MODERATING ROLE OF GOVERNMENT REGULATIONS IN THE RELATIONSHIP BETWEEN INTEGRATIVE LEADERSHIP STYLE AND THE ORGANIZATIONAL PERFORMANCE OF COMMERCIAL STATE CORPORATIONS IN KENYA

Abstract

Research has revealed that Kenya's Commercial State Corporations continue to perform significantly worse, with their collective financial losses substantially exceeding projections. This deteriorating performance indicates a serious financial crisis in these state-owned enterprises. If this trend continues unchecked, it poses a major threat to Kenya's ability to achieve its long-term national development goals as outlined in Vision 2030. The objective of this study was to establish the moderating effect of government regulations on the relationship between integrative leadership style and organizational performance of commercial state corporations in Kenya. Utilizing the Full Range Leadership Model, Theory of Public Interest Regulation and Resource-Based View Theory (RBV), the research implemented a cross-sectional survey design, gathering data from top management teams of all 52 commercial state corporations in Kenya via purposive sampling, while adhering rigorously to ethical standards during data analysis. The regression analysis showed a strong relationship (R = 0.748), with 55.9% of organizational performance explained by integrative leadership and government regulations. Both integrative leadership (β = 0.602, p < 0.001) and government regulations (β = 0.198, p < 0.001) were significant positive predictors of performance. The addition of an interaction term revealed a significant moderating effect (β = 0.113, p < 0.001), indicating that government regulations enhance the positive impact of integrative leadership on performance. This means that stronger regulatory frameworks amplify the effectiveness of integrative leadership, demonstrating that regulations act as a facilitator rather than a barrier. The study recommends that leaders in commercial state corporations adopt adaptive leadership strategies aligned with the regulatory environment to enhance organizational performance. By fostering a culture of compliance and ethical conduct in line with legal requirements, leaders can amplify the positive impact of their practices. Proactive engagement with regulatory bodies helps leaders stay informed about policy changes and integrate them into strategic decision-making. This responsiveness not only improves performance but also strengthens accountability and legitimacy. Ultimately, aligning leadership approaches with government regulations enables sustained success and better navigation of complex operational landscapes.