Transformational Leadership, Knowledge Management, Organizational Structure, Reward Systems and Performance of Telecommunication Firms in Kenya

Abstract

The purpose of this study was to add onto the existing knowledge on transformational leadership, organizational structure, reward systems and firm performance. The study aimed to assess the mediating role of knowledge management and the moderating role of organizational structure and reward systems on the relationship between transformational leadership and performance of telecommunication firms in Kenya. Extant literature was reviewed and hypotheses formulated and tested. The data for the study was mainly collected using structured questionnaires from 160 firms, which were available from a sampled population of 404 telecommunication firms in Kenya. The questionnaires were designed using a five point Likert scale. The data was analyzed using descriptive statistics including mean and standard deviation while the hypotheses were tested using regression analysis. The findings showed that there is a significant relationship between transformational leadership and firm performance. Knowledge management was found to significantly mediate the relationship between transformational leadership and firm performance. However, organizational structure was found to have no moderating effect on the relationship between transformational leadership and firm performance. The findings revealed a significant difference between the joint effect of transformational leadership, knowledge management, organizational structure and reward systems and their individual effect on performance of the firms. The study findings support the transformational leadership theory by demonstrating that transformational leaders are capable of influencing knowledge management initiatives, which contribute to improved firm performance. The findings also support the resourcebased theory by demonstrating empirically that when properly combined and utilized, VRIN resources can lead to improved firm performance. This study is expected to add values to knowledge, policy and future research. The study was constrained by a number of limitations. One of the key limitations was lack of the most up to date record of the telecommunication firms in Kenya. By the time of commencing data collection exercise, the most recently available list from CAK was compiled in June 2015. This means that the derived sample may have suffered from non-inclusion bias. One of the key recommendations for future studies is to identify other contextual factors that may further explain the relationship between transformational leadership and firm performance. The study findings have implications for policy makers in the telecommunication firms in that they supported the need to institutionalize knowledge management for improved performance. At the national level, the findings will prove helpful as a source of information for transforming Kenya into a knowledge society by the year 2030 as envisioned in the vision 2030.