Influence of Strategic Practices on Corporate Governance in Selected Kenyan Parastatals

Recent and continuous global events involving major corporate and business failures continue to reverberate the importance of good corporate governance as a catch phrase necessary for ensuring the financial health and viability of business entities so that the interests of all stakeholders are protected and to prevent the unfair dominance of the interests of any stakeholder over those of the others. The general objective of the current study was to assess the influence of strategic practices on corporate governance in Kenyan parastatals. The study was guided by four objectives To determine the effect of board composition as a strategic practice on corporate governance in Kenyan parastatals. To establish the effect of accountability on corporate governance in Kenyan parastatals. To determine the effect of ethical practices on corporate governance of parastatals in Kenya. To assess the influence corporate social responsibility has on corporate governance in Kenyan parastatals. The study was guided by several theories including the Agency Theory, Stewardship Theory, Stakeholders Theory Political Theory, and Resource Dependency Theory. The study adopted a descriptive research design. The entire 46 parastatals formed the target population for the study Stratified random sampling were used to pick the parastatals that were to be considered for the study.14 parastatals from the Class A were considered for the study and 292 Respondents formed the sample size. The primary data was collected by use of a structured questionnaire using the Likert Scale. Split-Half technique of reliability testing was employed in the study whereby the pilot questionnaires were divided into two equivalent halves and then a correlation coefficient for the two halves computed using the Spearman Correlation Formula. Data was analyzed using both quantitative and qualitative methods. The results of data analysis were presented using frequency distribution tables and bar graphs this facilitated description and explanation of the information. The study concluded the variables collectively have a significant effect on corporate governance in Kenyan parastatals, its evident from the table that 87.9 % of variation or change in the corporate governance is explained by, board composition, accountability, ethical practices, and corporate social responsibility. This implies that these factors are very significant (since the p-valuesless than 0.05) and therefore need to be considered as a strategy in implementation of corporate governance. The study found out that good corporate governance is a vital element to firm performance. The study established that, generally, there is a positive relationship between corporate governance and the board composition, accountability, ethical practices and corporate social responsibility in selected Kenyan parastatals.