Influence Of Macro Environment And Top Management Demographics On The Relationship Between Enterprise Risk Management And Performance Of Kenyan State Owned Corporations
Abstract
This study was a conceptualization of the relationship between Enterprise risk
management (ERM), macro environment, Top management demographics (TMD) and
organizational performance. Some researchers have argued that Enterprise risk
management has a positive influence on performance while others have advanced that
the influence is negative, whereas others have contended that this strategic management
practice is fairly recent and its effect is yet to be fully realized. There is also no
agreement on the moderating influence of both macro environment and Top
management demographics on the relationship between Enterprise risk management
and performance. Additionally, the moderating influence of macro environment on the
relationship between Enterprise risk management and organizational performance has
been inconclusive. It was for this reason, that there was need to explore the existence
of such relationships. The study context was Kenya state-owned corporations. The
general objective of the study was to establish the relationship between Enterprise risk
management, Top management demographics, macro environment and the
performance of Kenya state-owned corporations. Arising from this broad objective, the
specific objectives were to: 1) Investigate the influence of Enterprise risk management
on the performance of state corporations; 2) determined the moderating influence of
macro environment on the relationship between Enterprise risk management and
performance of the state corporations; 3) examine the moderating influence of Top
management demographics on the relationship; 4) determine the joint influence of
Enterprise risk management, Top management demographics and macro environment
on the performance of the state corporations. The study applied a cross sectional survey
design and use of structured questionnaire and collected data from 92 state
corporations. Descriptive and inferential statistics were used to analyze the data.
Hypotheses were tested using both simple and multiple regression analysis. Baron and
Kenny model was used in testing the moderating effects. The study findings indicated
that: 1) Enterprise risk management had a statistically significant influence on
performance of Kenya owned state corporations; 2) Top management demographics
significantly moderated the relationship between Enterprise risk management and
performance; 3) Macro environment had no significant moderating influence on the
relationship; 4). Enterprise risk management, Top management demographics and
macro environment jointly significantly influenced performance of the state
corporations. The results supported upper echelons theory, contingency theory of
enterprise risk management and stakeholder’s theory. However, the results failed to
support the proposition of open systems theory. The study makes significant
contribution to knowledge by: 1) Validating the propositions of the Contingency theory
of Enterprise risk management and establishing the significant positive influence of
Enterprise risk management on organizational performance in the public sector context
2) Advancing the significant moderating influence of Top management demographics
on the relationship between Enterprise risk management and performance and 3)
establishing the significant joint effect of Enterprise risk management, Top
management demographics and macro environment on performance. The study results
will be valuable to policy makers in re-enforcing and adoption of Enterprise risk
management in State-owned agencies, organizational leadership in integrating
Enterprise risk management with organization-wide strategic management activities.
The study suggests that future studies could adopt different research designs and
investigate different contexts.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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