An investigation of the nature of the agency relationship in public universities in Kenya

Abstract

The study sought to investigate and assess the nature and identify salient aspects of agency relationship between the government as the principal and public universities in Kenya as agents for the provision of higher education. All the six commissioned public universities were selected and five agents' - semi structured questionnaires send to each university. Ten principal's questionnaires were send to the various Government departments concerned with the governance, administration and monitoring of Public Universities. The questionnaires were structured to capture data on the agency relationship, identify specific areas of conflicts and their resolutions and determination of specific agency costs. The response rate was 85% on the returned questionnaires. The data was analyzed using tables, percentages and proportions. Results indicate that agency relations between the government and public universities are direct and are expressed in form of parliamentary legislations, financing higher education, policy, establishment, research and collaboration. Agency conflicts emerge from lack of provision of optimal levels of the above aspects, which support smooth functioning of public universities. The resolutions on conflicts were found to be sub optimal since there exists a breakdown in communication systems between the principal and it's agents. The underpinning aspect is inadequate provision of resources by the principal leading to moral hazard and adverse selection of functions by the agents. The government is now determined to boost its performance monitoring and evaluation of agents using the aspect of performance contracting. This is by emphasizing on results per resource allocated rather than processes used to achieve the output. The study found that salaries paid to senior management staff of public universities, directly consume a big proportion of allocated resources; this propounds the critical aspect of higher agency costs being incurred by the government to run Public Universities.