Effect Of Corporate Governance Practices On Organizational Performance Of State Corporations In The Health Sector In Kenya

Abstract

Sound corporate governance practices are a major contributor to effective and efficient management of State Corporations in the health sector in Kenya. “Since independence, the level of accountability in management of State Corporations has continued to decline despite the availability of various monitoring structures like legal frameworks, Ethics and Integrity, Policies and the Code of Conduct and Ethics intended to provide a clear road map to successful performance of the State Corporations. The objective of this study was to determine the effect of corporate governance practices on the performance of the State Corporations in the health sector in Kenya. The specific objective was to determine the effects of accountability, transparency, responsibility and moral integrity on organizational performance of health State Corporations. Primary data was obtained from respondents through questionnaires. The study adopted a descriptive research design with a population comprising of the health State Corporations. The unit of observation in the health State Corporations comprised of Chief Executive officers, Corporation Secretaries, staff from marketing, finance, human resource management, supply chain management, audit and integrity assurance officers. A sample size of 354 respondents was used as derived from the Yamane Formula. Primary data was collected the using questionnaires. The data was analyzed using descriptive and inferential statistics. The study conducted normality test, multicollinearity and heteroscedasticity. A regression model was used to test the effect of corporate governance practices on the performance of the State Corporations in the health sector in Kenya. The results indicated that accountability and organizational performance of health State Corporations is positively and significantly related (β=0.158, p=0.000). The results further indicated that transparency and organizational performance of health State Corporations is positively and significantly related (β=0.114, p=0.002). Board Responsibility and organizational performance of health State Corporations is positively and significantly related (β=0.108, p=0.001). Lastly, results showed Moral Integrity and organizational performance of health State Corporations is positively and significantly related (β=0.184, p=0.000). The study concluded that corporate governance practices have a positive and significant effect on organizational performance of State Corporations in the health sector in Kenya. The study recommends that the management of the State corporations should establish certain control mechanisms that ensure accountability. The study recommends that there should continuous internal check and audit on the part of management and low level of management to ensure adequate accountability systems in the State Corporations. Finally, the study recommends that monitoring should be done thoroughly by the board. These findings inform the need to ensure compliance with corporate governance principles and codes of governance.