Moderated Mediated Effect of External Environment and Strategy Implementation on Relationship between Strategic Leadership and Organisation Performance

Parastatals have contributed immensely to Kenya’s social and economic development, yet they often face financial and governance challenges in spite of them accounting for a sizeable share of the national budget. This often calls for appropriate and timely parastatal execution of reforms in line with the provisions and dictates of the national strategy on parastatal reforms. This study sought to establish the moderated mediated effect of external environment and strategy implementation on relationship between strategic leadership and organisation performance: case of agricultural, livestock and fisheries (ALF) parastatals in Kenya. Taking positivist approach, the study was anchored on Full Range Leadership Theory supported by Cultural Dimension, Open System Theory and Resource-Based View theory. Cross sectional survey design using a census was adopted with a target population consisting of 45 Chief executive officers and 135 senior managers from 45 ALF parastatals in Kenya. Primary data was collected using structured questionnaire and analysis done descriptively and inferentially using correlation, multiple regressions and bootstrapping. Model results showed that there was strong significant positive correlation of R=0.7731 between all the study variables. Further study results shows that 59.8% (R2 =0.598) of variation in performance can be explained by a unit change in strategic leadership style, strategy implementation and external environment. Bootstrapping results revealed that the index for moderation mediation is significant, where lower and upper confidence interval [LLCI: 0.154, ULCI: 0.384] where the zero (0) is outside the confidence interval and thus moderation mediation is significant. There is direct association between strategic leadership style and organization performance of Agricultural, Livestock and Fisheries parastatals in Kenya which is moderated by external environment and the interaction is significant while the indirect association between strategic leadership style and strategy implementation on level of external environment, the interaction is also significant thus the direct and indirect effects are both significant. External environment will influence directly and indirectly the organizational performance of Agricultural Livestock and Fisheriesparastatals in Kenya therefore, if parastatals organizations leaders want to improve their organizational performance significantly they should engage in balanced control that involves strategic leadership style, strategy implementation and external environment. The study recommends re-evaluation of leadership and strategy implementation policies at the inspectorate of state corporations in Kenya to enhance performance of the institutions and align them with stakeholder’s demands and the global emerging trends in strategy implementation. The ALF leaders should allow departments to device viable ways of achieving strategic objectives and make sure that strategic plan is developed and implemented using a participatory approach. Finally, ALF parastatals leadership must take cognizance of external environment’s influence and adjust their operations and leadership in tandem to perform better.