A Canonical Model of Organizational Performance and its Determinants; a Case of Local Contractors in Kenya

Abstract

Local contractors in Kenya have been reported to have a myriad of weaknesses including operational inefficiencies, poor growth, reduced profitability, poor technology, ineffective strategies, and weak management structures among many others. This is a clear demonstration of poor organizational performance. A number of factors have been reported to influence the level of organizational performance among contractors. This paper seeks to establish the relationship between the dimensions and determinants of organizational performance for local contractors in Kenya. A canonical correlation analysis (CCA) of the criterion (dimensions) and the predictor (determinants) variables is presented herein. The results of CCA showed a significant relationship between the dimensions and determinants of organizational performance. The model was statistically significant, with a Wilks’s lambda, λ, of .05197, F (100, 1551.20) = 7.93263, p<0.001. Significance across all the multivariate tests was an indication of good overall model fit. Though the study yielded ten canonical functions, only four were found to be significant. However, since the redundancy index values for the second, third and fourth roots were very low (1.6%, 1.1% and 0.5%), these canonical functions were excluded from final interpretation of the results. The total shared variance between the variates in the adopted canonical model was found to be 86.87%. The model was validated using a second set of data with the results similarly demonstrating a statistically significant relationship. The three determinants found to have the highest influence on organizational performance were found to be quality of service, firm’s organizational structure and strategic planning practices. Due to the strong positive relationship established between the dimensions and determinants of organizational performance, the study recommended that local contractors strive to enhance their organizational performance by improving the environment in which they operate. Keywords— canonical correlation analysis, determinants, dimensions, local contractors, organizational performance.