THE EFFECT OF DEMERGER STRATEGY ON ORGANIZATIONAL PERFORMANCE A CASE STUDY OF STATE DEPARTMENT FOR TRADE AND ENTERPRISE DEVELOPMENT, KENYA

##plugins.themes.academic_pro.article.sidebar##

Published Apr 19, 2022
https://doi.org/10.71064/spu.amjr.1.1.145
Download
pdf
Statistic
2022: Special Issue:African Multidisciplinary Journal of Research

##plugins.themes.academic_pro.article.main##

Peter Chege
St. Paul's University
George Gachuru
St. Paul's University
James Njau
St. Paul's University

Abstract

Restructuring is the act of organizing „differently‟ with a sole aim of strengthening the position of an institution in terms of its mandate and performance. It is a stage of repositioning, recasting the organizational structure. Studies conducted on the effect of demerger strategy on organizational performances have had conflicting results. The specific objective of this study was to investigate the effect of demerger strategy on organizational performance as well as establishing the state of facts concerning demerger as a restructuring strategy in the Kenyan Government Institutions. This study is premised on the Weick‟s Model of Organizing. The study utilised a descriptive research design. The targeted population was the employees of State Department for Trade and Enterprise Development. The sample was established by use of stratified random sampling and a sample of 146 respondents was generated. A questionnaire was used for data collection. Analyzed data was evaluated using descriptive statistics. Linear regression model was used to estimate the effect of independent variable on the dependent variable. Results of the study indicated that the response rate was 76.71% which was sufficient for inferential statistical analysis. A coefficient of determination generated after regression analysis was 85.4% of variance in the organizational performance of State Department of Trade and Enterprise Development. Results from inferential analysis showed the p-value and regression coefficient generated after running the regression model was (β= 0.223, p = 0.017). The study indicates that demerger has not only a significant but also a positive effect on State Department for Trade and Enterprise Development. These results therefore show that government institutions should consider demerger as a strategy for improving organizational performance in Ministries, Agencies and Departments in the public service.
Keywords: Restructuring, Demerger, Carve Out, Organizational Performance, Split-up, Split-up

##plugins.themes.academic_pro.article.details##

How to Cite
Chege, P., Gachuru, G., & Njau, J. . (2022). THE EFFECT OF DEMERGER STRATEGY ON ORGANIZATIONAL PERFORMANCE A CASE STUDY OF STATE DEPARTMENT FOR TRADE AND ENTERPRISE DEVELOPMENT, KENYA. African Multidisciplinary Journal of Research, 1(1), 450–462. https://doi.org/10.71064/spu.amjr.1.1.145

References

  1. Akumu, L. & Nzulwa, J. (2018). The relationship between restructuring strategies and performance: a case of Kenya National Audit Office. International Academic Journal of Human Resource and Business Administration, 3(3), 289-310
  2. Colville, I (July 1994). "Searching for Karl Weick and Reviewing the Future". Organization. 1 (1):pp.218–224.
  3. Copper, R. & Schindler, S. (2014). Business Research Methods. India: Tata McGraw-Hill
  4. Dittmar, A, (2013) Capital Structure in Corporate Spin-Offs, ICFAI Reader, October, pp.59-63.
  5. Mahdani, Sulaiman & Kahtani, A. & Abujarad, (2012). The relationship between strategy implementation and performance of manufacturing firms in Indonesia: The role of formality structure as a moderator. World Applied Sciences Journal, 20(7), 955-964.
  6. Khaugani, M. & Ndegwa, P (2020). Strategic demergers and organizational performance of Madison Group and Companies in Kenya. International Journal of Social Sciences Management and Entrepreneurship, Vol. 4 (1), 85-102
  7. Kothari, C & Gaurav, G. (2016). Research Methodology: Methods and Techniques. Revised 3rd Edition. New Delhi: New Age International Publishers
  8. Mallick, A. & Rakshit, D. (2016) Corporate Restructuring through Demerger: A case study, Finance India, 20(4):1321-1338.
  9. Mokaya, J. (2016). The effect of corporate restructuring on company performance: A case study of East African Breweries Limited (EABL). A Research Report Submitted to Chandaria Business School, USIU-Africa, Nairobi.
  10. Mugenda, O., & Mugenda, A. (2003). Research Methods: Quantitative & Qualitative Approaches.
  11. Acts Press. Nairobi. Kenya.
  12. Njeri, A. (2013). The effect of the separation of life assurance and general insurance on the financial performance of insurance companies in Kenya. An Unpublished MBA Thesis Submitted to School of Business University of Nairobi, Nairobi.
  13. SDT&ET (2021) Establishment of State Department for Trade and Enterprise Development: Human Resource and Management Department
  14. Singh, R., Bhowal, A. & Bawari, V. (2016). Impact of Demerger on Shareholders‟ Wealth, Enterprise Risk Management, 1(1):44-59.
  15. Taro, Y. (1967). Mathematical statistics. Harper & Row.