Corporate Governance Practices and Performance of Enterprise Risk Management in the Horticultural Farms in Kajiado County, Kenya

Abstract

Corporate governance mechanisms are established to ensure proper management and transparency within firms, aiming to enhance firm value for the benefit of shareholders and other stakeholders. Following the 2007 global financial crisis and various corporate failures, there had been significant calls for the implementation of effective corporate governance practices in the operation and management of corporations. However, in recent years, many flower farms have been closed because of various reasons such as unable to meet their financial obligation among other things. The study investigated the impact of corporate governance on the performance of risk management in Kenyan flower farms. Specifically, the research explored how managerial skills, internal control systems, organizational transparency, and ownership structure influenced the effectiveness of risk management in these flower farms. A descriptive research design was utilized, targeting all 40 flower farms in Kajiado and involving a sample of 170 respondents. The researcher gave questionnaires to the respondents to fill using drop and pick method where the questionnaires were given to the respondents, they were given two days to fill and then on the third day, the researcher went back to collect the filled questionnaires. One on one interviews were conducted in which the researcher booked an appointment with the management of the flower farms and did interview guide. Focused group discussion was done with all the workers whereby they were grouped in to groups of ten people and then the discussion took place. Data collection employed questionnaires, while data analysis was carried out using SPSS version 25. The collected data was presented through frequency tables, means, standard deviations, and inferential statistics. The inferential statistics aimed to establish the relationships between the dependent and independent variables of the study, formulated as Y = a1 + β1X1 + β2X2 + β3X3 + β4X4 + ε. The study's findings were significant, revealing that the combined independent variables exerted a significant influence on risk management within the flower farms. The study found out that managerial skills have positive and significant influence on risk management and thus the null hypothesis which presumed that managerial skills has no significant influence on risks management was rejected. Also, the study findings showed that organizational internal control has positive and significant influence on risk management. The study rejected the null hypothesis which stated that organizational internal control has no significant influence on risk management. It was also discovered that transparency and accountability influence risk management in flower farms since the correlation value was positive. The study therefore rejected the null hypothesis which presumed that transparency and accountability has no significant influence on risk management. Finally, the results indicated that ownership structure has positive influence on risk management and consequently, the study rejected the null hypothesis which stated that ownership structure has no significant influence on risk management. The conclusion of this study underscores the critical role that various factors, including managerial skills, internal control systems, organizational transparency, and ownership structure, play in influencing the effectiveness of risk management practices within the horticulture industry. The study's conclusion highlights that these factors are not isolated elements but are interrelated and collectively contribute to the effectiveness of risk management practices. This insight underscores the complexity of risk management within the horticulture industry. It suggests that addressing risk management challenges requires a holistic approach that considers multiple facets of corporate governance and operational practices. The findings stress the importance of managers in corporate world to ensure that there is strong mechanism of identifying various risks which may befall an organization , mitigate and manage them before they may pose risk to the continuity of the organization.