BOARD OF DIRECTOR ORIENTATION AND PERFORMANCE OF STATE CORPORATIONS IN KENYA : A SURVEY OF SELECTED STATE CORPORATIONS IN THE ENERGY SECTOR.

Abstract

This study focused on the Board of director orientation on performance of state corporations in Kenya : A Survey of Selected State Corporations in the Energy sector. The objective of the study was to find out how board composition, board independence, board training and leadership style affect performance of board of directors in Kenya’s state corporation. The scope of the study for the research project was selected state corporations in Kenya and they included: Kenya Power and Lighting Company, Kenya Pipeline Company, Kenya Electricity Generating Company, National Oil Corporation of Kenya and Kenya Civil Aviation Authority. The study was anchored on the Agency theory supported by Transactional Cost theory and Upper Echelon theory. The study adopted a descriptive research design. The unit of analysis was selected state corporations while the unit of observation was board of directors in the mentioned state corporations. The target population for the study was 62 board of directors drawn from state corporations in Kenya and censors’ method was adopted. The key research instrument to be used; a 5-point-likert scale questionnaire which was used to collect primary data. The questionnaire was administered through drop and pick method. The process of data analysis involved data clean up and explanation. Responses in the questionnaires were tabulated, coded and processed by use of a computer Statistical Package for Social Science (SPSS) version 25 programmed to analyze quantifiable data using descriptive and inferential statistics which include Frequency, Mean, Correlation analysis and Regression analysis. This study applied a descriptive research design since it analyzed both quantitative and qualitative data at the same time. The target population was directors of selected Kenya’s energy sector parastatals that consisted of: Kenya Pipeline Company Ltd, Kenya Power and Lighting Company Ltd, KenGen Company Ltd, KETRACO, Geothermal Development Company Ltd and National Oil Corporation, where a simple random sampling was adopted to pick the respondents to engage in the study and a sample size of 62 directors were selected. The study utilized the help of self-administered questionnaires to compile primary data where the questionnaires had both open and closed –ended questions and statements. The research findings and results indicated that the questionnaires were both valid and reliable and could be utilized. Ideally, having all other independent variables constant, a unit increase in level of board leadership style would result to an increase in performance of the board of directors in Kenya’s energy sector parastatals significantly. Several avenues for additional research can be identified. For starters, our research was limited to the effects of determinants of the effectiveness of board of directors in the Kenya’s energy sector parastatal. Future studies should however look at the effectiveness of the board of directors from other sectors as well as from both public and private sectors. More research is needed to investigate on other determinants of effectiveness of the board other than board composition, board size, board independence, board training and development and board leadership style. Hence this study recommends further study to include other attributes that might influence the effectiveness of board of directors in the parastatal sectors.