Government Regulations' Moderating Influence on the Link between Local Petroleum Companies' Organizational Performance and Corporate Governance in Kenya

Abstract

In 2013, local petroleum firms in Kenya had a combined market share of 71% which in a span of 2 years had significantly declined to 52% as of 2015. The decline in the market share was as a result of stiff competition from the multinationals, which has continued to affect the organizational performance of local petroleum firms in Kenya. The purpose of this study was to determine the moderating effect of government regulations on the relationship between corporate governance and organizational performance of local petroleum companies in Kenya. The study population was 834 local petroleum companies in Kenya licensed by Energy and Petroleum Regulatory Authority as of August December 2022. This study was anchored on Theory of Transformation Leadership and supported by Institutional Theory and Resource Dependence Theory. These theories are linked to corporate governance, strategy implementation, government regulations and organizational performance variables. Primary data was collected using structured and unstructured questionnaires. The study was guided by positivism philosophy and the data collected was coded and analyzed using Statistical Package for Social Sciences (SPSS version 22) and be presented in bar charts, percentages and tables. Data was analyzed using ANOVA, correlation and multiple regressions. The study findings indicated that the adjusted R square increased from 59.3% to 65.1% and 66.9% after the interaction term and thus, government regulations moderate the relationship between corporate governance and organizational performance of local petroleum companies in Kenya. This means that there is a significant moderating effect of government regulations in the relationship between corporate governance and organizational performance of local petroleum companies in Kenya. The study recommends that managers should ensure that the company is in compliance with all relevant laws and regulations, and that it adheres to best practices in corporate governance, to protect the company from potential legal or regulatory sanctions and maintain a positive reputation in the industry.