Corporate Governance Practices and Performance of Small Scale Tea Processing Companies in Kenya

Abstract

The study looked the corporate governance practices and the performance in small scale tea factory companies in Kenya. Companies are continuously under immense pressure to maintain superior performance in areas of finance, operations and growth as well as the non financial parameters. Good cooperate governance is linked to superior forms’ performance Corporate governance is concerned with key areas of Organization responsibility to the shareholders, management leadership within organization and issues of transparency, accountability and efficient utilization of resources. The study used a cross-sectional descriptive survey design. This design research was informed by the set up of the tea industry and specifically the target small scale sector as well as the number of companies that were involved in the study and the need to conduct comparative analysis. The objectives of the study were to establish the corporate governance practices in the small scale teas processing companies and the influence it has on organizational performance. The study set to gather both primary and secondary data by way of questionnaire and secondary data which were obtained from the managing agent of the companies. To achieve the purpose of the objectives of the study, corporate governance practice was based on the best code of practice guidelines while performance was base on the balance scorecard and other four key areas of performance measurement; quality, Percentage of total income payout to grower, final payment rate in Kenya shillings per Kilogram of green leave and market price per kilogram of made tea the study utilized. Both descriptive statistics and correlation analysis through regression of key performance indicators against six corporate governance practices was presented in the summarized regression statistics for the From findings the small scale tea sector has establish, implemented the corporate governance practices and adopted at various levels their applications, which have influenced the operations and decision making of the companies hence influencing the organizational performance of the tea processing Companies in Kenya. It was concluded that corporate governance best code of practice provides a structured approach to the principle agent arrangement. The practices as adopted in the small scale tea industry from the findings are extensively applied. However certain aspects have not been fully appreciate by some players thus discrepancies in application and also benefit derivation as show by the wide IV performance indicator bases established. Some factories exhibited high level of corporate governance practice while others presented weak practices this in correlation to the performance against exhibited variance