EFFECT OF ORGANIZATIONAL STRUCTURE ON FINANCIAL PERFORMANCE OF COMMERCIAL STATE CORPORATIONS IN KENYA

John Ndwiga Njiru () and Dr.Winnie Nyamute ()

International Journal of Finance and Accounting, 2018, vol. 3, issue 2, 72 - 87

Abstract: Purpose: The main purpose of this study was to determine effect of organizational structure on financial performance of commercial state corporations in Kenya. Methodology: The study employed a survey research design and targeted all the 34 commercial state corporations in Kenya. The study used both structured / closed ended and unstructured / open ended questionnaires to collect data. Both qualitative and quantitative was analyzed. Inferential statistics was employed whereby correlation and multiple linear regression was used to establish a relation between and among the studied variables. A statistical Package for social sciences (SPSS) was used to analyze data. The analyses data was presented graphically by visual aids such as Figures and Tables. Results: The findings obtained concluded that, organizational size, structure formalization, structure complexity and structure centralization affected the financial performance of commercial state corporations. Also it was establish that the number of non-executive directors affected the performance of the commercial state corporation is a challenge the board faced. It was further deduced that the organizational structure affected the financial performance of the commercial state corporations. Unique Contribution to Theory, Policy and Practice: The study recommends that the board size and composition be considered since they affect the financial performance of the commercial state corporations, the number of non-executive directors needs to be selected well, the board needs to comprise of well-educated people since they are actively involved in shaping Commercial state corporations' strategy, on-executive directors be trained on internal corporate governance mechanisms, and also ownership concentration needs to be reduced to avoid few people controlling the financial performance of the organization.

Date: 2018
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