Mulili, BM 2011, 'Towards the best corporate governance practices model for public universities in developing countries: the case of Kenya', DBA thesis, Southern Cross University, Lismore, NSW.
Copyright BM Mulili 2011
The concept of corporate governance originated in the nineteenth century when incorporation was being advocated as a way of limiting liability (Vinten, 2001). The concept gained prominence in the 1980s due to stock market crashes in different parts of the world, and the failure of some corporations, partly owing to poor governance practices (Tricker, 2011). Several researchers have found strong links between organisational performance and corporate governance practices (Gregg, 2001; Hilmer, 1998; Kiel & Nicholson, 2002). Improved corporate governance practices have also been acknowledged to play an important role in the growth and development of the whole economy of a country (Claessens, 2006; Clarke, 2004; Reed, 2002).
Corporate governance is now an international topic due to the globalisation of businesses. Nevertheless, countries differ from each other in a wide variety of ways, such as politically, economically, culturally and technologically. This partially explains why corporate governance approaches in developing countries differ from those of developed economies (Rabelo & Vasconcelos, 2002).
Solomon (2010) highlights the evolution of corporate governance systems in a number of developing countries in Africa. Nevertheless, research on corporate governance practices in developing countries, especially countries in the African continent, is limited (Okeahalam, 2004; Shleifer & Vishny, 1997). This lack of research, as Yakasai (2001) explains, can be attributed to the culture of trust that prevailed in many African countries. Managers were trusted to run organisations in the best interests of all stakeholders with little emphasis being laid on corporate governance or disclosure and transparency of information.
According to Yizengaw (2003), higher education is one of the most effective instruments of political, economic, human resources and social development of a country. Moreover, a number of developing countries in Africa perceive education to equalise opportunities between social classes, distribute income more fairly and develop a more employable labour force (Carnoy, 1982). This leads to modernisation and social transformation (Ogom, 2007).
This research was conducted in Kenya. In spite of the World Bank’s and the International Monetary Fund’s (IMF) tough conditions on governance and better economic management (Solomon, 2010), the country is still caught up in macro-economic instability as evidenced by high inflation rates, account deficits and policy uncertainties (Njanja, Ogutu & Pellisier, 2012). Politically, Kenya is a multiparty democracy whose government has tried to create a more open and less fearful society that is transparent in its practice, decentralised in its style, accountable in its procedures, meritocratic in recruitment, efficient in the use of resources and relevant in its objectives and outcomes. These measures have positively impacted on the higher education sector. For instance, there has been a move towards greater autonomy of the universities in the management of their internal affairs and the removal of the somewhat autocratic culture that generally prevailed in the past. While each university has its own Act dating back to its foundation, all the universities are affected by numerous legislations with the Commission for Higher Education (CHE) playing a regulatory role. Socially, the country is experiencing increased educational levels, partly owing to the demands of an increasingly sophisticated economy. Moreover, freedom of expression is rampant in the country, and the citizens are free to question anything that does not seem to make sense to them. There are also increased efforts to reduce the prevalence of corruption and pressure groups tend to advocate for all forms of social change.
Public universities in Kenya are faced with numerous challenges that include, among many others, the need for the rapid expansion of university education, reduced government funding, gender inequality, low research capability, students living in poor conditions and the spread of HIV/AIDS (Mwiria & Ngethe, 2007). These challenges imply the need for leaders of the said institutions to implement broad policy changes. Mwiria (2007) perceives governance to be the most critically needed area of reform in the management of public universities in Kenya.
The aim of this research, therefore, was to explore the corporate governance practices adopted by public universities in Kenya with a view to recommending appropriate changes. The researcher collected qualitative data from 15 informants using semi-structured interviews. In order to enhance information richness, the researcher selected informants who were members of both governing councils and management boards. Three informants from each university were interviewed. The findings were triangulated using document reviews and a focus group discussion. The data collected was transcribed, coded and analysed qualitatively using the NVIVO software.
The findings obtained from this research confirm that Kenya’s public universities are faced with many challenges that include large student numbers, overstretched facilities and inadequate financing. The magnitude of these challenges weighs heavily on the governance of the said institutions.
On the basis of the findings, several changes are recommended for enhancing corporate governance of these institutions.
The researcher identifies the following areas as requiring further research:
- Comparative analysis of corporate governance practices of public and private universities in developing countries.
- Collaboration in the governance of public and private universities in developing countries.
- Comparison of corporate governance of public universities in developed and developing countries.
- As with most research studies, replication of this study is suggested for validation purposes.
- The use of larger samples is also recommended.
- Replication of the study using a different sample of non-university officials would help to improve our knowledge of corporate governance practices in Kenya, Africa, and other developing countries.
- Replication of the study on a national sample of public directors/executives would also be helpful in understanding the issues of corporate governance.
- A replication of the present study using survey research method would also help to shed light on the problems and challenges of corporate governance in Africa/Kenya.
- Finally, a comparison of private versus public managers using a national sample would also be helpful.