Effect of Strategic Leadership on the Performance of Commercial and Financial State Corporations in Kenya

Abstract

This study aimed at establishing the effect of strategic leadership on performance of commercial and financial State Corporations in Kenya. Descriptive survey design was used. The target population consisted of all the forty eight (48) commercial and financial SCs in Kenya. Respondents were persons in charge of strategy or human resource department. Semi-structured questionnaire was used to collect primary data. The response rate of this study was 77.1% based on 37 respondents out of 48. The analysis of strategic leadership in commercial and financial state corporations showed that, in positive organizational culture, core values, symbols and ideologies are shared. Correlation analysis provided the relationship of strategic leadership practices and organizational performance showing that, there was a positively strong relationship between corporate strategic direction and high customer satisfaction. Balanced organizational controls showed a positive strong relationship with annual employee turnover. Strategic leadership practices have been discussed in this study, which include: determined corporate strategic direction, effectively managed corporate resource portfolio, emphasized effective organizational culture, emphasized ethical practices and balanced organizational controls. These practices have correlated highly with customer satisfaction, return on investment, net profit margin and low annual employee turnover. The correlation analysis that tested the level and significance of relationships of research variables confirmed that effective strategic leadership affects organizational performance. Therefore, this study adds to the body of knowledge of Barney and Arikan (2001) who explained that the most important task for strategic leaders is effectively managing the firm’s portfolio of resources which can be categorized into financial capital, human capital, social capital and organizational culture. It has also added to the literature that effective strategic leadership promotes organizational performance. The researcher recommended that balanced organizational controls should be effectively applied to realize good performance. A further study can be undertaken on the effect of strategic leadership on the performance of regulatory state corporations in Kenya.