Moderating Effect of Diversity Management on the Relationship between Corporate Governance Practices and Performance of Selected Counties in Northern Kenya

Abstract

The county governments in Kenya have been facing serious challenges in developing corporate governance frameworks that are secure and beneficial to all stakeholders. The purpose of this study was to evaluate the moderating effect of diversity management on the relationship between corporate governance practices and performance of county government (survey of Isiolo, Marsabit and Samburu). Specifically, the study sought; to evaluate the connection between corporate governance practices and performance of the county government in Kenya; to examine the relationship between diversity management and performance of county government in Kenya; and to assess the moderating effect of diversity management on the relationship between corporate governance practice and performance of county government in Kenya. The study was guided by three theories; the stakeholder theory, the standpoint theory and the goal setting theory. The three theories explain the study variables including corporate governance practices, diversity management and county government performance. A descriptive research design was employed in this research. The study population comprised of all departmental heads or their equivalent in the three county governments, that is, Isiolo, Marsabit and Samburu. There are 80 departments in the three county governments. The study conducted a survey since the number of departments was small. Therefore, the study surveyed 80 departmental heads. The choice of department heads was justifiable since they are the key players in running the county governments. Primary data was collected through well-structured questionnaires, which constituted of closed questions. Collected data was processed using SPSS version 23. Descriptive statistics including frequencies, percentages, means and standard deviations were used. Further, inferential statistics including correlation and regression analysis were also used to illustrate the relationship between the variables under study. The study used a multiple regression model. The findings indicated a linear relationship between corporate governance practices and county performance. The addition of diversity management to corporate governance practices improved the prediction of county performance although in a statistically insignificant way. Further, diversity management was found to have no moderation effect on the relationship between corporate governance practices and county performance. The study recommends that counties should continue practicing corporate governance. They should separate management body from boards for proper oversight. The counties should formulate policies in line with promoting career development and inclusiveness of the public opinions for transparency. Such practices of corporate governance will possibility augment the performance of counties because these two variables were significantly associated. The study commends the management of diversity observed in the counties because its combined main effect with corporate governance practices had more association to county performance than when considering corporate governance independently.