Diversity in top management, strategy, top managers’ compensation and performance of kenyan state corporations
Kasomi, Fredrick K Muthenya
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Research anchored on upper echelons theory has established that diversity in top management affect organizational strategy. A separate body of literature demonstrates that top managers‘ compensations affect organizational behaviors. There is however almost no literature that has sought to examine the influence of diversity in top management and compensation in tandem, or their interactive effects in shaping organizational strategy. The conflicting empirical findings have portrayed influence of diversity in top management on organizational outcomes as a double-edged sword and the debate therefore ranges on. The main objective of the study was to establish the joint influence of diversity in top management, strategy and top managers‘ compensation on performance of Kenyan state corporations. The study employed a cross sectional research design. The study‘s population consisted of 96 Kenyan state corporations and data was collected from 85 organizations. Four specific objectives and corresponding hypotheses were formulated and used to test this relationship. Data was collected using structured questionnaires collated, organized, cleaned, analyzed and interpreted based on descriptive statistics, simple and multivariate regression analysis was done. While it was established that overall diversity in top management did not have a statistically significant influence on organizational performance the intervening effect of strategy as well as moderating influence of top managers‘ compensation where found to be statistically significant. Similarly joint effect of the three variables was statistically significant accounting for 60.8% of variation in organizational performance. This therefore implied that for Kenyan state corporations to remain competitive strategic process call for identification of greater adaptive capabilities, which favor heterogeneous teams due to enhanced creativity and innovativeness. In the same vein top managers‘ compensation would be critical as it would hold the behaviorally fragmented heterogeneous executive elites as a team during strategic process which spurs organizational performance. The study has also made its unique contribution to policy formulation and managerial practice to Kenyan state corporations. The study has also made a unique contribution to the academic literature arising from integration of Industrial Organization Economics Theory, Agency theory, Resource Based Theory and Stakeholder theory. This study has given rise to future research avenues and practical implications such as the need to establish the influence of different measures of top management diversity on either of the six SBSC measures of performance. It would also be interesting to replicate this study in different contexts in order for researchers to draw different patterns showing the effect of diversity in top management team on organizational outcomes. One of the main limitations of this study was that all the study‘s data were obtained through self-administered questionnaires which could have been biased. The reliance on primary data could have the potential associated with sources of systematic measurement error. Additionally, some of the responses regarding aspects of top managers‘ compensation were taken as being personal and as such in some instances resisted responding to questions. This was compounded by the problem associated with top management, who are sometimes unwilling to submit themselves to scholarly poking and probing. Future research could consider using both primary and secondary data to measure, variables and as such use longitudinal research design.