Influence Of Institutional Dynamics on the Implementation of Performance Contracting Among Private Universities in Nakuru County

Abstract

Performance contracting is a critical management tool in higher education institutions, designed to enhance accountability, efficiency, and alignment with organizational goals. In Kenya, private universities in Nakuru County have adopted performance contracting to improve service delivery and institutional outcomes, though implementation has faced inconsistencies arising from internal organizational challenges. This study investigated the influence of institutional dynamics leadership commitment, resource availability, governance structure, and organizational culture on the implementation of performance contracting among selected private universities in Nakuru County. Anchored in Transformational Leadership Theory, Resource-Based View, Agency Theory, and Schein’s Organizational Culture Theory, the research employed a descriptive cross-sectional design. From a target population of 616 academic and non-academic staff, a sample of 243 respondents was drawn using proportionate simple random sampling. Data were collected through structured questionnaires and analyzed using descriptive and inferential statistics, with diagnostic tests conducted to ensure accuracy and model robustness. Regression analysis showed strong explanatory power, with an adjusted R² of 0.784, indicating that 78.4% of the variation in performance contracting implementation was explained by the four institutional dynamics. The model was statistically significant (F = 10.840, p < 0.001). Individually, leadership commitment (β = 0.241, p = 0.016) improved strategic alignment and staff engagement; resource availability (β = 0.268, p = 0.001) enabled governance structure (β = 0.283, p = 0.004) enhanced accountability and role clarity; and organizational culture (β = 0.705, p < 0.001) had the greatest influence, emphasizing the role of openness, collaboration, and performance orientation. The study concludes that effective performance contracting in private universities depends on aligning and optimizing institutional dynamics. It recommends participatory leadership, sufficient resourcing, strengthened governance mechanisms, and a culture of innovation and accountability. These measures can significantly improve service delivery and institutional performance, offering practical insights for higher education stakeholders seeking to enhance performance contracting systems.