Influence of Corporate Governance Practices On Performance of Transport Parastatals in Kenya.

Abstract

State corporations in Kenya’s transport sector continue to grapple with governance deficiencies such as weak board oversight, financial mismanagement, and procurement irregularities, which undermine operational efficiency and erode public confidence. This study examined the influence of corporate governance practices on the performance of transport parastatals in Kenya. The specific objectives were to evaluate how board structure, leadership styles, stakeholder engagement, and resource management affect organizational performance. The study was anchored on Agency Theory, Full Range Leadership Theory, Stakeholder Theory, and the Resource-Based View. A descriptive explanatory research design was adopted, targeting 13 transport parastatals, with 104 departmental general managers purposively selected as respondents. Data were collected through structured questionnaires. Primary data were collected using structured questionnaires and analyzed through both descriptive and inferential statistics. The findings revealed that board structure had a significant positive influence on performance, particularly in enhancing strategic direction and diversity (P value of 0.000). Leadership styles especially transformational and democratic were found to be key drivers of improved organizational outcomes (P value of 0.000). Stakeholder engagement also emerged as a critical determinant of performance, promoting inclusivity and accountability (P value of 0.002). Additionally, effective resource management was shown to substantially enhance operational efficiency and service delivery (P value of 0.018). The study recommends that transport parastatals institutionalize periodic board performance evaluations, strengthen board independence, and mitigate political interference. It further advocates for leadership development initiatives emphasizing participatory and transformational approaches, structured stakeholder engagement frameworks, and integrated resource management systems that promote cross-functional coordination and strategic alignment.