CORPORATE GOVERNANCE AND PERFORMANCE OF COUNTY GOVERNMENTS IN KENYA BY MACHEL WAIKENDA UNITED STATES INTERNATIONAL UNIVERSITY – AFRICA SPRING 2019 CORPORATE GOVERNANCE AND PERFORMANCE OF COUNTY GOVERNMENTS IN KENYA BY MACHEL WAIKENDA A Dissertation Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Doctor of Business Administration (DBA) UNITED STATES INTERNATIONAL UNIVERSITY – AFRICA SPRING 2019 ii STUDENT’S DECLARATION I, the undersigned, declare that the research herein is work originally done by me and that it has not been presented to another university or institution except to the United States International University – Africa in Nairobi for academic credit. Signed_______________________________ Date___________________ Machel Waikenda (ID 648969) This project has been submitted for examination with our permission as the appointed supervisors. Signed_______________________________ Date___________________ Professor Peter M. Lewa Signed_______________________________ Date___________________ Professor Maina Muchara Signed_______________________________ Date___________________ Dean, Chandaria School of Business Signed_______________________________ Date___________________ Deputy Vice Chancellor, Academic and Student Affairs iii COPYRIGHT All rights reserved. No part of this proposal report may be recorded, photocopied, or reproduced in any other way, stored in retrieval system or transmitted in any mechanical or electronic form without the permission of the author or USIU-A. Machel Waikenda © 2019 iv ABSTRACT The devolved system of governance was adopted to ensure development in all regions and effectiveness in service delivery for all Kenyans. This purpose of the study was to evaluate the corporate governance influence on the performance of county governments in Kenya. More so, the research intended; to determine the influence of inclusiveness of employees, functions of regulatory bodies, consensus orientation practices and stakeholders’ participation on performance of county governments in Kenya and further evaluate the moderating effect of political environment on corporate governance and performance of county governments in Kenya. The study used a positivist research philosophy. According to the principles of positivism, the philosophy depends on quantifiable observations that lead themselves to statistical analysis. This aspect of positivism is relevant to this study as the researcher only based the findings on data collected from county governments. The design methods used include the descriptive and explanatory cross-sectional survey method. The unit of analysis was the county governments. The counties in which data was collected helped in generalization of findings to all the Kenyan 47 counties. The unit of observation was county officials who included Governors, deputy Governors, County executive committee members, County secretaries, deputy County secretaries and MCAs. For this study, a sample of 354 was arrived at. Simple random sampling method was adopted for the selection of the study participants. The study used a questionnaire for collection of primary data. Data analysis was done with the help of a statistical analysis program. Frequencies and descriptive statistics were obtained for the study’s variables and this information was presented in graphs and frequency tables. Both descriptive and inferential statistics were used. Inferential statistics included regression analysis that was used to test the significance between dependent and the independent variables. The researcher observed respondents’ rights to privacy and safety. The study established that stakeholder’s participation, inclusiveness, consensus orientation, regulatory bodies and v political environment had a significant influence on the performance of county governments in Kenya. The study concluded that inclusiveness influences the performance of county governments in Kenya significantly and positively. The study also concluded that regulatory bodies positively and significantly influences performance of county governments in Kenya. The study further concluded that consensus orientation influences performance of county governments in Kenya. The study again concluded that stakeholder participation influences performance of county governments in Kenya positively. The study also concluded that political environment as a moderating variable influences county performance in the country positively. The study thus concluded that regulatory bodies had the greatest effect on the performance of county governments, followed by inclusiveness, and then stakeholders’ participation while consensus orientation had the least effect on their performance. The study recommends that Governors need to sensitize county directors to work in consultation with other stakeholders to ensure that all feel part of the developmental agenda for the county. Since it was found that regulatory bodies have a positive and significant influence on county governments’ performance in Kenya, there is a need for county governments to set effective regulations through the Public Procurement Regulatory Authority so as to regulate and shape the county’s procurement procedures. This will ensure that no financial resources are unaccounted for. More studies need to be conducted to investigate corporate governance and performance of the central government in Kenya. vi ACKNOWLEDGEMENT My gratitude goes to my supervisors, Professor Lewa and Professor Muchara of United States International University (USIU) - Africa who have guided me throughout the research writing with their advice and constructive criticism. Additionally, I would like to thank my entire family for the support that they have given me including the late hours and long days as I tirelessly worked on completing this project. Your support will always be appreciated. Above all, I thank God for his mercy and grace. vii DEDICATION I dedicate this dissertation to my fellow Kenyans, especially those who work in and with county governments, diligently serving others and looking for ways to perfect their craft and bring development to local communities. Never give up in your resolve to transform our beloved Nation. viii TABLE OF CONTENTS STUDENT’S DECLARATION ............................................................................................ iii COPYRIGHT ......................................................................................................................... iv ABSTRACT ............................................................................................................................. v ACKNOWLEDGEMENT .................................................................................................... vii DEDICATION ..................................................................................................................... viii LIST OF TABLES ................................................................................................................ xii LIST OF FIGURES ............................................................................................................. xvi ABBREVIATIONS AND ACRONYMS ........................................................................... xvii CHAPTER ONE ..................................................................................................................... 1 1.0 INTRODUCTION ............................................................................................................ 1 1.1 Background of the Study ................................................................................................. 1 1.2 Statement of the Problem ................................................................................................ 6 1.3 Purpose of the Study ....................................................................................................... 8 1.4 Specific Objectives .......................................................................................................... 8 1.5 Hypotheses ...................................................................................................................... 8 1.6 Justification of the Study ................................................................................................. 9 1.7 Scope of the Study ......................................................................................................... 10 1.8 Definition of Terms ....................................................................................................... 10 1.9 Chapter Summary .......................................................................................................... 11 CHAPTER TWO .................................................................................................................. 13 2.0 LITERATURE REVIEW .............................................................................................. 13 2.1 Introduction ................................................................................................................... 13 2.2 Theoretical Review ....................................................................................................... 13 2.3 Conceptual Framework ................................................................................................. 33 2.4 Empirical Review .......................................................................................................... 43 2.5 Chapter Summary .......................................................................................................