Influence of Strategic Leadership On Organizational Performance: The Moderating Role of Digital Capability in The Government Sponsored Youth Empowerment Organizations in Kenya

Abstract

The Government-Sponsored Youth Empowerment Organizations (GSYEOs) represent a strategic approach by the Government of Kenya to empower the youth by equipping them with essential tools and resources. Despite these well-meaning interventions, youth poverty and unemployment rates in Kenya continue to rise, necessitating a critical evaluation of the performance of these government entities. This study aimed to evaluate the impact of digital capabilities on the connection between strategic leadership practices and the performance of GSYEOs Specifically, the study evaluated how strategic direction, strategic control, organizational culture, and human resource development affect organizational performance. The theoretical framework of the study drew on strategic leadership, dynamic capability, and control theories, with organizational performance measured through the Balanced Scorecard framework. A mixed-method research design was employed, involving a random sample of five GSYEOs with a population of 525 employees. A sample of 110 respondents was selected using Mugenda and Mugenda’s (2003) formula, while five purposively selected IT employees provided insights on technological aspects. Proportionate stratified random sampling was used to select employees from different GSYEOs, while 13 senior leaders were randomly chosen for interviews. The study's internal consistency was confirmed through Cronbach’s alpha after the pilot study. Data collection employed two instruments: a Key Informant Interview guide and a questionnaire comprising both closed- and open-ended questions, which were analysed using descriptive and inferential statistics. Inferential analysis included correlation, simple and multiple linear regression, and multiple hierarchical regression with moderation. The findings revealed that strategic direction, human resource development, organizational culture, and strategic control had a statistically significant positive effect on organizational performance in the simple linear regression model (p < 0.05). Multiple regression analysis showed that strategic leadership practices accounted for 69% of the variance in organizational performance, with human resource development and culture being the only statistically significant predictors. Moreover, digital capability was found to have an antagonistic effect, diminishing the positive relationship between strategic direction and organizational performance (β = -0.431, CI = -0.431, -0.036, p = 0.021). The study found that, when all independent and moderating variables were included in a hierarchical regression model, the combined influence on organizational performance was statistically significant, with R² at 86.2%. Regarding digital capability, the study recommends that GSYEO leadership should promote innovation by enhancing digital capacity, fostering a culture of innovation, and increasing funding for digital initiatives. However, it is crucial that employees are first trained, and that digital assets are reviewed to ensure alignment with the organization’s goals and mission before implementation. The study further concluded that human resource development had the greatest impact on strategic leadership practices. Consequently, the study recommends prioritizing human resource development through adequate funding for training initiatives. Lastly, the study advocates for aligning organizational culture with the goals and objectives of GSYEOs to enhance overall performance.