The Effect Of Financial Management Strategies On Performance Of Public Universities In Kenya; The Moderating Effect Of Organizational Size.

Abstract

Financial management is concerned with the effective and efficient management of an organization’s assets, liabilities, revenues, and cash flow to ensure that organizational goals are achieved. Good financial management strategies involve effective internal controls, working budgets, internal audits, and trained employees. The purpose of the study was to evaluate the moderating role of organizational size on the relationship between financial management strategies and organizational performance of public universities in Kenya. The specific objectives were to; establish the relationship of financial management strategies on organizational performance; the effect of organizational size on performance; the moderating effect of organizational size on the relationship between financial management strategies and organizational performance; and to examine the joint effect of organizational size and financial management strategies on organizational performance of public universities in Kenya. The guiding theory for this study was resource-based theory. The study also utilized organizational theory perspectives on budgets, stakeholder’s theory, and agency theory. The study adopted a descriptive survey design. The target population was thirty public chartered universities (as at October 2016) with a population of 1539 employees comprising top and middle-level management. The sample size of the study was 407 respondents. Data was analyzed using descriptive statistical techniques: means, standard deviation, and frequencies. Pearson's product moment correlation was adopted to test the strength of the relationship between the variables, while multiple and simple linear regression analyses were used to test the effect and level of significance. The study revealed that there is a positive, moderate and significant of financial management strategies on organizational performance, implying that public universities should develop and implement effective financial management strategies to bust their organizational performance. Secondly, the study results indicated that organizational size has a moderating effect on the relationship between financial management strategies and organizational performance of public universities. Further, the study results showed that there is a positive, moderate, and significant joint effect of financial management strategies and organizational size on organizational performance of public universities. Finally, the study findings established that there is a positive, moderate, and significant effect of organizational size on organizational performance. The study created new knowledge by establishing that the impact of moderating effect of organizational size is not so significant on the relationship between financial management strategies and organizational performance. The study recommends further research to be conducted, to establish the influence of other variables other than financial management strategies in improving performance. In addition, the study recommended a future comparative research on university colleges, private universities and other service industries. Further, the study recommends future study on financial management strategies on organizational performance to include other cadres of staff that are not included in this study.