Does performance contracting matter? The moderating influence of performance contracting on the relationship between strategy implementation and performance of Kenya State Corporations

Abstract

Strategy implementation has been established to influence organizational performance. However, its influence on organizational performance could be subject to a number of other variables including performance contracting. The mutually agreed contracts through negotiations between principals and agents are conventionally used with the purpose of enhancing implementation of strategy. This study therefore sought to investigate the effects of performance contracting on the relationship between strategy implementation and performance of Kenyan state corporations. The results showed that performance contracting significantly moderated the relationship between strategy implementation and performance. Markedly, this moderating effect was negative which was conspicuously unconventional. It is most likely, from the findings, that there exists a disconnect between performance contracting and strategy implementation in Kenyan state corporations. The study further observed that although performance contracting was established to operationalize strategy implementation, it seems the process has acquired a trajectory of it’s on. The study recommends a relook at the process to ensure a linkage between performance contracting and strategy implementation to ensure better performance of Kenyan state corporations.