Top Management Team Characteristics, Corporate Governance, Corporate Social Responsibility and Performance of Large Manufacturing Firms in Kenya

Abstract

The deliberations as to whether top management team characteristics affect the performance of organizations continue to draw responsiveness from scholars and practitioners. Some researchers on upper echelon findings have been conflicting and are not wholly consistent due to inherent limits of organizational demography related to, and not taking into consideration the intermediate role of, mental and psychological characteristics and team processes. This study, therefore, sought to add to knowledge by assessing the clout of management team’s demographic, behavioural and involvement features on organizational outcomes, while taking cognizance of the probable part played by corporate governance as a moderator in addition to corporate social responsibility acting as an intervening variable. The principal objective of this study was to establish the impact of corporate governance and corporate social responsibility on the relationship between top management characteristics and organizational performance of large manufacturing firms in Kenya. Accordingly, four specific objectives and matching hypotheses were designed and used to test this relationship. A cross-sectional research design was employed in this study whose population comprised of all 72 large manufacturing organizations that held membership of Kenya Association of Manufacturers during 2016. The relevant data was collected from 56 organizations, representing 78% response rate. Performance was measured using financial and non-financial indicators. The data scrutiny and elucidation were grounded on descriptive statistics, correlation and regression analyses. Hypotheses testing revealed, statistically, a significant and moderate association exists amongst management characteristic and organizational performance, corporate governance wields a positive moderating outcome just as corporate social responsibility posits a positive intervening influence on the relationship. The contribution of the three components of management characteristics on performance follows the order of behavioural, involvement and demographic. The joint effect portrayed to be a greater force than individual influences at R-square 0.470. The relationship between management characteristics and organizational performance indicates R-square of 0.168 rising to 0.412 when the relationship is moderated by corporate governance, when intervened by corporate social responsibility it increases to 0.377. The study encountered some limitations such as using the cross sectional survey which does not clearly show causal effects on the observed relationships and therefore could not give actual relationships that exist between the predictor variables and organizational performance. In addition, data examination utilized regression analysis technique assuming the relationship amongst data variables was linear but could be probable that associations among variables are not necessarily linear. Future academics are encouraged to use some other tools for statistical analysis. The study has extended our appreciation of the linkage between the characteristics of management team and organization outcomes by including governance measures to moderate and corporate social responsibility to play the intervening role. Similarly, the study included behavioural and involvement characteristics of executive team variable. This study provides a mile stone on pertinent management traits literature. The necessity to establish other dynamics influencing the connection between executive team characteristics with outcomes of organizations was underscored. Similarly, the study goes further to contribute to the complex nature of associating managers’ personalities with performance of organizations and advocates for more research in this area. The key finding was that the joint effect inclusive of corporate governance and social responsibility is greater than top management team characteristics single effect on firm performance.