Challenges faced in the involvement of stakeholders in strategy formulation of the electricity sector in Kenya

Abstract

The strategic thinking phase in the evolution of strategy making is characterized by synthetic, divergent and creative thought processes interwoven with analytical, convergent and logical thought to more effectively deal with a complex, uncertain and rapidly changing external environment (Stacey, 2003). Despite the importance of stakeholder involvement in strategy formulation no study has been done on stakeholder involvement in strategy formulation in the Electricity Sector in Kenya. The aim of this study therefore was to bridge this gap by investigating the extent to which stakeholders were involved in strategy formulation and the challenges managers faced while involving the stakeholders. The study adopted descriptive research design. The population of the study was 6 Electricity Corporations and 5 IPPs in Kenya. The study sample was 26 respondents. The study collected both primary and secondary data. Primary data was collected using a questionnaire while secondary data was obtained from records of the companies. Data was analyzed by descriptive analysis. From the findings, the study concludes that stakeholders play an important role in the strategy formulation process in the electricity sector in Kenya. The challenges faced while involving stakeholders in strategy formulation in the energy sector affected the ESIs to a great extent. The poor stakeholder engagement practices, diverse stakeholders‟ views and expectation, impossibility of engagements with certain stakeholders such as natural environment and future generations, stakeholder identification and prioritization problems, conflicting stakeholder and organizational interests and interpretation of the stakeholder engagement process are key challenges that affect organization‟s strategy formulation efforts. There are numerous challenges that organizations face as they engage with their stakeholders in the strategy formulation process. The stakeholders‟ involvement in the strategy formulation process in the Electricity Sector in Kenya was to a limited extent; therefore, the study recommends that the management of Electricity Sector in Kenya should enhance the level of stakeholders‟ involvement in the strategy formulation. This should be coupled with both the ESIs and stakeholders maintaining a good and a long term relationship. Given that there are diverse challenges faced in involving stakeholders in strategy formulation, the study recommends that the ESI players should develop strategy to mitigate as well as cope with challenges faced in involving stakeholders in strategy formulation in the Kenyan energy sector. Involvement of stakeholders in strategy formulation of the electricity sector in Kenya will involves scanning, selecting, interpreting and validating information relating to the organizations in the sector. It will take some of the organization's stakeholders to articulate and agree on vision and direction. In theory, the study creates emphasis on the existence of a dynamic and complex relationship between organizations and their stakeholders and, emphasizes the management of these relationships. Therefore, stakeholder theory plays a significant role in understanding the stakeholders‟ influences on organizations‟ actions and how organizations respond to these influences.