dependency on wood fuel and biomass, which account for 68 percent of the total energy consumed in Kenya (Petroleum 22%, electricity 9%, others 1%).

1.2 Statement of the Problem

The electricity sub-sector is a key factor in accelerating the achievement of the aspirations of the country as highlighted in Kenya’s development agenda (Vision 2030).

To this end, energy supply featuring sustainability, affordability, and reliability for all citizens is a key enabler in the realization of Kenya’s Vision 2030. Statistics indicate that Kenya's electricity sub-sector strategic objectives stated as up-scaling power generation, increasing access to services and information, customer satisfaction and enhancement in technology have however not been realised leading to poor performance (ADF, 2010; KIPPRA, 2010; ERC, 2014; IEA, 2015).

Different studies on strategy implementation in the past decades have focused mainly on the operationalisation of strategies (Higgins, 2005; Neilson, Martin & Powers, 2008;

Kombo & Njagi, 2014; Mbako & Charles, 2012). Higgins (2005) found out that various factors namely organisation structure, systems, leadership style and resources are critical in strategy execution while staff skills did not influence strategy execution.

These findings contradict those of Azara, Syad and Muhammad (2013) who established that skilled staff improves performance of an organisation.

Abdulla and Markandya (2012) noted that poor leadership was a major challenge in strategy implementation in the energy sector but did not expound on the specific leadership styles that influence strategy implementation. Neilson, Martin and Powers

(2008), found out that right decision, motivation and organisation structure influence strategy execution. In addition, Kombo and Njagi (2014) found out that strategy implementation influences organisational performance. However the study only focussed on implementation as measured by institutionalisation and operationalisation and ignored other variables like leadership style, organisation structure, systems and staff- skills.

In a similar study, Mbako and Charles (2012) focussed on firm size, liquidity position and independent industry regulation and their influence on performance. In the study financial performance was operationalised as a binary variable and analysed using the logit regression model but since financial performance is a continuous variable, the usage of logit regression model was therefore incorrect.

From the foregoing discussions, this study focuses on strategy institutionalisation as an approach that can be used by the corporations in the electricity sub-sector to enhance their performance. Most researches have focused on strategy implementation and performance of organisations in large enterprises in manufacturing and services sectors.

Very few have focused on organisations in the electricity sub- sector despite their importance in the economy.

The current study therefore sought to assess the extent to which staff skills influence organisational performance. Additionally, the current study seeks to find out the extent to which leadership style influences performance not only in REA but also in the other state owned corporations in the electricity sub-sector. Further, strategy institutionalisation has been measured using systems, leadership style, organisation structure, and staff skills. In addition corporate culture was incorporated as a moderating variable. The study applies a multiple regression model since performance is continuous variable.

1.3 Objectives of the Study

1.3.1 General Objective

The general objective of the study was to investigate the influence of strategy institutionalisation on the performance of state-owned corporations in the Electricity sub-sector in Kenya.

1.3.2 Specific Objectives

The specific objectives of the study were to:

i. Determine the influence of systems on the performance of state-owned

corporations in the Electricity sub-sector in Kenya.

ii. Establish the influence of leadership style on performance of state-owned

corporations in the Electricity sub-sector in Kenya.

iii. Assess the influence of organisational structure on the performance of state-

owned corporations in the Electricity sub-sector in Kenya.

iv. Establish the influence of staff skills on the performance of state-owned

corporations in the Electricity sub-sector in Kenya.

v. Assess the moderating influence of corporate culture on the relationship between

strategy institutionalisation and the performance of state-owned corporations in

the Electricity sub-sector in Kenya.

1.4 Research Hypotheses

The following hypotheses guided the study:

H01: Systems have no influence on the performance of state-owned corporations in the

electricity sub-sector in Kenya.

H02: Leadership style has no influence on the performance of state-owned corporations

in the Electricity sub-sector in Kenya.

H03: Organizational structure has no influence on the performance of state-owned

corporations in the Electricity sub-sector in Kenya.

H04: Staff- skills have no influence on the performance of state-owned corporations in

the Electricity sub-sector in Kenya.

H05: Corporate culture has no moderating influence on the relationship between

strategy institutionalisation and performance of state-owned corporations in the

Electricity sub-sector in Kenya.

1.5 Significance of the study

The findings of this study are anticipated to contribute empirical evidence related to the influence of strategy institutionalisation on the performance of state-owned

16 corporations. Findings from the study, thus, are beneficial interest to all stakeholders in

Kenya’s energy sector. This helps in broadening and deepening researchers understanding of strategy institutionalisation and their importance in the corporate sector.

To the scholars, the study not only explored the direct relationship between strategy institutionalisation and performance of corporations in the electricity sub-sector but also the moderating influence of corporate culture. The research methodology and findings from the study are anticipated to aid future researchers who would wish to carry out a related study.

The study provides some insights and practical implications to strategic management practitioners and line managers about organisational performance and what needs to be done in order to remain competitive in the market. This enables firms to keep pace with the rapid environmental changes in the public sector. The findings may make managers aware of the importance of systems, organisational structure, relevant staff skills and good leadership style as drivers of organisational performance.

The Government policy makers and Vision 2030 team will find the results of this study intriguing as a source of information on the influence of Strategy institutionalisation on organisational performance and the possible steps that needs to be taken in for maintaining market competitiveness.

1.6 Scope of the Study

This study focused on all the state-owned corporations in the Electricity sub-sector in

Kenya as at July 2015 and had been in operation for at least five years. The study surveyed all the head offices of the corporations located in Nairobi. The study explored the influence of strategy institutionalisation on the performance of these state-owned corporations in the last five years. The study also laid special emphasis on organisation structure, leadership, culture, systems and the moderating influence of corporate culture.

The influence of other organisational factors and other environmental factors was not included.

1.7 Limitations of the Study

This study covered state-owned corporations in the electricity sub-sector that had certain specific characteristics and therefore the results may not be generalized to other sectors or organizations in the private sector. In addition, some executives did not have time due to their tight schedules. Delimiting this involved administering the questionnaire to other managers at the same level. This was in line with Saunders'

(2007) argument that questionnaires can be administered to other informants in the same category at appropriate times.

Another challenge that was faced while carrying out this study was use of self - report data which easily triggered respondents' perception that the study was geared towards investigation purposes. To allay the fears, an introductory letter from the university was presented as a way of confirming that the data being collected was solely meant for academic purposes and would be treated with confidentiality.

1.8 Organization of the Thesis

The structure of this thesis is as follows: Chapter one provides an introduction to the study based on both content and context perspectives. The core areas discussed in chapter one include research problem, objectives, hypotheses, the scope of the study, limitation of the study, and structural organization of the thesis. Chapter two critically reviews the existing theoretical and empirical literature. In addition, summary of literature review and research gap and the conceptual framework are presented.

Chapter three is a research methodology section, which discusses and justifies the research design, research philosophy, study population, design and procedure for sample selection, data sources and instruments of data collection, the validity and reliability of data collection instruments, procedure of data collection, data analysis, the empirical model, method of data presentation and ethical issues in research. Chapter four comprises the results of the study and discusses the findings in comparison to literature. Chapter five, which is the final chapter summarises study findings, concludes the study based on the hypotheses, identifies the contribution of the study to knowledge and recommends areas for further research.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This section provides a background based on review of literature and previous research on strategy institutionalization. Structurally, the section is divided into two major subsections; the theoretical and empirical literature review subsections. Furthermore, the section gives with a presentation of the variables of the study in a conceptual framework. Finally, the study also highlights some of the knowledge gaps that it sought to fill.

2.2 Theoretical Review

The current study was underpinned by the Stakeholder theory, Balance Scorecard

Theory, McKinsey Seven S's Model, and Organisational Assessment Model.

2.2.1 The Stakeholder Theory

The stakeholder theory is credited to Edward Freeman (Laplume, Karan & Reginald,

2008). The premise of the stakeholder theory is that there exist links among several constituent groups within organizations and instituting and sustaining the support for the groups through considering their diverse interests is required (Kirsi, 2010).

According to Phillips & Robert (2003), both the resource and market-based views reflect in the stakeholder view of a strategy with an additional integration of a socio- political level. The authors give an example of a common description of the stakeholder

20 theory, which involves definition of particular stakeholders of a firm and examination of the factors that necessitate managers to consider the parties as stakeholders.

Precisely, the theory considers the normative and descriptive theories of stakeholder identification and salience respectively.

According to Blattberg (2004), the view that stakeholder theory has assumed the interest of various stakeholders to be either balanced or compromised against each other, is a relevant point for its criticism. Blattberg opines that this is a one sided approach that only proposes negotiation as a platform for conflict resolution regarding the interests of the stakeholders. Instead, Blattberg recommends conversation which enshrined in the concept of ‘patriotic’ corporation, which he defends, as an alternative to the approach postulated by the stakeholder theory.

After an in-depth examination of the stakeholder theory, Lynda (2006) uncovered the importance of supporting major stakeholders for the success of both projects and programs. Borrowing from Lynda’s (2006) study, there are two implications for the managers. First, managers are mandated to manage their corporations through ensuring that the rights of the stakeholders are secured and ensure the engagement of the stakeholders in decision-making process. Second, the management is required to act as agents of the stakeholders and ensure that the maintenance of the long-term stake of each side while safeguarding the survival of their company.

Another research by Kirsi (2010) further noted four premises of the stakeholder theory.

First off, a corporation often has multiple links with many stakeholders who either affect or are affected by its decisions. Secondly, the theory acknowledges the nature of the relationships through considering the processes as well as outcomes of the stakeholders and their firms. Third, it is also concerned with the interests of the legitimate stakeholders who have inherent value and not the interests that are assumed to be dominated by other stakeholders.

Lastly, it also looks at the process of decision-making by the management. Admittedly, an inclination towards power and instrument which forms the basis of the stakeholder theory enables a company applying the framework a likely opportunity to have improved organizational performance either from an economical view point or any other relevant dimension (Hasan & Kamil, 2010).

The stakeholder theory was useful in the study in the sense that corporations in the electricity sub-sector have relationships with many constituent groups (stakeholders), whose interests have intrinsic value and therefore managerial decisions made that affect processes and outcomes of the firm would be of paramount importance to them. The theory stresses the decision-making process by the management and looks at the strategy from a socio-political level. It therefore underpinned leadership style and corporate culture variables in the study.

2.2.2 The Balanced Scorecard Theory

This theory was a proposition by Norton and Kaplan in 1992. This model encompasses financial measures that are complemented by a set of non-fiscal measures that are

22 otherwise referred to as operational measures. The latter includes internal business operations, customer satisfaction, and the ability of organizations to identify and capitalize on the factors that institute resilience in financial performance. Vividly, the management usually consider the market-based strategies as well as consumer-oriented strategies that are assured of good fiscal returns.

On matters relating to internal businesses processes, the executive identify the essential internal processes that their organizations must succeed in implementing. Finally, as further highlighted by Kaplan & Norton (2005), the growth and learning aspect involves the identification of the resources that can sustain a long-term growth and development within the firms.

While financial measures are only able to reflect the firm current and past performance, on the opposite extreme, then non-monetary parameters such as customer satisfaction, employee morale and improved internal processes provide employees with information on how their actions determine the achievement of the strategic goals within their organisation (Ittner & Lacker, 2003). This theory was relevant to this study for it provided a definition of performance and also listed the performance indicators to be performed.

2.2.3 McKinsey Seven S’s Model

The McKinsey Seven S's (7S's) model was collaboratively developed by the McKinsey partners, Waterman and Peters, and management scholars, Pascale and Athos in the

23 early 1980s. The first application of this diagnostic framework was by Pascale & Athos

(1991) to recognize the seven criteria that are critical in the implementation of any business level strategy. As the name suggests, the 7S stand for the three hard elements; structure, strategy, systems and four soft elements; staff, style, skills, and shared values.

Notably, the hard elements can easily be influenced and identified by the management, and are therefore tangible compared to the soft intangible and abstract elements. In some literature, hard and soft elements have been referred to as hardware and software, respectively and collectively relate to both the stakeholder and institutional theory

(Peters & Waterman, 2004).

According to Peters & Waterman (2004) and Kinney (2007), the McKinsey 7S's model, is currently being embraced by most companies in the process of diagnosing and implementing business strategies. Therefore, it can be used by corporations in the electricity sub-sector to bridge the organizational objectives to relevant and plausible actions to achieve desirable results.

Apart from strategies, the model is very useful if successful roll-out of policies and programs in organizations is anticipated. Consequently, McKinsey 7S's Framework applies in the investigation of the implementation of organizational policies as well as strategies at a strategic level, culminating into an understanding of the organizational performance parameters.

The McKinsey 7S’s model was used as a mirror to approach the study hypotheses and to critically examine the potentiality of the 7S's in optimizing the process of policy and strategy implementation within an organization. As Kaplan (2005) opines, the intertwinement and interdependence of the seven parameters of the model is important, and thus it is a useful model to examine the success and efficiency of the implementation processes.

Undeniably therefore, there are four-sided specific objectives of the study that are informed by the model namely; to establish the influence of leadership style, organizational structure, staff skills, and systems on the performance of state owned agencies operating within the electricity sub-sector in Kenya.

2.2.4 Institutional and Organisation Assessment Model (IOA)

For the assessment of Organizational performance, the most viable framework is the

Institutional and Organisational Assessment Model (IOA Model). The model has been well elucidated by the International Development Resource Centre (IDRC) and

Universalia. According to the model, the performance of an organization is multidimensional as it interfaces the equilibrium between the efficiency, relevance, financial feasibility, and effectiveness of the organization in question (IDRC, 1999).

Authentically, performance is defined by the level of effectiveness as reflected in the fulfilment of a mission, its efficiency, financial viability, and ongoing relevance

(success of the adaptation to environmental changes). The model implies that contextual forces such as internal motivation, external environment forces, and organizational

25 capacity, influence performance (IDRC, 1999). Admittedly, from the review of past literature, conducted in the preliminary stage of developing the framework, it is evident that changes within organizations address factors in their external environments.

Critically, this is true because any alteration of the internal resources and shifts in values within an organization are likely to cause effects on standards of operations and organizational culture and climate. Organizations are like holistic systems that exist in environments that determine their performance either positively or negatively. The regulatory environment, economic, social, political, environmental, and technological related factors affect the operations of an organization.

The Institutional and Organisational Assessment (IOA) model was relevant to the study as it informed all the study variables. Performance in this study is dependent on similar factors as proposed in the model for instance culture, strategic leadership, structure, and infrastructure as presented in Figure 2.1. This model, therefore, anchors the entire study.

Figure 2.1: Organisational Assessment Model Source: http://www.universalia.com (accessed on 21-5-15)

2.3 Empirical Literature Review

The central focus of this section is on the review of literature that seeks to explain the objectives of the current research as well as the gaps in literature that validate and justify the current research study.

2.3.1 Systems and Organizational Performance

There is need for firms to establish different control tools to assist in management of decision-making processes. As a result of globalization and technological advancement, firms have resorted to adopting Management Control Systems (MCS). This view was validated by Antonio and Domingo (2007) whose research findings indicated a direct and tangible effect of the application MCS on performance, with the cultural influence taken into consideration.

Further, a separate study by James (2014) indicated that most organizations that lack processes have failed drastically in sustaining their competitive advantages in spite of having a robust and resilient strategy formulation process. The study investigated the strategy implementation processes that have a widespread adoption within most electricity distribution companies in the Sultanate of Oman.

The results indicate that most managers consider coordination of activities a major challenge in strategy implementation. Indisputably, coordination requires alignment of the processes, planning, and change management for individuals tinged with the management of specific processes and tasks. In this case, the strategy-related tasks as well as non-related strategies are combined and balanced at the same time (James,

2014).

Valentin (2013) indicated that an ERP becomes a major alignment mechanism that can supplement the controlling and accounting functions, once the management is in place, for improved organizational performance. In the case which converges the period before and after economic crisis in Romania, it is evident that alignment between organizational elements evolves as a measure to respond to environmental challenges.

Eileen and Jennifer (2010) further notes that there is an indirect impact of validating casual relationships, problem-solving, and problem identification on organizational performance through learning of the shared vision and learning as a team. On the other hand, monitoring has a positive direct impact on organizational performance.

2.3.2 Leadership and Organizational Performance

According to Jooste and Fourie (2009), strategic leadership counts when it comes to the implementation of a strategy within an organization, with all other factors constant. The results obtained after a forced ranking of the drivers perceived as important in the implementation process are in accordance with findings from studies by Bossidy &

Charan (2002), Freedman & Tregoe (2003), Thompson & Strickland 2003, Hsieh & Yik

(2005), Kaplan & Norton (2005), Hrebiniak (2006), and that by Hitt (2007).

In fact, the success of the strategy, right from formulation stages to implementation stages, depends on the strategic leaders within an organization in how they do away with reluctance or incompetence that are indicators of strategic failure (Freedman &

Tregoe, 2003). Moreover, a strong and effective strategic leadership enables organizations to efficiently implement a strategy (Hitt, 2007).

Transformational leadership style is particularly important in organizational performance as it surpasses transactional style in organizational success (Jonathan,

2012). Christopher, Denver, Severino, Shingirai & Tonderai (2012) opine that leadership must be vision-led, have strong communication systems, and act as role model for behaviour changes, which are consistent with new strategies. Anees (2013) also found a significant relationship between leadership behaviors and overall organizational performance.

2.3.3 Organisational Structure and Organisational Performance

Mehdi and Bayrami (2009), while investigating effect of organizational structure on strategy implementation process revealed some priorities. Among the strategies include creation of an enabling environment for employees to display their competencies, properly defined organizational rules and appropriate structures, healthy working relationship with customers, department for strategic management planning being independent, expert teams that manage themselves, communication channels, and independent command hierarchies.

John and Kenneth (2001) examined the influence of span of control on performance in public organizations as a structural attribute, with major focus on situations when task difficulty varies and revealed that in extremely difficult programs, the organizations have to redefine the problems into those that are structurally manageable. Also, they found that structure is not a "one size fits all" answer to deal with organizational hitches.

In a model developed and tested by Felipe (2012), organizational structure was conceptualized as a decision-making structure. As such, it has proved to have an effect on the number of successful organizational initiatives. The findings of the study revealed that there were predictable effects or organizational structure on a wide range of organizations. Furthermore, they also suggested that organizational structure even increases the consensus threshold required by a committee that selects projects.

Consequently, there is a likelihood of a fewer commission errors, more omission errors, and few approved projects.

2.3.4 Influence of Staff - skills on Organizational Performance

Aguinis and Kraiger (2009) argued that training improves financial success; efficiency, productivity, and revenue as well as other results of an organization provided that they are related in any way to the training. Azara, Syed & Muhammad (2013) further opine that organizations with skilled, talented, innovative, and creative employees achieve return on investment which makes them assured of improved efficiency and organizational performance.

Azara, Syed and Muhammad (2013) in a Pakistan based study found that organizations are struggling with employee turnover and ineffective performance despite investing resources in the improvement of employees. This is consistent with organizations that invest blindly without knowledge on the crucial skills necessary for the employees after and still expect that after completion of training process they will bring change in the organization. Results in their study revealed a significant association between training and performance of an organization.

In another study conducted by Waseef and Iqbal (2011) in knowledge intensive firms in

Peshawar of Pakistan, which attempted to explain the relationship between management of human capital and organizational performance, it emerged that management of human capital is a source of competitive advantage. Benchmarking on higher education

31 institutions and pharmaceutical firms, it emerges that human capital management influences organizational performance. The results of the study shed light on the importance of investing in management of human capital as a strategy for developing organizational and national competitive advantage.

According to another study by Khandekar and Sharma (2003), it is conclusive that companies with resilient Human Resource capabilities are assured of sustainable competitive advantage and thus superior performance. Further still, another set of researches by Amir and Amen (2013) and McKinsey (2006) maintain that improved capabilities, knowledge, and skills of a talented workforce are undisputable sources of competitive advantage globally.

Muogbo (2013) in a research investigating the relationship between organizational performance and employee motivation in selected manufacturing firms in Anambra

State reveals a significant relationship between the two. Some of the notable and relevant variables in the study included compensation, work environment, fringe benefits, promotion, and safety, autonomy, job embeddedness, Staff training, availability of communication, and efficient communication. In the same study, it is apparent that extrinsic motivation to employees influences their performance organization has a significant influence on the worker's performance.

Douglas (2007) describes a multi-disciplinary, multi-method inquiry into the effects of personal skill growth and diminishing of the performance of project-based

32 organizations. It extends cognitive science literature by calibrating rates of skill growth and decay of individuals performing complex, cognitive tasks to quantify their effect on group learning within projects. The study indicates that three sources (or inflows) of knowledge are available to transmit (or flow); knowledge of individuals within an organization; mentoring or formal training that may be employed and on-the-job.

Findings by Douglas (2007) suggested that interventions at the individual level (for example role changes) will be reflected in the performance at the group level. The analysis also indicated that an increase in trans-specialist knowledge does not cause an increase in learning rate, but does cause an increase in decision-making quality.

2.3.5 The moderating role of Corporate Culture on the relationship between

Strategy Institutionalisation and Performance

Rizwan, Yasin and Saleh (2014) considered the interactional effects of organizational culture on this relationship between knowledge management practices and effectiveness of the organization. According to the study, ad hoc culture opens room for innovation while hierarchical cultures stimulate imitation. Also, where the leaders are inclined to control rather than flexibility, there exists a bureaucratic culture.

On the other hand, innovative culture is cultivated by preference of flexibility by the leadership. Undeniably, the bureaucratic culture is entirely associated with conflict and reduces the impacts of innovative and supportive culture (Rizwan et.al, 2014). The study concluded that organizational effectiveness is determined by knowledge

33 management systems or practices. Additionally conducive organizational culture positively moderates knowledge management practices. Global managers must promote knowledge management practices and create conducive culture to institute and sustain organizational effectiveness.

Abbas (2014) in his research examined the moderator role of organizational culture between business performance and intellectual capital. Some of the elements of intellectual capital include rational, structural, human, and customer capital. In the study, the above elements were shown to have some direct influence on business performance. Therefore, the Iraqi industry based study revealed the moderator role of organizational or corporate culture.

The study applied two models of regression analysis to test the interacting terms between knowledge management and intellectual capital with culture. Here, the interaction term (culture as moderator) increased the R value to 0.667, indicating an obvious moderation influence on the relationships between the independent variable and the dependent variable, which is business performance.

Shakil (2012) in their study that used Regression and Correlation analysis to empirically test the relationship between organizational culture components and performance management practices observed that adaptability and mission have substantial positive values in association with performance. Involvement, consistency, adaptability and mission were used to operationalise organizational culture. In addition, it is imperative

34 for all the variables to be positive for better results considering the practices related to performance management.

Shakil (2012) further suggests that the performance management practices can be implemented by organizations so as to institute job security and chances for career and personal development, as turnover mitigation measures. Consequently, organizations are assured of organizational culture (values, beliefs, norms, assumptions) based performance management practices within the organization, and a strong corporate culture.

Fakhar, Rana, Ayesha and Lalarukh (2012) in their study on the impact of organizational culture on organizational performance found a significant link between strong culture and improved organizational performance. Furthermore, organizational culture has a substantial impact on most of the organizations process, employees, and overall performance. The findings indicate that employee commitment and alignment to organizational culture increases organizational performance as they work in sync to achieve the organization goals. They recommend that the leadership and management in organizations develop a strong corporate culture to improve the overall performance of the employees and organization.

Hakan, Jamel and Birol (2011) examined the moderating role of organizational culture in the relationship between leader's power bases and subordinate's job stress. Their study defined organizational culture as values, beliefs, norms, and practices shared

35 among members of a group. Strong social support is necessary for coping with stress in the workplace as it buffers stress and contributes to the psychological and physical well- being of employees.Cultural values are reflected in actual behavioral patterns in a study that used Organizational Cultural Profile (OCP) and Job Stress Surveys, to evaluate organizational culture and job stress, respectively.

Using hypotheses tested using moderated hierarchical regression; the study found that aggressiveness dimension of culture (from the OCP) strengthened the positive relationship between harsh power bases and job stress. Furthermore, respect for people, which was another dimension, was found to weaken the above relationship. Overall, the study results indicate that respect for people dimension reinforced the negative relationship between soft power bases and job stress.

As a measure to quantify organizational culture, Cameron and Quinn (2006) developed the Organizational Cultural Assessment Instrument (OCAI). The OCAI results provide a means by which organizations successfully implement change. Some of the dimensions of OCAI are strategic emphasis, management of employees, organizational leadership, and organizational glue. This study used this tool while investigating the regulating role of corporate culture on the relationship between strategy institutionalisation and performance of state corporations in Kenya's energy sector.

2.4 Summary of Literature and Research Gaps

From the reviewed literature, it is apparent that although research on strategy implementation exists, there has been little focus on strategy institutionalisation and

36 performance. Specifically, there is no literature on strategy institutionalisation and performance of state-owned corporations in the Electricity sub-sector in Kenya and the moderating influence of corporate culture. Table 2.1 summarizes the literature reviewed and brings out clearly the research gaps identified.

Table 2.1: Previous Studies and Knowledge Gaps

Author(s) Focus of Study Key Findings Knowledge Focus of the Gaps Current Study Abbas The study was Intellectual capital Focused only Current study (2014) seeking to elements directly affect on focused on the investigate the the performance of intellectual moderating role of controlling role of business and culture has a capital culture in the link the organizational moderating effect elements with between strategy culture between between the two aspects. culture as a institutionalization intellectual capital moderator and corporate and business performance. This performance: An study was also empirical study in conducted in Kenya. Iraqi industry James The factors Strategy implementation Focused on The current study (2014) affecting efficiency depends on factors such leadership as focused on the of strategy as industry, country, an antecedent influence of strategy implementation in organizational culture and variable to institutionalisation the service environment. In terms of Culture, on performance with provision industry. effectiveness successful Structure and a moderating effect A Study of implementation of a systems of corporate culture Electricity strategy leadership Distribution precedes organizational Companies in the culture and structure as Sultanate of Oman well as control and information systems. Valentin Systems ERP only becomes a core Systems The current study (2013) implementation as alignment mechanism alone does focused on other managerial tools on after the management not influence factors apart from firm performance, support is secured. performance systems which in connection with It acts as an excellent thus the need influence the organizational addition to controlling for other performance. processes, and and accounting functions factors accounting and Overall, it improves the controlling organizational systems. performance. Anees The impact of Leadership behaviors Focused only The current study (2013) leadership behavior strongly impact on on the focused on the style on organizational organizational behavior of a of leadership performance performance. D&R leader as a besides the other Cambric Communication factor factors apart from achieved organizational influencing leadership which are

success because of the performance systems, behavior of the CEO with organizational the employees. structure, and staff skills while corporate culture acts as a moderator. Oyewobi The effects of There is a moderating Focus was on The current study ( 2013) business effect of the environmenta focused on the environments on environmental dimensions l dimensions moderating role of corporate strategies on organizational as moderating corporate culture on and performance of performance. In sum, the variables on the relationship construction dimensions of business relationship between strategy organizations in environment have organisation institutionalisation south Africa moderating effects on the strategies and and performance. organizational strategies performance and performance Yasir, The impact of The results showed a Knowledge The current study Zulqarnain, knowledge positive impact of management explores other Muhamma, management on knowledge management is not the factors other than Aslam organizational on organizations only factor knowledge or skills (2013). performance. performance. that can which include are influence systems, performance organizational structure, and leadership styles while corporate culture acts as a moderator. Shakil The relationship Results show that Focused on In Current study the (2012) between adaptability and mission the effect of moderating role of components of has significant positive Organisationa corporate culture is organizational values in correlation for l culture on explored culture and performance performance performance management practices Mbako & Drivers of A good liquidity position, Performance Current study Charles Organizational independent industry was viewed focused on (2012) Performance from regulations, and Strong from a performance from a a State-Owned boards affect good firm financial non-financial Enterprise(SOE) performance as revealed perspective. perspective Perspective by SOE set up

Fakhar, The impact of Organizational culture Findings The current study Rana, organizational deeply impacts on various based on used a proportionate Ayesha and culture on organizational processes, convenience stratified random Lalarukh organizational the employees , and sampling sampling which (2012) performance overall performance. which is not enables hypothesis suitable for testing and further hypothesis generalization of fi testing and ndings. generalization of findings

Jonathan Leadership Compared to transactional Findings The current study (2012) behaviors and their style of leadership, based on only focused on impact on transformational one style of leadership in organizational leadership behaviors have leadership relation to strategy performance in a significant impact on institutionalization. governmental organizational entities performance. Denver, Strategic role of Partial success of strategy Focused on The current study Severino, Leadership in implementation results leadership as considers factors Tonderai, Strategy from a relatively low the only that can influence Shingirai Implementation in leadership involvement in factor that performance such as and Zimbabwe's State strategy implementation can influence staff skills, structure Christopher Owned Enterprises leading performance and systems in the (2012) Kenyan context. Felipe A model on Organizational structure Focused only Current study (2012) organizational has predictable effects on on focused on structure and a range of organizations. organizationa organizational organizational l structure as structure in relation performance. factor to strategy influencing institutionalization. performance Magda and The impact of Results gave support to The focus The current study Joaquim organisational the hypothesis that the was on focused on strategy (2011) privatization on the economic efficiency privatization institutionalization performance of improves as a and its and its influence to publicly owned consequence of influence on enterprises organizational performance privatization strategic reforms, though improvements may entail a given time-delay. Ul, Tahir, Relationship Involvement is highly is Focus was on In the current study and Shakil between intertwined with culture as an corporate culture is (2011) organizational consistency and explanatory studied as a culture and adaptability. Different variable moderating variable. performance dimensions of management organizational culture also practices: a case of have a positive substantial university in relationship with the Pakistan performance management practices

Trien and State ownership Results indicated state Focus was on Focus of Current is Amon and firm ownership has a state on strategy (2011) performance: moderating effect on the ownership institutionalisation evidence from the association between firm and and performance Chinese listed performance and firm performance firms value.

Eileen and Performance Direct monitoring has a Use of Current study Jennifer measurement (PM) direct influence on performance focused on system (2010) system use and organizational system is not in relation to organizational performance. Also, the only strategy performance problem-identification, factor that institutionalization

problem-solving and influences and its effect on validating causal performance. performance relationships indirectly impact organizational performance through shared vision and team learning. Jooste and The role of Strategic leadership leads Focused on Current study Fourie strategic leadership to efficient strategic focused on (2009) in effective implementation of a leadership as leadership as a sub strategy organizational strategy the only variable of strategy implementation: and improves factor that institutionalization Perceptions of organizational can influence and its influence on South African performance. performance performance of the strategic leaders energy sector in Kenya Mehdi and Effect of Priorities in Focused only Current study Bayrami organizational organizational structure on focused on other (2009) structure on include creating organizationa factors: systems, implementation of appropriate structure for l structure as leadership styles, strategies steady and continuous factor and staff skills and relation with customers influencing their influence on takes the first priority. performance performance. Antonio Innovative culture, Validated the positive and Focused only This study focused and management significant effect of on culture on the influence of Domingo control systems applying management and other factors; (2007) and performance in control systems on management leadership styles, young SMES organizational control and staff skills on performance with the systems as performance of the effect of culture being factors firms in the energy considered. influencing sector in Kenya performance Waseef and The relationship Management of human Human The current study Iqba (2011) between human capital significantly capital specifically looked capital impacts on organizational management at staff skills and management and performance. is not the other factors that organizational only factor influence on performance that organizational influences performance. performance Muogbo Impact of Extrinsic motivation for Focused only The current study (2013) employee employees or staff on employee studies staff skills in motivation on significantly affects their moti as relations to strategy Organisational performance. factor institutionalization Performance of influencing and organizational manufacturing performance performance. firms in Anambra State Rizwan, The interactional Knowledge management Focused only This study focused Yasin and effects of practices determine on the on strategy Saleh organizational organizational interactional institutionalisation (2014) culture on this effectiveness, and the effect of and the moderating relationship relationship is moderated Organisationa role of corporate between by conducive l culture on culture. knowledge organizational culture effectiveness

management of the practices and organisation effectiveness of the organization. Aguinis Employees Training has a direct The study The current study and Kraiger Training and effect on organizational Employee focused on staff (2009) Organizational performance. The training is not skills attained after Performance: mediating role of the only training, besides Mediation by employee performance factor that other factors. It also Employees also gave positive result influences explores the Performance performance moderating role of corporate culture Douglas Individual skill Learning rates of Focused only This study looked at (2007) growth and decay cognitive skills result in on individual staff skills influence affect the improvements in decision skill and not on organizational Performance of making quality. staff skill performance. project organizations Source: Author (2015)

2.5 Conceptual Framework

The conceptual framework captures the relationship between the study variables namely systems, leadership style, organisation structure, staff- skills, corporate culture and performance.

Independent Variables Dependent Variable

Strategy Ins titutionalisation Systems  Documentation of system processes  Implementation H01 initiatives supported  Process performance goals  accountability

Leadership style Performance  Strategy articulation  Provision of vision H02  Efficiency  Progress in change  Effectiveness implementation  Relevance  Personal inspiration  Goal Achievement  Rate of access to services  Customer feedback Organisational structure H03  Rules and procedures Corporate Culture  communication  Results oriented  Decision making  Teamwork autonomy  competitive  Time conscious actions approvals  Commitment   Prioritisation of Staff skills projects H04  Knowledge  Political  Competencies approvals

 Talent  Opportunities Moderating Variable

Figure 2.2: Conceptual Framework Source: Researcher (2015)

The independent variables corresponding to strategy institutionalisation were measured using four constructs, namely systems variable, which was determined through documented processes, IT-based processes, measurement of processes and process control; Leadership style variable, which was to be measured through strategy articulation, vision provision and implementation of progress reward; Organisational structure variable which was to be measured by rules and procedures, communication, decision making and length of time for approvals to be made; Staff variable which was to be measured by provision of challenging opportunities, Knowledge, recognition of reward to talent and career advancement.

Corporate culture was the moderating variable and included teamwork, emphasis on competitive actions, commitment, prioritization of projects and time conscious political approvals. The dependent variable was organisational performance measured non- financially through customer satisfaction, goal achievement, effectiveness, efficiency and relevance.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter presents the philosophical orientation of the study, research design, target population, sample selection techniques, method of determining the sample size, and instruments of and procedure for data collection. Operationalisation of the study variables has also been presented in this chapter. The chapter is concluded with a discussion of techniques adopted for data analysis.

3.2 Research Philosophy

The philosophical foundation adopted by the study was positivism. The core premise in the positivist philosophy is that knowledge is founded on facts. Thus, positivism considers void all abstractions or subjective status of individuals (Neuman, 2006).

Based on the aforementioned description, positivism is founded on the quantitative perspective featuring numerals being used to express objective realities. The numerical values inherent in positivism are believed to have power to explain and predict behaviours of phenomena (Neuman, 2006; Furrer, Goussevkaia & Thomas, 2008).

Inherent in positivism constitute measurement and analysis with possibility of replication by other researchers.

Positivism features high objectivity in nature. Easterby-Smith, Thorpe and Lowe (2006) emphasise the independence of the researcher from the phenomenon under study and that the only phenomena validly considered as knowledge in positivism are those with

44 features of observability and measurability. Reduction and deterministic measurements precisely determine reality in positivism. Various differences brought exhibited by cultures, social factors, ethnicities and economic conditions are not considered in determining realities (Easterby-Smith, Thorpe & Lowe, 2006).

This study, therefore, was guided by positivism paradigm. The study followed a systematised process which involved hypothesising fundamental laws and eventually deducing the observations with the aim of determining the truth or falsifying the predetermined hypotheses. Verification of the prepositions was executed through empirical tests. Empiricism was founded on operationalisation of variables presented in the conceptual framework, which allowed for measurement and generalization of the results.

3.3 Research Design

This research employed both descriptive and explanatory research designs owing to the fact that it was envisaged that the data to be collected would be quantitative and qualitative in nature. The need for collecting both types of data was to ensure in-depth analysis and explanations of strategy institutionalisation and performance of organizations in the electricity sub-sector. Sekaran and Bougie (2009) recommend use of more than one study design as one of the ways of enhancing the validity and reliability of the findings; thus, the researcher opted to adopt both qualitative and quantitative designs in line with Saunders’, Lewis’ and Thornhill’s (2009) recommendations.

The descriptive design is advantageous because it provides for capturing population’s characteristics and eventually test the hypothesis (Cooper & Schindler 2008). Further, descriptive design minimises biases in the study by limiting the extent to which the researcher can manipulate the variables. According to Mugenda & Mugenda (2003), explanatory research is suitable in studies with already constructed hypotheses explaining hypothetical interactions between two or more variables.

This design was more appropriate as it was able to bring out the influence of strategy institutionalisation on the performance of organizations in the electricity sub-sector.

Descriptive and explanatory research designs are suitable for generating pertinent, precise and accurate information concerning the phenomenon and draw valid conclusions from the facts discovered and give as many explanations as possible to the findings (Neuman, 2006).

It was anticipated that this design would support the study's desired objectivity, data collection and data analysis required for this study. Samuel, Jacqueline, Juma and

Kabare (2013) used descriptive and explanatory research designs in their study because of the need to allow for detailed description and analysis of their study variables.

3.4 Empirical Model

Several models that could be applied in quantitative data analysis such as logit, discriminant analysis, probit, and regression models were identified. However, unless a dependent variable is binary in nature, Logit, probit, and discriminant analysis models cannot be suitable (Field, 2009). Muthen and Muthen (2007) recommend use of

46 multiple regressions for data with a continuous dependent variable. The study, therefore, used Multiple Regression models due to the continuous nature of the dependent variable.

Multiple Regression models involved combining several independent variables into one regression equation. According to Jackson (2009), assessment of the effect of multiple predictor variables on the dependent variable is performed based on the combined linear equation. The eventual aim of analysis using multiple regression models was to establish the line of best fit and the most parsimonious reasonable model for describing the relationship between the dependent (outcome or response) variable and a set of predictor (independent variables).

The regression models was as follows

Y= β0 + β1X1+ β2X2+ β3X3+ β4X4 + ε……………………………………………. (3.1)

Where

Y = the dependent variable - Performance

β0 = constant

훽1- 훽4 = Beta Coefficients

X1 = Systems

X2 = Leadership style

X3 = Organisational Structure

X4 = Staff Skills

ε = Error term

In derivation of the composite index (SI) for the study variables, the researcher adopted the weighted geometric mean formula as recommended by Alan and Emma (2015). It was derived as follows:

...... …... (3.2)

Where,

Y = β0 + β5SI + ε …………………………………………………………….…… (3.3)

Where

Y = Performance

SI = Composite index for systems, leadership style, organisational structure and staff skills.

β0 = Constant

β5 = Beta coefficient

To establish the influence of corporate culture as a moderating variable, two models; model 3.4 and 3.5 were used. Whisman and Mc Clleland (2005) recommend

48 determining the statistical significance of the coefficient of interaction in studies featuring an overall effect to be moderated.

Model 3.4 is stated as:

Y = β0+β5SI+β6CC+ ε……………………………………….…………..………… (3.4)

Where:

SI = Composite index for systems, leadership style, organisational structure and staff skills.

CC = Corporate Culture

훽0 = constant

훽6 = Beta coefficient

ε = Error term

If corporate culture was significant when introduced into model 3.4 then it would have satisfied the first explanatory condition where the coefficient of corporate culture (CC) should be significant (Whisman & Mc Clleland, 2005). Finally, the study estimated model 3.5 with the aim of establishing the direction and effect of the moderator on the predictor variables and its cumulative effect on the outcome (dependent) variable.

Y = β0+β5SI + β6CC + β7SI*CC + ε…………………………………………… (3.5)

Where

Y = Performance

SI = Composite index for systems, leadership style, organisational structure and staff skills.

CC = Corporate Culture

SI*CC = Product of Strategy Institutionalisation and Corporate Culture

훽7= Beta Coefficient

ε = Error term

Table 3.1 summarises the eligibility and analytical criteria on moderation

Table 3.1: Moderation Decision – Making Criteria

Model 3.4 Model 3.5 Conclusion

β6 not significant No overall effect to moderate (P ˃ 0.05)

β6 is significant β7 not significant Moderating variable is an explanatory (P < 0.05) (P ˃ 0.05) variable

Β6 is significant β7 is significant Moderating variable has a moderating (P < 0.05) (P < 0.05) effect Source: (Whisman & Mc Cllelland, 2005)

3.5 Operationalisation and Measurement of Variables

Organisational performance was the dependent variable in this study while systems, leadership style, staff skills and organisational structure were the independent variables.

The study considered corporate culture to be the moderating variable. The description of the four variables of this study and their operationalisation is presented in Table 3.2.

Table 3.2: Operationalisation and Measurement of variables

Variable Nature Operationalisation Measurement Dependent  Customer satisfactionI 5 – Point Likert Scale Performance Variable  innovation in processes  customer access to information  Goal achievement  Attainment of strategic objectives Independent  Documentation of processes 5 – Point Likert Scale variable  Implementation initiatives Systems supported  Process performance goals  Accountability Independent  Strategy articulation 5 – Point Likert Scale Leadership variable  Provision of vision Style  Change implementation Progress reward  Employee motivation Staff Independent  Results oriented 5 – Point Likert Scale variable  Teamwork,  Emphasis on competitive action  Commitment Independent  Rules and procedures 5 – Point Likert Scale Organisation variable  Communication Structure  Decision making autonomy. Moderating  Prioritisation of projects 5 – Point Likert Scale Corporate Variable  Time conscious Political Culture approvals  Appointments  Internal politics Source: Researcher (2015)

3.6 Target Population

The target population included all the seven state owned corporations in the electricity sub- sector as at July 2015. The accessible population were the management employees from the seven corporations in Nairobi County where the headquarters of the corporations is located. The accessible population totalled to 512 managers comprising of top level, middle level and low level managers as presented in Table 3.3

Table 3.3: Distribution of the Management Employees in State-Owned Corporations in Electricity Sub- Sector

State owned Management level Stratum population Percentage corporation Strata Size Top management 12 KenGen Middle level 22 24.2 Lower level 90 Sub Totals 124 Top level 10 KPLC Middle level 25 26.4 Lower level 100 Sub Total 135 Top level 10 REA Middle level 15 15.6 Lower level 55 Sub total 80 Top level 8 KETRACO Middle level 16 13.3 Lower level 44 Sub Total 68 Top level 7 GDC Middle level 12 10.4 Lower level 34 Sub Total 53 Top level 8 ERC Middle level 12 8.2 Lower level 22 Sub Total 42 Top level 1 KNEB Middle level 6 1.9 Lower level 3 Sub Total 10 TOTAL 512 100 Source: MOE (2014)

3.7 Sample Size and Sampling Design

A census of the seven state-owned corporations in the electricity sub-sector was conducted. The research unit of analysis was therefore all the corporations owned by the state and operating in the electricity sub-sector. The respondents comprised of management employees of these corporations. A proportionate stratified random sampling technique was used for sample size selection of the 512 managers that were accessible.

Respondents were drawn from pre-identified three strata of top level management that comprised chief executive officers and senior managers, middle level comprised heads of departments and their assistants and lower level included supervisors. Saunders,

Lewis and Thornhill (2007) argue that more detailed information is easily collected from a sizeable sample consisting of only fewer cases.

Yamane’s (1967) formula was applied for in arriving at a sizeable sample. The formula is as given below:

n = N/ (1+N (e) 2)

Where n = sample size, N = Population size and e = error term

N = 512, e = 0.05

Hence n = 512/ (1 + 512(0.05)2) = 225

Using the formula by Yamane, the sample size at 95 percent certainty was found to be

225, translating to 34.9 percent of the target population. A proportional distribution of this sample was then done across the strata. The strata sample size was done as per

Pelhazur and Schmelkin's (1991) formula also cited by Kyamanywa (2005) as described below:

풓 = (풄 ∗ 풔)/풑

Where r is respondent required from a stratum c is stratum population (category) s is the desired size (225) p is the total population (512)

Table 3.4 shows the distribution of management employees sampled for each corporation

Table 3.4: Sample Size

Management Sample size Strata Stratum population level 퐫 = (퐜 ∗ 퐬)/퐩 Top management 12 5 KenGen Middle level 22 10 Lower level 90 40 Sub Totals 124 54 Top level 10 4 KENYA POWER Middle level 25 11 Lower level 100 44 Sub Total 135 59 Top level 10 4 REA Middle level 15 7 Lower level 55 24 Sub total 80 35 Top level 8 4 KETRACO Middle level 16 7 Lower level 44 19 Sub Total 68 30 Top level 7 3 GDC Middle level 12 5 Lower level 34 15 Sub Total 53 23 Top level 8 4 ERC Middle level 12 5 Lower level 22 10 Sub Total 42 18 KNEB Top level 1 0 Middle level 6 3 Lower level 3 1 Sub total 10 4 TOTAL 512 225 Source: Researcher, 2015

3.8 Data Source and Collection Instruments

Primary data was collected using a self- administered. A structured questionnaire was administered to the three levels of management. The rationale for including the three levels of management was the recognition that they were involved in the strategy formulation and implementation. Secondary data obtained reviewing documents of the company reports were also used in this study. The questionnaire was divided into four parts to obtain information covering various aspects of the study. Part A covered general information of the state-owned corporation. Part B contained the likert type of questions on strategy institutionalisation including systems, leadership, staff skills and organisational structure. Part C covered corporate culture and Part D was on organisational performance.

3.9 Validity and Reliability

Ensuring content validity involved a pilot test. The researcher administered questionnaires to 30 respondents. Results from the piloting process were used to adjust the questionnaire where as deemed fit. This was meant to ensure the instrument measured what it was supposed to measure as per the requirements of content validity outlined by Saunders et al (2007).

Piloting tested whether participants would experience difficulties in comprehending questionnaire items, identify any omitted items, approximate the time respondents would take to complete the questionnaire and indicate how the data collection instrument (questionnaire) would perform in the field. Results from the pilot study confirmed the validity of the questionnaire for data collection.

Construct validity was also evaluated. Cooper and Schindler (2011) describe construct validity as the extent to which a set of measured items actually measures the theoretical hidden construct that the items are intended to measure (Cooper & Schindler, 2011).

Construct validity was addressed by including in the questionnaire all those variables that were derived from the literature.

Construct validity is meant to adequately cover the research questions guiding the study

(Alan & Emma, 2015). Supervisors and other experts who were from study’s area of operationalisation reviewed the questionnaire to ascertain its content validity. A close examination of the questionnaire individually was carried out and the feedback provided to the researcher. The questionnaire for this study was criticised based on its length, which forced the researcher to shorten it to the standard length.

The fundamental element and purpose of reliability was to estimate the consistency of measurement. Consistency implies the degree to which an instrument measures the same way each time when same subjects are treated under different conditions using same procedures. Measuring internal consistency involved estimating reliability by grouping questionnaire items that measure the same concept as suggested by Ranjit

(2005). Cronbach's alpha reliability coefficient was used to test the reliability of the questionnaire. Based on the assertion by Wunnely (1998) and George & Malley (2003), a reliable instrument of data collection should have alpha value of greater than or equal to 0.70. Table 3.5 presents a summary of results for all the variables.

Table 3.5: Reliability Test

Variables No of items Cronbach’s alpha Comment Organisational Performance 10 0.789 Reliable Systems 6 0.845 Reliable Leadership Style 5 0.747 Reliable Organisational structure 10 0.821 Reliable staff 8 0.789 Reliable Corporate Culture 10 0.855 Reliable Overall 55 0.913 Reliable Source: Pilot Data (2015)

According to the findings presented in table 3.4, all the variables met the 0.7 alpha value requirements. This, therefore, implies that the set of items in the questionnaire are positively correlated to one another.The reliability of the instrument stands at approximately 95% as recommended by George and Malley (2003). Therefore, a cut-off point coefficient of 0.7 and above as a strong measure of reliability was used.

3.10 Data Collection Procedure

Kenyatta University graduate school provided an authorization to conduct this study.

The necessary clearance was also sought from the National Commission for Science and Technology (NACOSTI). Additionally, the management of the state-owned corporations provided the authorization and consent to collect information from study respondents.

The questionnaire was administered using a drop and pick method and was collected after three weeks. The choice of drop and pick method was used because the technique was believed would minimise non-coverage error. Drop and pick method would also

57 reduce sample bias without compromising the response rates. The technique was also beneficial because it enabled the researcher to gain experiential insights that could not be possible with other methods of survey (Steele, 2001)

3.11 Data analysis Methods

Data was analyzed both quantitatively and qualitatively as described below:

3.11.1 Quantitative Data Analysis

After respondents filled all questionnaires, the researcher collected them from the field and performed data cleaning. The aim of data cleaning was to identify and correct errors that might have occurred during data collection. Coding of data was carried out in readiness for analysis. Descriptive and inferential statistics were used to analyse quantitative data.

Descriptive statistics were used to provide descriptions of data based on descriptive aspects of frequencies, means, percentages, and standard deviations. Inferential statistics, on the other hand, was carried out using multiple and step by step regression models. Multiple regression analysis was used to generate a weighted estimation equation that could be used to make predictions of the relationships between dependent and independent variables.

The strength and nature of the correlation was determined by Pearson's product moment correlation (r). The amount of variation in the dependent variable explained by the independent variables was interpreted based on the coefficient of determination (R2).

The standardization beta (β) coefficient was determined to indicated the direction

(positive or negative) and the magnitude of the relationship among variables in addition to comparing the relative contribution of each independent variable on organisational performance recommended by Hair (2011).

Derivation of the composite index for Strategy Institutionalisation (SI) was done using the weighted geometric mean formula recommended by Alan & Emma (2015). It was derived as follows:

…………………………………………………..3.6

Where:

Testing of the research hypotheses was done at 95% level of confidence to determine whether the influence by independent variables was significant or not. A p-value of less than 5 percent meant that the null hypothesis failed to be accepted and the alternate hypothesis failed to be rejected. A p-value of greater than 5 percent meant a fail to reject the null hypothesis, thus, the alternate hypothesis failed to be accepted.

After determining the strength of the predictor variables, the researcher used variables that determined the model to run multiple regressions in stepwise method. Multiple regressions determined the predictors that the predictors that best predict the dependent variable. Field (2013) suggests that it is vital to perform diagnostic tests to check the underlying assumptions of regression analysis. Normality, Linearity, Multicollinearity,

Heteroscedasticity, Sample adequacy and Sphericity tests were carried as follows:

a) Normality test

Normality was tested by use of Shapiro-Wilk test. A P-value of greater than or equal to

0.05 indicated that the data was normal (Jackson, 2010). A P-value of less than or equal to 0.05 indicates that the distribution was not normally distributed and that the distribution would be rejected at 5 percent level of significance. A sufficiently normally distributed variable would score a P-value greater than 0.05 and would be deemed fit for statistical analysis as it does not lead to any inflated statistics and underestimated standard errors (Hair, 2011).

b) Linearity Test

Pearson’s correlation coefficient was used to test the linear relationship between organizational performance and each of the independent variables. The role of the correlation coefficient is to show the strength and the direction of the linear relationship

(Yount, 2006); a negative correlation indicates that the variables are inversely related such that an increase in one of the variables leads to a decrease in the other variable. A

60 positive correlation coefficient, on the other hand, would indicate a direct influence such that when one variable increases, the other one also increases (Field, 2009).

c) Multi-collinearity Test

The aim of performing multicollinearity test was to ascertain that there is no collinearity problem of the predictor variables having some explanatory power over each other.

According to Field (2013), presence of multicollinearity is deduced by Variance

Inflation Factor (VIF) of greater than 10 indicating the presence of multicollinearity.

Multi-collinearity reduces the reliability of multiple regressions models because the standard error of coefficients increases with increase in collinearity.

d) Heteroscedasticity Test

Breush-Pagan test, as recommended by Warner (2008), was used to test

Heteroscedasticity. The test carried out determined whether variance of errors from the regression was contingent upon the values of the independent variables. The researcher wanted to test the null hypothesis of a constant variance between the error term and alternative, that is, the error term and alternative were a multiplicative function of one or more variables. A P-value of less than 0.05 would indicate heteroscedasticity (a constant variance does not exist in the error term); thus, null hypothesis would be rejected at 5 percent level of significance. Heteroscedasticity would also be indicated by large chi-square, implying that the error term was not constant.

61 e) Sampling Adequacy Test

Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy was used to carry out sample adequacy confirmation. The purpose of the KMO index was to examine and justify the suitability of the application of Factor Analysis. A significant factor is indicated by values between 0.5-1.00 (Magd, 2008). According to Hutcheson and

Sofroniou (1999), values between 0.7 and 0.8 can also provide a good indicator for factor analysis.

f) Bartlett's Test of Sphericity

The strength of the relationship among variables was measured using Bartlett's Test of

Sphericity. This tested the null hypothesis that internal consistency did not exist (inter- correlation) against the alternative that the items used in the structured questionnaire to measure the various variables were internally consistent. Failure to reject the null hypothesis means that the principal components that measures a particular domain have to be found through factor analysis Field (2013).

Summarizing, organizing and presenting the data collected and analysed was done using tables. Chapter 4 presents results and discussions, which is followed by chapter 5, which presents conclusions and recommendations. Table 3.6 presents a summary of data analysis techniques.

Table 3.6 Tests of Hypotheses Objectives Hypothesis Statistical Research Interpretation approach Question To determine the Systems have no Part B R2 influence of systems on influence on Q.7 to Q. F-value the performance of state- performance of state- 13 t-Value owned corporations in the owned corporations Level of Electricity sub-sector in in the electricity sub- significance = 0.05 Kenya. sector in Kenya. P≤0.05 reject null hypotheses

To establish the influence Leadership style has Part B R2

of leadership style on the no influence on the Q. 14 to Q. F-value Yi =β +β X + performance of state- performance of state- 0 1 1 20 t-Value β X +β X + owned corporations in the owned corporations 2 2 3 3 Level of β X +ε Electricity sub-sector in in the Electricity sub- 4 4 significance = 0.05

Kenya. sector in Kenya. P≤0.05 reject null

hypotheses

To assess the influence of Organizational Part B R2

organisational structure structure has no Q. 21to Q. F-value

on the performance of influence on the 31 t-Value

state -owned corporations performance of state- Level of

in the Electricity sub- owned significance = 0.05 sector in Kenya. corporations in the P≤0.05 reject null Electricity sub-sector hypotheses in Kenya. To determine the Staff- skills have no Part B R2 influence of staff skills on influence on the Q. 32 to Q. F-value the performance of state- performance of state - 40 t-Value owned corporations in the owned corporations Level of Electricity sub-sector in in the Electricity sub- significance = 0.05 Kenya. sector in Kenya. P≤0.05 reject null hypotheses To assess the moderating Corporate culture has Part D R2 influence of corporate no moderating Q.56 to F-value culture on the relationship influence on the Y = β0+β5SI + Q.65 t-Value between strategy relationship between β6CC + Level of institutionalisation and the strategy β7SI*CC + ε significance = 0.05 performance of state - institutionalisation P≤0.05 reject null owned corporations in the and the performance hypotheses Electricity sub-sector in of State-owned Kenya. corporations in the Electricity sub-sector in Kenya Source: Researcher (2015

3.11.2 Qualitative analysis

Content analysis was used to analyse the open-ended questions. This involved the researcher grouping common themes together and drawing inferences from the findings as posited by (Glesne, 1998). As per Cooper and Schindler (2008) using structured questions in a study allows for content analysis, which is instrumental in bringing to light issues that would not be possible to capture through closed questions.

3.12 Ethical Issues

Various steps were undertaken to avoid going against the ethical standards of research.

First, the researcher obtained informed consent from the relevant authorities and research participants. Prior to data collection exercise, respondents were informed that there were no direct benefits or losses incurred if they failed to participate in the study.

The study addressed the issue of confidentiality by assuring participants that the information they provided would not be shared with third parties, and that it was only meant for purposes of data analysis. The respondents were also informed that they were free to stop participating in the study at any stage if they were not willing to continue.

The researcher assured the respondents that any information they provided was not meant to harm them or be used for selfish, commercial or personal gains but was meant for academic purposes. Additionally, the study was founded on the ethical requirements of full disclosure, fair treatment, and privacy. Participation in the study was voluntary verbally consented to by the respondents. The names of the respondents were not identified in the questionnaires that they filled.

The researcher guaranteed confidentiality, privacy and security of the information obtained from the respondents by restricting unwanted parties from accessing the information containing features that could revealed the respondent identification and data files carefully controlled.

CHAPTER FOUR

RESEARCH FINDINGS AND DISCUSSION

4.1 Introduction

The findings and discussion of the study are presented in the two main sections of this chapter. The first section presents the study results arrived at using descriptive statistics.

Inferential statistics used to test the hypotheses of the study are presented in the second section.

4.2 Response Rate, Respondents Features and Firm Characteristics

4.2.1 Response Rate

The study sought to engage a total of 225 management employees of state-owned corporations in the electricity sub-sector in Kenya. According to Wimmer and

Dominick (2006), a response rate of between 21 percent and 70 percent is acceptable for self-administered questionnaires. Studies carried out at organisational level have an appropriate response rate of between 35 percent and 40 percent (Rogelberg & Stanton,

2007). Table 4.1 presents a summary of the response rate.

Table 4.1: Response Rate

Frequency Per cent Filled and returned 142 63.1 Non- returned 83 36.9 Total 225 100 Source: Survey Data, (2015)

Results presented in Table 4.1 shows that out of the anticipated 225 responses, the study positively managed to engage 142 respondents. This represented an overall successful response rate of 63.1 per cent. The unsuccessful response rate of 36.9 percent consisted of unreturned and uncompleted questionnaires. A response rate of 63.1 percent is acceptable for self-administered questionnaires since it's greater than the threshold of 21 percent (Wimmer & Dominick, 2006), thus the 63.1 per cent response rate is adequate for attaining the objectives of the study.

4.2.2 Respondents Characteristics

This section presents the demographic characteristics of the management employees of state-owned corporations in the electricity sub-sector in Kenya. The information is summarized in Table 4.2

Table 4.2: Respondent Characteristics

Number of Years Served Highest level of Education 1-10 11-20 Above 20 Frequency Per cent Diploma 3 7 8 18 12.7 Bachelor Degree 27 21 31 79 55.6 Masters 14 22 6 42 29.6 Doctoral (PhD) 2 1 0 3 2.1 Total 46 51 45 142 100 Source: Survey Data, (2015)

Results presented in Table 4.2 shows that Majority (55.6%) of the employees of state- owned corporations had a bachelor's degree while 29.6 percent had masters' degree.

12.7 percent were in possession of diploma and 2.1percent had doctoral degrees. This is representative of the population under study that has a majority of the managers holding

67 a bachelor's degree. This shows that the electricity sub-sector is managed by high- skilled individuals. Further Table 4.2 shows that the respondents with bachelors degree were the majority and had served for over twenty years followed by those with Diploma and masters degree. Notably, the majority of the respondents with doctoral degrees had served for a period less than ten years. This underscores the fact that managerial positions in the parastatals require more skills than basic education but are less attractive to doctorate holders. The data collected from the respondents is consistent with the population and can be relied on for unbiased results.

4.2.3: Distribution of Respondents by Firm, and Firm size

This section presented the distribution of respondents across state corporations, branches and firm size as categorised by the number of employees. The presentation of the results is done in Table 4.3.

Table 4.3: Respondents Firm and Firm size Characteristics

Distribution of Respondents by firm Frequency Percent GDC 15 10.6 REA 19 13.3 KETRACO 18 12.7 KPLC 38 26.8 KenGen 36 25.3 ERC 13 9.2 KNEB 3 2.1 Total 142 100 Distribution of respondents by Number of Branches Frequency Percent Below 10 56 39.4 Above 10 86 60.6 Total 142 100 Distribution of respondents by Firm size Frequency Percent Below 200 Employees 21 14.8 200-500 22 15.5 600-900 20 14.1 1000-1300 34 23.9 Above 1300 45 31.7 Total 142 100 Source: Survey Data (2015)

From the Results presented in Table 4.3, KPLC and KenGen had more than half

(52.1%) of the respondents. This is in consonance with the study population since

KenGen and KPLC are the leading corporations in the electricity sub-sector. In terms of branches corporations with more than 10 branches had 86 respondents which represent

60.6 per cent of the respondents. This distribution favoured corporations with a high number of branches. However, this is expected since the number of branches determines the number of managers and subsequently, the respondents. Table 4.3 further shows that corporations with more 1300 employees and those with employees between 1000 and1300 had 55.6 per cent of the respondents. This bias is expected since the number of employees determines the number of managers, and therefore, the respondents.

4.3 Descriptive Statistics

This section presented the descriptive statistics of the responses in the six domains of the structured questionnaire. The mean and the standard deviation are used to show the closeness and the dispersion of the responses respectively.

4.3.1 Systems

Managers were asked to rate systems on a scale of 1 to 5. Where 5 represented ‘strongly agree' and 1 ‘strongly disagree'. The systems domain had six Likert items. Mean and standard deviation, as well as the average mean, were then computed for the variable as shown in Table 4.4.

Table 4.4: Descriptive Statistics on Systems

N Mean Std Dev Organization has the correct procedures to support 142 4.100 2.668 implementation initiative The organization has put in place specific process 142 4.014 0.841 performance goals Online control of information has been established 142 3.700 1.078 Information flow through system process is continuous 142 3.510 0.979 and efficient Process measurements are defined. 142 3.600 0.877 Tasks performed are is in relation to strategy 142 3.821 0.839 Accountability is clearly defined 142 3.620 1.010 Average 3.765 1.185 Source: (Survey Data, 2015)

Results presented in Table 4.4 show that the average mean score for the systems domain is 3.765 and the standard deviation is 1.185. The average score round off to a score of 4 on the five-point Likert scale adopted by the study. This implies that on average the

70 managers affirmed that their organisations had put in place the correct systems to support strategy institutionalisation. This is supported by the statement suggesting organization had the correct procedures to support implementation initiatives, which had the highest mean of 4.100.

One of the items ‘Information flow through the process is continuous and efficient scored comparatively lower than the other items, with a mean of 3.510 and a standard deviation of 0.979 implying the respondents agreed that there was continuous and efficient information flow through the process in the organisations . This may be explained by the fact that most processes that operate in business are temporary and constantly changing, and a specific process exists to serve. Furthermore, business processes are constrained by business rules.

The findings are in agreement with the assertion by Eileen and Jennifer (2010) that organisational performance is impacted directly by monitoring and indirectly by shared vision and team learning through problem finding, solving and validation of causal relationships.

4.3.2 Staff -Skills

Staff skills domain had eight Likert items. The mean and spread for each of the items as well as the average mean and spread are shown in Table 4.5.

Table 4.5: Responses on Staff -Skills

N Mean Std Dev The organization provides challenging opportunities to 142 3.417 0.936 employees to improve their performance. The staff feels valued by the organization 142 3.171 0.977 The organization loans out staff to other departments to make 142 2.627 1.180 them engaged Pairing of employees as a method of coaching is promoted by 142 2.873 1.173 the organization The organization has strategies in place that facilitate 142 3.284 1.015 productive and progressive work environment The organization recognizes and gives rewards to good talent. 142 2.910 1.093 The organization presents opportunities for career advancement 142 3.194 1.107 Personal values resonate with culture, systems, goals and shared 142 3.261 0.988 values of organization. Average 3.092 1.059 Source: Survey Data (2015)

Results presented in Table 4.5 show that the average mean score for the staff- skills domain is 3.092 with a standard deviation of 1.059. The average score round off to a score of 3 on the five-point Likert scale adopted by the study. This implies that the on average the respondents were neutral on some of the items in this section. The respondents affirmed that the organisation provided challenging opportunities to employees to improve their performance which had the highest mean score of 3.417, and that they felt valued by the organisation (M= 3.171, SD= 0.977). The organization had strategies in place that facilitated productive and progressive work environment

(M= 3.284, SD= 1.015) and presented opportunities for career advancement (M= 3.194,

SD=1.107).

They, however, disagreed that organization loaned out staff to other departments to make them engaged, which had the lowest mean score of 2.627 and standard deviation of 1.180. The respondents also felt that the organisation did not promote pairing of employees as a method of coaching (M= 2.873, SD= 1.173) and that good talent was not recognised and rewarded (M=2.910, SD=1.093).

The findings are in agreement with the assertion by Muogbo (2013) on the existence of a relationship between employee motivation and organizational performance. Further, the results corroborate with the findings of Aguinis and Kraiger (2009) that the overall profitability, effectiveness, productivity, revenue and other outcomes of the organisation are improved by training

4.3.3 Leadership style

The leadership style domain had five Likert items. The mean and spread for each of the item as well as the average mean and the average standard deviation are shown in

Table 4.6.

Table 4.6: Descriptive Statistics on Leadership style

N Mean Std Dev I/My leader clearly articulate(s) the strategy 142 3.800 0.972 I/My leader provide(s) a compelling vision 142 3.700 0.937 I/my leader provide(s) measurable objectives for implementing 142 3.700 1.001 the vision I/My leader recognize(s) and rewards progress in implementing 142 3.255 1.056 change I/My leader personally inspire(s) and motivates for the change. 142 3.586 0.986 Average 3.610 0.990 Source: Survey Data (2015)

Research findings in Table 4.6 indicate that the average score for the leadership domain was 3.610 and average standard deviation of 0.990. The average score round off to a score of 4 on the five-point Likert scale adopted by the study. Though the respondents disagreed that their leader recognised and rewarded progress in the implementation of change which had the lowest mean score of 3.255 and standard deviation of 1.056, they generally agreed that their leaders clearly articulated the strategy, which had the highest mean score of 3.800 and standard deviation of 0.972. They also agreed that their leaders provided a compelling vision (M=3.700, SD=0.937), provided measurable objectives

(M=3.700, SD=1.001), and personally inspired and motivated for change (M=3.586,

SD=0.986).

The findings are in agreement with the assertion by Jooste and Fourie (2009) that the most important driver of strategy implementation is strategic leadership for it contributes positively to the effective implementation of a strategy, leading to organisational performance.

4.3.4 Organizational Structure

The respondents were required to rate their level of agreement or disagreement with the statements pertaining to the organisational structure on a scale of 1 to 5. Where 5 represents ‘strongly agree' and 1 ‘strongly disagree'. The results are in Table 4.7.

Table 4.7: Responses on Organizational Structure

N Mean Std Dev Decisions and working relationships are governed by formal 142 3.716 0.881 rules and procedures Rules and procedures provide means for defining appropriate 142 3.694 0.886 behavior Communication concerning strategy implementation is both 142 3.483 0.914 horizontal and vertical Temporary teams are used for strategic assessment, process 142 3.388 0.866 development and new product development Lines of communication are clear 142 3.455 0.970 Lines of responsibility are clear 142 3.492 1.001 Route to top management for approvals is time conscious. 142 3.4 1.076 Once a decision is made implementation tends to be straight 142 3.246 0.961 forward Specialists and experts in respective areas are given 142 3.194 0.992 substantial autonomy Structural changes are made to address new strategies, 142 3.467 1.050 technological, economic and demographic changes. Average 3.453 0.960 Source: Survey Data (2015)

Research findings in Table 4.7 indicate that the average score for the organizational structure domain is 3.453 with a standard deviation of 0.960. On the five-point Likert scale adopted by the study, the average scores round off to a score of 4. This implies that the respondents, in general, agreed with each of the Likert items in the domain.

The respondents affirmed that working relationships and decisions were governed by formal rules and procedures thus providing means for defining appropriate behavior as

75 supported by the statement ‘decisions and working relationships are governed by formal rules and procedures' which had the highest mean of 3.716 and standard deviation of

0.881. The respondents also felt that communication concerning strategy implementation was both horizontal and vertical , lines of communication and responsibility were clear that structural changes were made to address new strategies, technological, economic and demographic changes which had mean scores of

3.483,3.455, 3.492, 3.467 and respective standard deviations of 0.914, 0.970, 1.001 and

1.050.

The respondents however disagreed that the route to top management for approvals was time conscious which had mean scores of 3.4 and standard deviations of 1.076 and that implementation was straightforward once a decision had been made (M= 3.246,

SD=0.961). They also felt that specialists and experts in respective areas were not given substantial autonomy (M=3.194, SD=0.992) and that temporary teams were used for strategic assessment, process development and new product development (M=3.267,

SD=1.050)

The findings are in support of the argument by John and Kenneth (2001) that organisations may, as the best strategy, consider redefining extremely difficult problems into ones that can be managed through structural means. They further argued that structure is not a "one size fits all" solution to coping with organizational problems on examining how performance is shaped by structure when task difficulty varies.

4.3.5 Corporate Culture

The respondents were required to rate their level of agreement or disagreement with the statements pertaining to corporate culture on a scale of 1 to 5. Where 5 represents

‘strongly agree' and 1 ‘strongly disagree'. The results are presented in Table 4.8.

Table 4.8: Perceptions on Corporate Culture

N Mean Std Dev The organization has formal procedures of governance 142 3.954 0.849 The organization is a very personal place. Beliefs and values are 142 3.128 0.972 widely shared between employees. The leadership in the organization is generally considered to 142 3.330 0.959 promote mentoring, facilitating, or nurturing The management style in the organization promotes job security, 142 3.286 1.062 conformity, predictability and stability. Loyalty, mutual trust and commitment to the organization runs 142 3.316 1.189 high. Formal rules and policies is the glue that holds the organization 142 4.466 1.033 members together. The organization emphasizes competitive actions and 142 3.654 0.595 achievement The organization defines success on the basis of efficiency. 142 3.353 1.109 Top management is selected on competitive basis 142 3.361 1.321 No delays experienced in implementation of strategies and 142 2.985 1.174 projects attributed to political consultations Average 3.500 1.326 Source: Survey Data (2015)

Results presented in Table 4.8 show that the average score for the corporate culture domain is 3.500. The average scores round off to a score of 4 on the five-point Likert scale adopted by the study. This implies that the respondents generally agreed with each of the Likert items in the domain. The respondents agreed that formal rules and policies are the glue that holds the organization members together as supported with the highest mean score of 4.466 and standard deviation of 1.033. They also agreed that the

77 organization had formal procedures of governance (M= 3.954, SD=0.849) and that the organization emphasized competitive actions and achievement (M=3.654, SD= 0.595).

The respondents however took a neutral ground on whether the leadership in the organization was generally considered to exemplify mentoring, facilitating, or nurturing

(M=3.330, SD= 0.959), whether the management style in the organization promoted job security, conformity, predictability and stability (M=3.286, SD= 1.062) or whether loyalty, mutual trust and commitment to the organization ran high (M=3.316, SD=

1.189). This is expected since the respondents view corporate culture from different perspectives and ideologies. Further, the elements of corporate culture emphasized differ across the organisations.

The respondents also were neutral on whether their organization defined success on the basis of efficiency; whether the top management was selected on a competitive basis which had a respective mean score of 3.353 and 3.361 with respective standard deviations of 1.109 and 1.321. The statement that ‘no delays experienced in implementation of strategies and projects attributed to political consultations, had the lowest mean score of 2.985 and standard deviation of 1.174 implying that the respondents felt that delays in the administration of strategies could be attributed to political consultations.

The findings seem to agree with the assertion by Dissanayake and Semasinghe (2016) that entrepreneur's willingness to take an initiative is at least or partially depends on the

78 innate culture of him/her. Further, the degree of dependence of employees affects the effective utilization of entrepreneurial strategy and the relationship between employees and the owner of the firm is an important consideration provided that this nature creates a collective setting and thus affects the overall performance of the firm.

4.3.6 Performance

The respondents were required to rate their level of agreement or disagreement with the statements pertaining to performance on a scale of 1 to 5, where 5 represented

‘significantly increased' and 1 ‘significantly decreased'. Performance domain had 14

Likert items; the mean and spread for each of the item as well as the average mean and spread are shown in Table 4.9

Table 4.9: Responses on Performance

N Mean Std Dev Customer satisfaction 142 3.625 0.826 Employee encouragement to have innovation in processes 142 3.553 0.832 Enhancement in technology 142 3.955 0.770 Adapting to changing environmental conditions 142 3.667 0.807 Training of employees 142 3.351 1.073 Alignment of procedures and routines 142 3.523 0.827 Effective resource utilization 142 3.886 0.851 Customer acquisition 142 3.598 0.763 Accessibility of services 142 4.007 0.881 Accuracy of information provided to customers 142 3.709 0.898 Employee access to information 142 3.592 0.912 Continuous process improvement 142 3.621 0.937 Employee involvement in decision making 142 3.258 1.038 Attainment of strategic objectives 142 3.534 0.881 Average Score 3.634 0.878 Source: Survey Data 2015

Research findings presented in Table 4.9 shows that the overall average mean score for the section is 3.634 with a standard deviation of 0.878. This indicates that the

79 respondents agreed that performance of the corporations was effective, efficient and relevant as it increased from one point to the other. They attributed this to increased accessibility to services with a mean score of 4.007 and a standard deviation of 0.881, enhancement in technology with a mean of 3.955 and standard deviation of 0.770, effective resource utilization with a mean of 3.886 and standard deviation of 0.851, accuracy of information provided to customers with a mean of 3.709 and standard deviation of 0.898. From the study scale, effectiveness through increased access to services and relevance through enhancement in technology sub-variables each made high contributions to organizational performance with involvement in decision-making the least contribution.

4.4 Diagnostic Tests

Greene (2002) observed that accurate estimate regression can only be possible when the basic assumptions of multiple linear regressions are observed. In this regard testing of normality, linearity, homogeneity of variance, and multicollinearity were important.

The tests and results are presented below.

4.4.1 Normality test

To test whether the variables were normally distributed Shapiro-Wilk test for normality was used as recommended by Field (2013). P value ˃ 0.05 would imply that the variable is sufficiently normally distributed on a significance level of 5% and is fit for further statistical analysis without resulting to inflated statistics and underestimated standard errors (Magd, 2008). The test had a null hypothesis that the data is not

80 normally distributed. The test statistics for normality of each variable are shown in

Table 4.10.

Table 4.10: Normality Test

Variable Test statistic Z statistic P value Corporations Performance 0.682 0.2476 Systems -1.051 0.8533 Organizational Leadership 2.106 0.0676 Staff skills -0.038 0.5153 Organizational Structure -1.057 0.8547 Corporate Culture 1.349 0.0888 Source: Survey Data (2015)

Research findings in Table 4.10 show that the p-values for all the variables were greater than 0.05. Therefore, the null hypothesis that the variables are not normally distributed was rejected at five per cent level of significance. This means that ordinary least squares can be applied to the data and reliability tests requiring normality of the data such as t- tests can reliably be used as recommended by Jackson (2009).

4.4.2 Test for Linearity

To test whether the variables were linearly related, correlation analysis was used. The test had a null hypothesis of no linear association. Table 4.11 shows the test statistics for linear associations between the variables. The reference variable was corporation’s performance.

Table 4.11: Linearity Test

Reference Variable: Corporations performance Test statistics Correlation Coefficient P value Systems 0.4689*** 0.000 Organizational Leadership 0.4178** 0.000 Staff skills 0.6019*** 0.000 Organizational Structure 0.6761*** 0.000 Corporate Culture 0.6179*** 0.000 Source: Survey Data (2015)

Results presented in Table 4.11 show that the correlation coefficients p-values are less than 0.05. This implies that all the explanatory variables had significant and positive correlation coefficients. That is the variables are linearly related to performance. The significant and positive correlation implies that the coefficients of the independent variables in the regression models were positive. In addition, linear specification could have been the correct specification of the model as indicated by the significance of the coefficients as recommended by Field (2013).

4.4.3 Bartlett's Test of Internal consistency

The consistency of the items used in the structured questionnaire to measure the various variables used in the study was tested using Bartlett's test of sphericity. The test has a null hypothesis of no internal consistency (intercorrelated). Failure to reject the null hypothesis means that the principal components that measure a particular domain have to be found through factor analysis. However, rejection of the null means that all the items are internally consistent and their composites can be used to measure the variable in question. The test statistics are shown in Table 4.12.

Table 4.12: Bartlett’s Test

Variable Degrees of freedom Test statistic Chi Square P value Corporations performance 91 1098.79 0.000 Systems 21 383.79 0.000 Organizational Leadership 10 413.28 0.000 Staff skills 28 461.01 0.000 Organizational Structure 45 590.80 0.000 Corporate Culture 45 673.49 0.000 Source: Survey Data (2015)

Research findings in Table 4.12 indicate that the P- values for Chi Square are less than

0.05. Therefore all the variables have significant Chi-Square values. The null hypothesis that the variables are not internally consistent is rejected at five per cent level of significance. This implies that the samples were from a population with equal variances and there was internal consistency between the items of each dimension in the structured questionnaire. Therefore, simple means for Likert items from each dimension of the structured questionnaire could be used as composites for each variable without the use of factor analysis as recommended by Muthen and Muthen (2007).

4.4.4 Test of Sampling Adequacy

Kaiser-Meyer-Olkin (KMO) measure was used measure was used to test whether the sample was adequate for data analysis. KMO measure varies between 0 and 1, and values closer to 1 are better with a threshold of 0.5 (Williams, Brown & Onsman,

2012). Table 4.13 presents the KMO test statistics results

Table 4.13: Kaiser-Meyer-Olkin Test

Variable KMO Tests Statistics Corporations performance 0.923 Systems 0.853 Organizational Leadership 0.856 Staff skills 0.880 Organizational Structure 0.854 Corporate Culture 0.900 Source: Survey Data (2015)

Results presented in Table 4.13 shows that all the test statistics were higher than 0.5.

The sample used by the study was therefore adequate and representative of the study population implying that generalisations can be made as regards the accessible population of state-owned corporations in the Electricity sub-sector in Kenya as recommended by Magd (2008)

4.4.5 Multicollinearity Test

To determine whether multicollinearity would pose a problem, regression analysis was conducted. The Variance inflation factor (VIF) is given in Table 4.14

Table 4.14: Multicollinearity Test

Variable VIF Leadership style 5.49 Organizational structure 5.49 Staff skills 2.18 Systems 5.84 Mean VIF 3.95 Source: Survey Data (2015)

Results presented in Table 4.14 show that the VIF for leadership style = 5.49, organisational structure = 5.49, staff skills = 2.18, systems= 5.84. The mean VIF for the variables is 3.95. All the variables have a VIF that is less than 10 ruling out the possibility of multicollinearity (Field, 2009). The results, therefore, imply that the level of multicollinearity in the model could be endured as recommended by Jackson (2009).

4.4.6 Homeskedasticity Test

To test whether the residuals from the various regression models were homoscedastic,

Breusch Pagan test was used. The test has a null hypothesis of constant variance in the error term. The test statistics are shown in Table 4.15.

Table 4.15: Homoskedasticity Test

Table Breusch Pagan Test Chi P- value 4.17 0.97 0.3256 4.18 4.85 0.2750 4.19 3.87 0.0792 Source: Survey Data (2015)

Research findings in Table 4.15 show that the P values for the Breusch pagan test for all the Tables are greater than 0.05. Therefore, the null hypothesis that the residuals are homoscedastic is not rejected at five per cent level of significance. As such the error terms are homoscedastic allowing the use of t ratios and the standard errors of all the models to test the significance of the slope coefficients as recommended by Warner

(2008)

4.4.7 Specification Test

To test whether the model was well specified Ramsey Specification test was used. The test has a null hypothesis that the model is neither under or over specified. The test statistics are shown in Table 4.16.

Table 4.16: Specification Test

Table Ramsey Specification Test Chi P-value 4.17 0.09 0.9668 4.18 1.29 0.2810 4.19 1.92 0.1305 Source: Survey Data (2015)

Results presented in Table 4.16 show that the p-values for the Ramsey specification test for all the Tables are greater than 0.05. Therefore, the null hypothesis that the models represented by the results in the respective Tables are not under or over specified is not rejected at five per cent level of significance. Therefore the models can be considered stable and worth interpreting.

4.5 Testing of Hypotheses

Multiple regression analysis was used to test hypotheses. This was performed using the field data and the adjusted R2 values and the beta values were used to interpret the results at a 95% level of significance. The variables under study were regressed on performance indicators and a composite performance measure computed to reflect overall organizational performance. This section addresses the five research hypotheses

86 that the study sought to test. The findings of the multiple regressions are summarized in

Table 4.17

Table 4.17: Influence of strategy Institutionalisation on Corporations Performance

Post Estimation Diagnostics Test Statistic P-value Adjusted R-squared 0.5497 R-squared 0.5774 F-statistic (4, 118) 26.95*** 0.000* Breusch-Pagan Test (Heteroskedasticity) 0.97 0.3256*** Ramsey Specification test 0.09 0.9668*** Mean VIF 3.95 Regression results Coefficients t-statistic P-value Systems 0.230*** 2.37 0.000 Leadership Style 0.157*** 1.26 0.002 Organizational Structure 0.544*** 2.91 0.004 Staff skills 0.539*** 4.65 0.000 Constant 1.426*** 4.75 0.000 Key ** significant at 5 percent *** significant at 1 percent Source: Survey Data (2015)

Research findings in Table 4.17 indicate that the adjusted R- squared was 0.5497 meaning that the independent variables jointly explain 54.97 percent of the variations in the dependent variable while the rest are explained by variables not fitted into the model. The F statistic is 26.95 with a corresponding P value of 0.000 which implies that the regression model is significant (P < 0.05). The Breusch Pagan statistic is 0.97 with a P-value of 0.3256. This implies that the null hypothesis of constant variance is not rejected at 5% level of significance.

Therefore, the t statistics and p-values can reliably be used to test the significance of coefficients in the model;

Y= β0 + β1X1+ β2X2+ β3X3+ β4X4 + ε

All the four dimensions of strategy institutionalisation were positively related to performance and the regression analysis indicated that an increase in each of them would result in an increase in organizational performance. It is, therefore, prudent for state-owned corporations in the electricity sub-sector to integrate strategy institutionalisation posture into their strategic behavior so as to improve their performance.

The findings are in agreement with the assertion by Burgelman, Grove and Meza (2006) that institutionalization of strategy is required at the implementation phase for the reality of strategy resides in its strategic actions rather than its strategic statements.

The findings further support the argument by Kombo and Njagi (2014) that institutionalisation of strategy requires activities that are action-oriented such as ensuring that strategic intentions are communicated throughout the organization, matching strategy with organizational structure and culture, selecting leadership that is effective and designing effective reward systems.

These findings are also consistent with the rationale of organisational Assessment model which posits that certain contextual forces drive performance: the capacities of an organisation, forces in its environment and the internal motivation of the organisation. Organisations change in response to factors in their external environment,

88 changes in internal resources and as a result of fundamental shifts in values within the organisation, which affect the organisational climate, culture and ways of operating

(IDRC, 1999)

The regression equation obtained from this output is:

Performance = 1.426 + 0.230 Systems + 0.157 Leadership Style +

0.544 Organisation Structure + 0.539 Staff Skills + ε

4.5.1 Test of Hypothesis One

The first objective sought to determine the influence of systems on the performance of state-owned corporations in the Electricity sub-sector in Kenya. Null hypothesis one was tested. The hypothesis was derived as:

H01: Systems have no influence on the performance of state-owned corporations in

the Electricity sub-sector in Kenya.

Research findings in Table 4.17 show the value of the coefficient of systems was 0.230.

This implies that holding everything else in the model constant, a unit change in the score of systems leads to 0.230 units change in the score of corporation's performance.

The corresponding P-value for systems was 0.000 (P < 0.05). Therefore at five per cent level of significance, the null hypothesis was rejected implying that systems had a significant influence on corporation's performance in Kenya.

Since the coefficient of systems is positive it can be inferred that systems have a positive influence on the performance of state-owned corporations in the Electricity

89 sub-sector in Kenya. It is, therefore, necessary for the state-owned corporations in the electricity sub-sector in Kenya to ensure that information flow through the system is optimized.

This finding is in agreement with the finding of Antonio and Domingo (2007) which indicated that management control systems had a positive and significant effect on performance. The findings further confirm the observation by James (2014) that coordination of activities requires streamlining the processes, priority management, and change management to ensure more synergy of resources and strike a balance between these tasks and tasks not related to strategy.

4.5.2 Test of Hypothesis Two

Hypothesis two of the study sought to establish the influence of leadership style on performance of state-owned corporations in the Electricity sub-sector in Kenya. The hypothesis was derived as:

H02: Leadership style has no influence on the performance of state-owned

corporations in the Electricity sub-sector in Kenya.

Research findings in Table 4.17 indicate that the value of the coefficient of leadership was 0.157. This implies that a unit change in the score of leadership style leads to 0.157 units change in the score of corporation's performance holding everything else in the model constant. The corresponding P-value for leadership style was 0.000 (P < 0.05) meaning that at five per cent level of significance the null hypothesis was rejected

90 implying that leadership style has a significant influence on corporation's performance in Kenya. Since the coefficient of leadership style is positive it can be inferred that leadership style has a positive influence on the performance of state-owned corporations in the Electricity sub-sector in Kenya.

The findings correspond positively with findings by Hitt (2007) that effective implementation of a strategy within the organisation is contributed positively by strategic leadership. The findings are further agreement with the argument by Jooste and Fourie (2009), the most important driver of strategy implementation is strategic leadership for it contributes positively to the effective implementation of strategy within the organisation. The findings further corroborate with those of Anees (2013) that there is a strong impact of leadership behaviours on organisational performance.

4.5.3 Test of Hypothesis Three

The third objective sought to establish the influence of organizational structure on the performance of state-owned corporations in the Electricity sub-sector in Kenya. This section tested the direct influence of organizational structure on corporations' performance. Null hypothesis three was tested. The hypothesis was derived as:

H03: Organizational structure has no influence on performance of state-owned

Corporations in the Electricity sub-sector in Kenya

From the research findings in Table 4.17, the value of the coefficient of organisational structure was 0.544. This implies that holding everything else in the model constant, a unit change in the score of organisational structure leads to 0.544 units change in the

91 score of corporation's performance. The corresponding P-value was 0.000 (P < 0.05) implying that at five per cent level of significance the null hypothesis was rejected. This means organizational structure has a significant influence on the performance of state- owned corporations in the Electricity sub-sector in Kenya. Since the coefficient of organizational structure is positive it can be inferred that organizational structure has a positive influence on the performance of state-owned corporations in the Electricity sub-sector in Kenya.

The findings are in agreement with the argument by Mehdi and Bayrami (2009) that the first priority on strategy implementation requires management to create an appropriate structure for steady and continuous relation with customers The findings are further in agreement with the argument by John and Kenneth (2001) that in shaping performance in a large set of public organisations, the best strategy for organisations may be to redefine difficult problems in a way that can be managed through structural means. The finding also corroborates with the findings of Felipe (2012) that on a wide range of organisations, the organisation structure has relevant and predictable effects.

4.5.4 Test of Hypothesis Four

This section tested the direct influence of staff skills on corporations' performance in line with the fourth objective that sought to establish the influence of staff skills on the performance of state-owned corporations in the Electricity sub-sector in Kenya. Null hypothesis four was tested. The hypothesis was derived as:

H04: Staff- skills have no influence on the performance of state-owned corporations

in the Electricity sub-sector in Kenya.

Research findings in Table 4.17 indicate that staff skills had a coefficient of 0.516. This implies that holding everything else in the model constant, a unit change in the score of organisational structure leads to 0.516 units change in the score of corporation's performance. The corresponding P-value for staff skills was 0.000 (P < 0.05), implying that at five per cent level of significance the null hypothesis was rejected. This means that staff- skills have a positive significant influence on the performance of state-owned corporations in the Electricity sub-sector in Kenya. It is therefore expected that the state-owned corporations in the electricity subsector should understand the important role employee motivation and training plays in corporations performance.

The findings are in agreement with the argument by Aquinis and Kraiger (2009) that training improves the overall organisation profitability, effectiveness, productivity, revenue and other outcomes that are directly related to the training in improving the quality of services. The findings are further in agreement with the assertion by Azara,

Syed and Muhammad (2013) that organisation having much better skilled and creative employees can easily avoid wasteful investment to improve efficiency and performance of the organisation.

The findings further support the argument by Khandekar and Sharma (2011) that firm's that utilise human resource capabilities are likely to gain sustainable advantages and realise superior performance. The suggestion by Douglas (2007) that interventions at

93 the individual level will be reflected in the performance at the group level and an increase in trans-specialist knowledge cause increase in decision-making quality is supported by the findings of the current study.

4.5.5 Test of hypothesis Five

The Fifth objective sought to assess the moderating influence of corporate culture on the relationship between strategy institutionalisation and performance of state-owned corporations in the Electricity sub-sector in Kenya. Previous studies on the influence of strategy implementation on the performance of firms have also stressed that corporate culture can influence this relationship.

It was therefore found prudent to carry an inferential analysis to establish the influence of corporate culture on the relationship between strategy institutionalisation and performance of state-owned corporations in the Electricity sub-sector in Kenya. The study also investigated the possibility of a moderating influence of corporate culture on the existing relationship. Hypothesis five was derived as follows:

H05: Corporate culture has no moderating influence on the relationship between

strategy institutionalisation and performance of state-owned corporations in

the Electricity sub-sector in Kenya.

Test of hypothesis five was done using stepwise multiple regressions. The first step involved the estimation of model 3.4 as the base model to establish the relationship between the dependent and independent variables. The model was restated as follows:

Performance = β0+β1SI+β2CC+ ε……………………….………………..………. (3.6)

Step one tested the relationship between the independent variables of the study and the dependent variable as presented in the regression output for the test of hypotheses one to five. Secondly, model 3.5 as specified in chapter three, where the product of SI and

CC was used to estimate the moderating effect. Model 3.5 was stated as follows:

Performance = β0+β1SI + β2CC + β3SI*CC + ε………………………...……… (3.7)

Interpretation of results involved a comparison of values of various parameters prior to and after moderation and a conclusion drawn on assessment of evidence of moderating influence. The findings when corporate culture was introduced as explanatory variable are shown in Table 4.18.

Table 4.18: Regression of Performance on Strategy Institutionalisation and Corporate Culture

Post Estimation Diagnostics Test Statistic P-value Adjusted R-squared 0.3960 R-squared 0.4060 F-statistic (4, 119) 40.67*** 0.000* Breusch-Pagan Test 0.2750*** 4.85 (Heteroskedasticity) Ramsey Specification test 1.29 0.2810*** Regression results Coefficients t-statistic P-value Strategy Institutionalisation 0.295*** 3.13 0.002 Corporate Culture 0.259*** 2.78 0.006 Constant 1.400*** 5.24 0.000 Key ** significant at 5 percent *** significant at 1 percent Source: Survey Data (2015)

The linear regression model was:

Performance = 1.400 +0.295 SI+0.259 CC + ε

Research findings in Table 4.18 indicate an adjusted R-squared value of 0.3960, meaning that the model explains 39.6% variation in organizational performance while the rest are explained by Variables that are not fitted in the model. The coefficient of corporate culture is 0.259 with a t- statistic of 2.78 and a corresponding p-value of

0.006. The p-value is less than 0.05, 0.05 and 0.1. Therefore, the coefficient is significant at five per cent level of significance.

The F statistic was 40.67 and, P=0.000 where (P < 0.05). The Beta coefficient for

Strategy institutionalisation is 0.295 with a P-value of 0.002 (P < 0.05) while that of corporate culture was 0.259 with a P –Value of 0.000 (P<0.05). Hence Strategy institutionalisation and corporate culture are jointly significant in explaining organizational performance. This satisfies the first explanatory condition where corporate culture should be significant (Mackinnon et al., 2007).

Secondly, model 3.7 was estimated where the product of corporate culture and strategy institutionalisation was to estimate the moderating effect. The regressed results are presented in Table 4.19.

Table 4.19: Regression Results of Performance on Strategy Institutionalisation, Corporate Culture and Interactive Terms

Post Estimation Diagnostics Test P-value Statistic Adjusted R-squared 0.4018 R-squared 0.4166 F-statistic (4, 118) 28.09*** 0.0000* Breusch-Pagan Test (Heteroskedasticity) 3.87 0.0792*** Ramsey Specification test 1.92 0.1305*** Regression results Coefficients t-statistic P-value Strategy Institutionalisation -0.032 -0.13 0.896 Corporate Culture -0.184 -0.58 0.562 Strategy Institutionalisation*Corporate 0.100 1.47 0.145 Culture Constant 2.800 2.83*** 0.005 Key ** significant at 5 percent *** significant at 1 percent Source: Survey Data (2015)

The linear regression model was:

Performance = 2.800+0.100 SI*CC - 0.032 SI - 0.184CC + ε

Research findings in Table 4.19 show that the adjusted R- Squared is 0.4018 meaning that the model explains 40.18% variation in organizational performance while the rest are explained by variables that are not fitted in the model. The F statistic is 28.09 with a corresponding P- value of 0.000. This means that the regression model is significant.

Strategy institutionalisation had a coefficient of - 0.032 and a P value of 0.896; corporate culture had a coefficient of -0.184 and P–value of 0.562 while the interaction term consisting of the product of strategy institutionalisation and corporate culture had a

97 coefficient of 0.100 with a t-statistic of 1.47 and p-value of 0.145. This implies that the interactive terms are not significant. Mackinnon et al. (2007) observes that when variables in step 1 are significant and those in step 2 are not significant then there is no moderating effect.

The coefficient of corporate culture in Table 4.18 is significant but the interaction between corporate culture and strategy institutionalisation, however, is not significant in

Table 4.19. Based on the moderation rule by Mackinnon et al. (2007), the study, therefore, fails to reject the null hypothesis that corporate culture has no moderating influence on the relationship between strategy institutionalisation and performance of state-owned corporations in the Electricity sub-sector in Kenya. The fact that corporate culture is significant in Table 4.18 implies that corporate culture is an explanatory variable rather than a moderator

The chief executives of corporations in the electricity sub- sector should therefore not underestimate the influence of corporate culture on performance, but rather encourage key themes of dominant values like customer service and institutionalize the practices so as to enjoy superior performance. This finding contradicts the argument by Abbas

(2014) that culture has an obvious moderation on the relationship between intellectual capital elements and business performance.

4.6 Qualitative Data Analysis

Semi-structured questions were analysed and presented into themes as presented in

Table 4.20

Table 4.20: Qualitative Data Analysis

Factor Description View on the initiatives Generally the respondents felt that the management strives to taken by management ensure that every staff has job functions that will impact on in ensuring successful strategy and by the vision, strategic theme and their role in strategy delivery of the desired vision of the company. institutionalisation Characteristic that was Most respondents felt that their leaders were supportive , held true of leadership task and achievement oriented though not participative in organisation How to ensure The respondents felt that the corporations should provide implemented strategies training frequently to build on employee skills while at the are aligned to same time ensuring success of the employees through organisational availing proper resources. Give sufficient information and structure remain transparent to all stakeholders View on whether the Most respondents strongly felt that those in leadership level of participation should actively involve all people most affected by the and involvement of change in its implementation. This way all employees at all support staff affected levels of the organization would embrace the proposed strategy changes. implementation Source: Survey Data (2015)

Research findings in Table 4.20 show that majority of the respondents were of the view that the management strives to ensure that all the employees had job functions that would impact on strategy. The findings support the assertion by James (2014) that coordination of activities requires streamlining the processes to ensure more synergy of resources and strike a balance between these tasks and tasks not related to strategy.

Further, the respondents also felt that the leaders were supportive and task and achievement oriented though not participative. The respondents also felt that frequent training to enhance skills should be provided, while at the same time opportunities for all staff to participate in strategy implementation. This finding supports the argument by

Syed and Muhammed (2013) that organisation having better skilled and creative

99 employees can easily avoid wasteful investment to improve efficiency and performance of the organisation.

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CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter presents the summary, conclusion, contributions of the study to knowledge, recommendations and suggestions for further research.

5.2 Summary

The performance of state-owned corporations in the electricity subsector has not been satisfactory in the achievement of strategic objectives stated namely; up-scaling power generation, increasing access to services and information, customer satisfaction and enhancement in technology despite the fact that the Electricity sub-sector is a key enabler to achieving the country's aspirations captured in the country's development blueprint; the Vision 2030.

Previous studies on performance at national and global levels did not focus on the state- owned corporations in the electricity sub-sector. The current study sought to determine the influence of strategy institutionalisation on the performance of state-owned corporations in the electricity sub-sector in Kenya. The specific objectives were to establish whether systems, leadership style, organisational structure, and staff skills had an influence on the performance of state-owned corporations in the Electricity sub- sector in Kenya.

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The study also sought to determine the influence of the combined effect of strategy institutionalisation on the performance of state-owned corporations in the Electricity sub-sector in Kenya and to assess the moderating influence of corporate culture on the relationship between strategy institutionalisation and performance of state-owned corporations in the Electricity sub-sector in Kenya. This was achieved by use of explanatory and descriptive survey designs.

Primary data was collected using structured questionnaire. The data collected was analysed using descriptive and inferential statistics. Descriptive analysis was used to describe and summarize data. Multiple regressions were used to assess the direct and joint effect of all the variables on organisational performance and stepwise regression was used to analyse the moderating influence of corporate culture on the relationship between strategy institutionalisation and the performance of state-owned corporations in the Electricity sub-sector in Kenya.

The first objective sought to determine the influence of systems on the performance of state-owned corporations in the Electricity sub-sector in Kenya. The null hypothesis was rejected based on the fact that systems had significant and positive influence on the performance of state-owned corporations in the Electricity sub-sector in Kenya. This could have been as a result of organisations performing tasks in relation to strategy and being able to put in place process performance goals. The findings showed that if an organisation put in place the correct systems to support implementation initiatives performance would improve.

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The second objective sought to establish the influence of leadership style on performance of state-owned corporations in the Electricity sub-sector in Kenya. The null hypothesis was rejected implying that leadership style had a significant positive influence on the performance of state-owned corporations in the Electricity sub-sector in Kenya.

The study established that leaders in the state-owned corporations effectively articulated strategies clearly, provided compelling visions and provided measurable objectives for implementing the vision. This could also be as a result of leaders involving and motivating employees, getting work done on time and being able to conceptualize on what need to be done and articulate the needs persuasively.

The third objective sought to assess the influence of organisational structure on the performance of state-owned corporations in the Electricity sub-sector in Kenya. The null hypothesis was rejected implying that organizational structure had significant and positive influence on the performance of state-owned corporations in the Electricity sub-sector in Kenya. This could be as a result of organisation structure being designed according to the needs of strategy and integrating both the strategy and the structure.

The fourth objective sought to establish the influence of staff skills on the performance of state-owned corporations in the Electricity sub-sector in Kenya. The null hypothesis was rejected implying that staff skills had a significant and positive influence on the performance of state-owned corporations in the Electricity sub-sector in Kenya. It is

103 important for the organisations to provide challenging opportunities to employees, present opportunities for career advancement while at the same time putting strategies in place to facilitate productive and progressive work environment.

The last objective of the study sought to assess the moderating influence of corporate culture on the relationship between strategy institutionalisation and the performance of state-owned corporations in the Electricity sub-sector in Kenya. The study established that corporate culture was an explanatory variable rather than a moderating variable.

5.3 Conclusions

This study concludes that strategy institutionalisation dimensions namely organisational structure, staff-skills, systems and leadership style have a positive influence on the performance of the state-owned corporations in the electricity sub-sector in Kenya. All the four dimensions of Strategy institutionalisation were positively related to performance and the regression analysis indicated that increase in each of them would result in an increase in organizational performance. It is, therefore, prudent for these corporations to integrate strategy institutionalisation posture into their strategic behavior so as to improve their performance.

The study also concludes that the state-owned corporations in the electricity sub-sector in Kenya have not yet embraced the best practices in their internal processes. Much as the corporations have the correct systems to support implementation initiatives; less attention has been paid to information flow through the system. This conclusion is also supported by the fact that accountability is not clearly defined. However the indication

104 that the corporations have put in specific process performance goals leads the researcher to conclude that the firms are becoming increasingly aware of the importance of systems as a performance enhancement tool.

The study further concludes that despite the important role employee motivation and training plays in corporation’s performance, it has not been fully realized by the management of the state-owned corporations in the electricity sub-sector in Kenya. This conclusion is supported by the fact that employees have been presented with limited opportunities for career advancement and that good talent has not recognised and rewarded.

Furthermore, the corporations have put a lot of emphasis on formal rules and procedures that govern working relationships at the expense of ensuring that structural changes that address new strategies, clear lines of communication and responsibility and shortening of the route to top management for approvals.

Finally, on the basis of the fifth objective which sought to establish the moderating effect of corporate culture on the relationship between strategy institutionalisation and performance of corporations in the Electricity sub-sector in Kenya, the researcher concluded that culture had no moderating effect on the relationship.

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5.4 Contributions of the Study to Knowledge

This study focused on the area of strategy institutionalisation and performance, particularly in the state-owned corporations in the electricity sub-sector in Kenya. The study makes a contribution to knowledge in the area of strategy institutionalisation and performance in a number of ways.

First, empirical studies which focused on organisations, established that strategy implementation had a significant relationship with performance. The current study contributes to this knowledge by focusing on an aspect of strategy implementation, that is, institutionalisation and its influence on performance. The study established that strategy institutionalisation had a positive influence on performance of state-owned corporations in the Electricity Sub- sector in Kenya.

Secondly, the current study focused on relatively unexplored research area in the public sector in Kenya. Prior studies have shown evidence of the link between strategic management practices and organizational performance. This study provides empirical evidence that institutionalisation of strategies can lead to a superior organizational performance in public sector organisations and more specifically, corporations in

Kenya.

Thirdly, this study further enhances the theoretical understanding of strategy institutionalization's influence on performance from a non-financial perspective. This is in contrast to most studies that have been carried out that look at performance from a

106 financial perspective. Further, the current study investigated the influence on a moderating variable (corporate culture) on the relationship between strategy institutionalization and performance of state-owned corporations in the electricity Sub- sector in Kenya. The Study established that corporate culture does not moderate the relationship.

Fourth, the study supports the Institutional and Organisational Assessment (IOA) Model which considers a multi-dimensional view of performance, that is, as the balance between the effectiveness, relevance and efficiency. Additionally the study supports the preposition of the Stakeholder Theory that organizations have relationships with many constituent groups and should therefore endeavour to balance their relevant interests in order to maintain the support from these groups.

Finally, the current study supports the McKinsey 7S's framework which is a diagnostic tool that can be used to investigate the implementation of organizational policy and strategy at the strategic level, and ultimately evaluate organizational performance with metrics.

5.5 Recommendation for Policy Implication

These findings have a number of managerial implications, presented as per the study objectives. The findings have established that increase in strategy institutionalisation could lead to improved performance of state- owned corporations in the Electricity Sub- sector. The influence of systems was also found to be positive and significant in contributing towards organizational performance. Hence the chief executives should put

107 in place systems that support implementation initiatives and ensure that tasks to be performed should also be related to the strategy and that information flow through the process is continuous and efficient.

On leadership style which was found to significantly influence organizational performance, this study recommends that electricity sub- sector policy makers should clearly articulate strategies and provide compelling visions. Chief executives should recognize and reward progress in the implementation of change. Additionally, emphasis should be laid on leadership that inspire and motivate for change.

The findings have also shown that organization structure is central to organisational performance. The government and policy makers should therefore come up with programmes that ensure timely approvals are made by from top management and where possible specialists and experts in respective areas should be given substantial autonomy. Structural changes should be made from time to time to address new strategies in line with technological, economic and demographic changes.

This study also recommends that all decisions and working relationships should be governed by formal rules and procedures and appropriate behaviour should be defined based on this. The chief executives of state owned corporations in the electricity sub- sector should endeavour to horizontally and vertically communicate about strategy, with clear lines of communication and responsibility put in place.

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On staff skills, the study recommends that the managers of state-owned corporations in the electricity sub- sector should provide challenging opportunities to employees to improve their performance. The organization's management should put strategies in place that facilitate productive and progressive work environment.

Additionally, management should recognize and reward good talent while availing opportunities for career advancement to its employees. Finally, management should provide support to the strategy of investment in human capital and its management for competitive advantage at organizational and national level to be fully realized.

5.6 Suggestions for Further Research

The researcher recommends that a similar study be conducted in other corporations in

Kenya. It is worth noting that although longitudinal research is both time consuming and expensive, future studies would benefit from testing the current study's model through a longitudinal research design so as to determine the causal links more explicitly. Further, the influence of corporate culture as an explanatory variable should be explored.

The study focused on the influence of strategy institutionalisation on the performance of state-owned corporations in the electricity sub-sector. However, a low percentage of variation in performance is explained by strategy institutionalisation. This indicates that there are other factors which influence performance. The introduction of one or more of these factors can provide a base for further research. As far as the findings are

109 concerned, possible enlargement of the sample to include other sub-sectors within the

Ministry of Energy and Petroleum would be highly desirable.

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APPENDICES

Appendix I: Questionnaire Letter of Transmittal

KIRUI CALEB C. P.O.BOX 297, KERICHO. [email protected]

Dear Respondent, I am a Phd student at Kenyatta University. Currently I am conducting a research to investigate the influence of strategy institutionalisation on the performance of organizations in the Electricity sub-sector in Kenya. The results of the study will form a basis for formulating ways of enhancing organisational performance through proper strategy implementation.

Your participation in this research by responding to this questionnaire will be appreciated. All your responses will be treated with utmost confidentiality and the data collected will only be used for academic purposes. Kindly read each question carefully and please tick and write as necessary.

If you have a query regarding this research please feel free to contact me through my telephone number 0722-685-986 or Chairman, Department of Business Administration, Kenyatta University, P.O.Box 43844, Nairobi.

Thank you in advance for your willingness to participate in this study.

Yours faithfully

Kirui Caleb Cheruiyot (D86/CTY/PT/28906/2013)

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Appendix II: Questionnaire (State Owned Corporations)

The questionnaire has three parts. Part A contains general information, Part B covers strategy institutionalisation, Part C Covers Performance and Part D contains the moderating factor.

PART A: GENERAL INFORMATION (Please indicate your opinion or put a tick in the spaces provided)

1. Name of your organization (Optional)…………………………………...... 2. Year of incorporation………………………………...... ………………………. 3. Position /Designation of the respondent ………………………………….. 4. Size of the company a. Number of branches…………………………………….... b. Total number of employees in all branches……………….. 5. How many years have you worked in this organization? ………….. 6. What is your highest level of education? Diploma ………….. Bachelor degree ………. Masters degree ………… Doctoral (PhD) ………….

PART B: STRATEGY INSTITUTIONALISATION (Tick where appropriate)

(i) Systems Use a tick to indicate in the space provided the extent to which you agree with the following statements.

Q/N Statement Strongly Agree Neutral Disagree Strongly Agree Disagree 7. Organization has the correct systems to support implementation initiatives 8. The organisation has put in place specific process performance goals 9. Online control of information has been established 10. Information flow through process is continuous and efficient 11. Process measurements are defined. 12. Tasks performed are is in relation to strategy

13. Accountability is clearly defined

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(ii) Leadership Use a tick to indicate in the space provided the extent to which you agree with the following statements.

Q/N Statement Strongly Agree Neutral Disagree Strongly Agree Disagree 14. I/My leader clearly articulate(s) the strategy 15. I/My leader provide(s) a compelling vision 16. I/my leader provide(s) measurable objectives for implementing the vision 17. I/My leader recognise(s) and rewards progress in implementing change 18. I/My leader personally inspire(s) and motivates for the change.

19. Which characteristic below is true of you or your leader? (Please tick in appropriate box to indicate your choice)

a Supportive b Participative

c Task oriented d Achievement oriented

e All the above f None of the above

20. What initiatives are taken by you or your management in ensuring successful strategy implementation …………………………………………………………..

(iii) Organisational Structure Use a tick to indicate in the space provided the extent to which you agree with the following statements.

Statement Strongly Agree Neutral Disagree Strongly Agree Disagree 21. Decisions and working relationships are governed by formal rules and procedures 22. Rules and procedures provide means for defining appropriate behavior 23. Communication concerning strategy implementation is both horizontal and

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vertical 24. Temporary teams are used for strategic assessment, process development and new product development 25. Lines of communication are clear 26. Lines of responsibility are clear 27. Route to top management for approvals is time conscious. 28. Once a decision is made implementation tends to be straight forward 29. Specialists and experts in respective areas are given substantial autonomy 30. Structural changes are made to address new strategies, technological, economic and demographic changes.

31. How do you ensure that the implemented strategies are aligned to the organization structure? ………………………………………………………….

(iv) Staff-skills Use a tick to indicate in the space provided the extent to which you agree with the following statements.

Statement Strongly Agree Neutral Disagree Strongly Agree Disagree 32. The organisation provides challenging opportunities to employees to improve their performance. 33. The staff feel valued by the organisation 34. The organisation loans out staff to other departments to make them engaged 35. Pairing of employees as a method of coaching is promoted by the organisation 36. The organisation has strategies in place that facilitate productive and progressive work environment 37. The organisation recognizes and gives rewards to good talent. 38. The organisation presents opportunities for career advancement 39. Personal values resonate with culture, systems, goals and shared values of organisation.

40. Did the level of participation and involvement of support staff affect strategy implementation? Explain your answer………………………………………

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PART C: PERFORMANCE The following is a set of non-financial performance measures/indicators. Please evaluate how well or poorly you believe the company has performed on these non - financial outcomes by ticking the appropriate box.

Statement Significantly Increased Same as Decrease Significantly increased Before d Decreased 41. Customer satisfaction 42. Employee encouragement to have innovation in processes 43. Enhancement in technology 44. Adapting to changing environmental conditions 45. Training of employees 46. Alignment of procedures and routines 47. Effective resource utilization 48. Customer acquisition 49. Accessibility of services 50. Accuracy of information provided to customers 51. Employee access to information 52. Continuous process improvement 53. Employee involvement in decision making 54. Attainment of strategic objectives

55. Overall, on a scale of 1 to 5; where 5 is the score of best positive non-financial outcome, how would you rate your organisation? ------

PART D: MODERATING ROLE OF CORPORATE CULTURE

Please indicate in the space provided the extent to which you agree with the following statements in relation to the corporate culture.

Statement Strongly Agree Neutral Disagree Strongly Agree Disagree 56. The organisation has formal procedures of governance 57. The organization is a very personal place. Beliefs and values are widely shared between employees. 58. The leadership in the organization is generally considered to promote caring training and facilitating 59. The management style in the organization promotes job security, conformity, predictability and stability.

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60. Loyalty, mutual trust and commitment to the organization runs high. 61. Formal rules and policies is the glue that holds the organisation members together. 62. The organization emphasizes competitive actions and achievement 63. The organization defines success on the basis of efficiency. 64. Top management is selected on competitive basis 65. No delays experienced in implementation of strategies and projects attributed to political consultations

THANKS FOR YOUR CONTRIBUTION TO THIS STUDY.

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Appendix III: List of State Owned Corporations in the Electricity Sub-Sector

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Appendix IV: Research Authorization

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Appendix V: Research Permit