Journal of Economics and Business

ISSN 2615-3726 (Online)

ISSN 2621-5667 (Print)

Published: 03 February 2020

The Moderating Role of the Legal Environment on the Relationship between TMT Characteristics and Organizational Performance in a Regulatory Setting in Kenya

Joseph O. Oketch, James M. Kilika, Godfrey M. Kinyua

Kenyatta University, Nairobi

Download Full-Text Pdf

10.31014/aior.1992.03.01.190

Pages: 211-222

Keywords: Top Management Team Characteristics, Legal Environment, Independent Regulatory Agencies, Organizational Performance

Abstract

The legal environments of regulatory agencies are key predictors of their organizational performance as they influence how the regulatory agencies are created, their mandates, sources of funding and reporting frameworks. Reporting frameworks include the nature of the relationships between the regulatory agencies and the policy makers, political actors, the legislature, the executive, judicial processes, regulated entities and the public. The specific objective of the study was to establish the moderating effect of the legal environment on the relationship between top management team characteristics and organizational performance of the independent regulatory agencies in Kenya. To achieve this objective, the study adopted descriptive cross-sectional research design. The target population of the study was all the twenty-three state regulatory agencies currently existing in Kenya. Due to the uniqueness of each independent regulatory agency and the distinct roles played by each top management team member in their organization, the study adopted a census survey of all the top management team members in all the twenty three state regulatory agencies in order to capture the required information. Primary data was gathered using structured questionnaire administered through drop and pick later method. Descriptive statistics was then used to summarize the survey data into percentages, frequencies, means and standard deviations. Whisman and McClelland model was used to test for the moderation. The findings of the study showed that legal environment has significant moderating effect on the relationship between top management team characteristics and performance of the independent regulatory agencies in Kenya The study recommends that the independent regulatory agencies should have stable funding mechanism so as not to rely on the parent ministries or exchequer support for them to be financially independent in executing their mandates. Lastly the study recommends for judicial system to recognize and support the work of the independent regulatory agencies in enforcement of the laws and regulations for their sectors or sub-sectors.

References

  1. Ansoff, H. I. & Mc Donnell, E.J. (1990). Implanting Strategic Management, 2nd Ed., NY: Prentice Hall.
  2. Awino, Z.B. (2011). Strategic Management: An Empirical Investigation of Selected Strategy Variables on Firm Performance: A Study of Supply Chain Management in Large Private Manufacturing Firms in Kenya. Prime Journals, 1(1): 9-18.
  3. Christensen, T. (2004). Regulatory Agencies: The Challenges of Balancing Agency Autonomy and Political Control. Stein Rokkan Centre for Social Studies; Working Paper No. 18.
  4. Daft, R.L. (2000). Organization Theory and Design, (7th Ed.) South-Western College Publishing, Thomson Learning. U.S.A.
  5. Government of Kenya, 2013). Sector Plan for Public Sector Reforms 2013 – 2017
  6. Gupta, A. (2009). Organization external environment. Retrieved from http://www.practical-management.com.
  7. Hitt, M.A., Ireland, R.D., Sirmon, D. G. & Trahms, C. A. (2011). Strategic Entrepreneurship: Creating Value for Individuals, Organizations and Society. The academy of management perspectives, 25(2): 57-76.
  8. Javier (2002). A review paper on Organizational Culture and Organizational Performance. International. Journal of Business and Social Science, 1(3): 52-76.
  9. Kasomi. F. M., (2015). Diversity in Top Management Teams, Strategic Choice, Top Manager’s Compensation Schemes and Performance of Kenyan State Corporations. (Ph.D. Thesis), University of Nairobi, Department of Business Administration, School of Business, Nairobi.
  10. Kikoyo, O. I. (2014). The Impact of Legal Framework on Regulatory Authorities in Tanzania: A Case Study of the Surface and Marine Transport Regulatory Authority (SUMATRA). (PhD Thesis). The Open University of Tanzania.
  11. Kilika, J. M. (2012). Institutional context, collaboration, human resource development infrastructure and performance of universities in Kenya. (Ph. D Thesis), School of Business, University of Nairobi.
  12. Kinuu, D. (2014). Top Management Team Psychological Characteristics, Institutional Environment, Team Processes and Performance of Companies listed in Nairobi Securities Exchange. (PhD Thesis), University of Nairobi, Department of Business Administration, School of Business, Nairobi.
  13. Kirkbesoglu, E. (2012). Strategic Reactions of Organizations to Legal Environment: A Typology for Industries in the Process of Institutionalization. International Journal of Business, Humanities and Technology, 2(3).
  14. Marcus A. A. (2011).Management Strategy: Achieving Sustained Competitive Advantage, McGraw-Hill Company, America.
  15. Mkalama. R. N., (2014): Top Management Team Demographics, Strategic Decisions, Macro-Environment and Performance of Kenyan State Corporations. (PhD Thesis), University of Nairobi, Department of Business Administration, School of Business, Nairobi.
  16. Muchemi, W.A., (2013). Top Management Team Diversity and Performance of Commercial Banks in Kenya. (PhD Thesis), University of Nairobi, Department of Business Administration, School of Business, Nairobi.
  17. Mugenda, O.M. & Mugenda, A.G. (2003). Research Methods: Quantitative and Qualitative Approaches. Nairobi: ACTS Press.
  18. Muraga, D. K. (2015). Strategic Human Resource Management Practices and Performance of Parastatals in Kenya. (Ph. D Thesis), Kenyatta University
  19. Njoronge, J. K., (2015). Strategy Implementation, Performance Contracting, External Environment and Performance of Kenyan State Corporations. (PhD Thesis), University of Nairobi, Department of Business Administration, School of Business, Nairobi.
  20. Njoroge, J. K., Ongeti, W. T., Kinuu, D. & Kasomi, F. M. (2016). Does External Environment Influence Organizational Performance? The Case of Kenyan State Corporations. Management and Organization Studies 3(3). Retrieved from http://mos.scieducpress.com.
  21. Nogal-Meger, P. (2018). The Quality of Business Legal Environment and Its Relation with Business Freedom. International Journal of Contemporary Management, 17(2): 111–136. doi:10.4467/24498939IJCM.18.021.8545.
  22. OECD. (2013). Principles for the Governance of Regulators. OECD Publishing, Paris. Retrieved from http:// Regulators.comment@oecd.org.
  23. Ongeti, W. J., (2014). Organizational Resources, Corporate Governance Structures and Performance of Kenyan State Corporations. (PhD Thesis), University of Nairobi, Department of Business Administration, School of Business, Nairobi.
  24. PTPR, (2013). Report of the Presidential Taskforce on Parastatal Reforms. Retrievedatwww.apsea.or.ke/.../76-report-of-presidential-taskforce-on-parastatal-reforms.
  25. Ricardo, R. and Wade, D. (2001). Corporate Performance Management: How to Build a Better Organization through Measurement driven Strategies alignment. Butterworth, Heinemann.
  26. Stern, J. (2010). The Evaluation of Regulatory Agencies. Centre for Competition and Regulatory Policy (CCRP), City University London. Working Paper No 16.
  27. Voiculet, A., Belu, N., Parpandel, D. E. & Rizea, I.C. (2010).The Impact of External Environment on Organizational Development Strategy. Munich Personal RePEc Archive.
  28. Wheelen, L. T. & Hunger, J. D. (2009). Strategic Management and Business Policy Concepts and Cases Eleventh Edition, Prentice-Hall International, USA.
  29. Whisman, M. A. & McClelland, G. H. (2005). Designing, Testing, and Interpreting Interactions and Moderator Effects in Family Research. Journal of Family Psychology 19(1): 111-120.

About Us

The Asian Institute of Research is an online and open-access platform to publish recent research and articles of scholars worldwide. Founded in 2018 and based in Indonesia, the Institute serves as a platform for academics, educators, scholars, and students from Asia and around the world, to connect with one another. The Institute disseminates research that is proven or predicted to be of significant influence for the general public.

Stay Connected

  • Instagram - Black Circle
  • Facebook - Black Circle
  • LinkedIn - Black Circle

Contact Us

Please send all inquiries to the email:

editorial@asianinstituteofresearch.org

Business Address:

5th Floor, Kavling 507, Fajar Graha Pena Tower, Jl. Urip Sumohardjo No.20, Makassar, Indonesia 90234

Copyright © 2018 The Asian Institute of Research. All rights reserved