The effect of autonomy on financial performance of commercial state corporations in Kenya

Abstract

Autonomy is the quality of state of being self – governing, especially the right or power of self – government, existing or capable of existing independently, and subject to its laws only. In other words, the issue is one of “degree of autonomy rather than an absolute autonomous state. While autonomy has made the process of financial accountability for the nature and quality of services provided by commercial state corporations. The change of government funding to block grants has been accompanied by responsibility and financial accountability of state corporations, who have typically responded with more timely, detailed, and accurate financial statement. The aim of this study was to establish the level of autonomy of commercial state corporations in Kenya, in relation to their financial performance. The population of the study comprised of all commercial state corporations in Kenya, numbering thirty one. The study was descriptive in nature and a census method was used since there are only a few commercial state corporations in Kenya. Descriptive survey design was preferred because it enables the researcher to describe the area of research and explain the collected data in order to properly investigate the differences and similarities. The research instrument used to collect primary data were questionnaires through the drop and pick method. The response rate was 77% that is a total of 24 out 31 respondents obliged to the research-questionnaires. Overall it was found that autonomy increases public accountability and consumer satisfaction. Many respondents felt that autonomous state corporations, vested with greater, authority were in a better position to respond to local community needs. They also felt that autonomy is likely to lead to improvements in the quality of life for its citizens, and that greater autonomy when accompanied by appropriate incentives, consumer responsiveness, and public accountability would lead to optimal financial performance. xi The findings indicated that most respondents felt that autonomy of state corporations was influenced to a large extent by political interference on it business undertakings, and still to a very high extent as compared to when there was full control by the government. The research was summarized from the findings that a widely used government control on corporation, is government ownership as well as resource decisions whereby the government makes decisions on hiring and firing of senior managers of these commercial state corporations. This study has revealed the effect of autonomy of financial performance in commercial state corporations in Kenya. It has investigated the level of autonomy of commercial state corporations in Kenya. It has investigated the level of autonomy of commercial state corporations which identified explanatory variables which lead the explained variance in the dependent variable, the financial performance. The data collected was presented using descriptive statistics and analyzed using multivariate regressions. In the light of the research findings, the researcher recommends; what needs to be done to improve the corporations financial performance with regards to autonomy from the government. The government should give the corporations the leeway to make decisions on investment and expansion as well as implementing day – to- day business activities. On the other hand the government should provide clear information and performance feedback, increase incentives and motivations among corporation employees. Again, the government should propose strategic direction, leadership, capacity building, reorganization and restructuring of commercial state corporations.