EFFECT OF CORPORATE GOVERNANCE ON ORGANIZATIONAL PERFORMANCE: A CASE STUDY OF WORLD VISION KENYA

Abstract

The purpose of this study was to investigate the effect of corporate governance on organizational performance. The study determined the impact of board size, frequency of board meetings and board composition on the organization performance. The study adopted the descriptive research design. The population constituted all the 80 employees of the World Vision Kenya headquarters based in Nairobi–Kenya. Stratified sampling technique was used to sample employees. The study used questionnaires to collect data from the organization. Pilot study was carried out at the national office, with questionnaires administered to 10 respondents. Cronbach’s Coefficient Alpha was used to measure the internal consistency of the data. Regression model was also developed to check the relationship between corporate governance and organizational performance. The study established that board members were given an orientation and training before attending the board meetings and sufficient time was provided during the board meetings for discussion before making board decision. Further, the study established that smaller boards enhance firm performance and a gender balanced board was found effective in boosting the performance of the organization. The study also established that during AGM meetings decision making was given priority to ensure that for the next financial year everything run smoothly. The study also established that a unit increase in Board size, Board composition and frequency of Board meetings increases organizational performance of World Vision Kenya. From the findings of the study, executives and policy makers should focus on improving corporate governance practices in world vision and any other non-profit making organization whose main objective is alleviating social and economic problems in the society. CMA guidelines on corporate governance practices advices that the size of the board should not be too large to extent that fruitful discussions during meeting cannot be realized. The study would be useful to policy makers during the development of governance policies. The study created critical and crucial knowledge to the stakeholders and management in the public as well as private institutions which may help them in decision making. The study findings benefited scholars/researchers who may wish to undertake further studies aimed at improving corporate governance structures and for theory building.

Key Words: Board Size, Board Meetings, Board Composition, Organization Performance

CITATION:  Okoth, F. O., & Litunya, R. (2019). Effect of corporate governance on organizational performance: A case study of World Vision Kenya. The Strategic Journal of Business & Change Management, 6 (4), 428 – 442.