Relationship between Top Management Team Diversity and Performance of Oil Marketing Companies in Kenya

A Research Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Master of Business Administration (MBA)The general objective of this study was to examine how top management diversity affects performance of oil marketing companies in Kenya in terms of profitability. The specific objectives of this study were: to establish if there exists a relationship between TMT demographic diversity and corporate performance of oil marketing companies in Kenya; to determine if there exists a relationship between firm innovation and corporate performance of oil marketing companies in Kenya; to determine if there exists a relationship between CEO‟s leadership style and corporate performance of oil marketing companies in Kenya. The study population was comprised of 55 oil marketing companies in Kenya. Organizational financial performance was measured using financial indicators for the period ended June 2013. Descriptive research design was employed in this study. This design was appropriate for this study because it necessitated collection, organization and summarizing data from a sample for conclusions. The data analysis involved measures of central tendency and frequencies as well as regression analysis. The data was presented by bar graphs, pie charts and frequency tables. The study first sought to establish if there exists a relationship between TMT demographic diversity and corporate performance of oil marketing companies in Kenya. It was indicated that indeed there exists a positive relationship between TMT demographic diversity and corporate financial performance. Additionally the R squared value of 0.517, 51.7% of corporate financial performance is explained by the independent variable (TMT demographic diversity), on the other hand the remaining 48.3% is explained by other factors put in place by the oil marketing companies in order to enhance their performance. The second objective was to determine if there exists a relationship between firm innovation and corporate performance of oil marketing companies in Kenya. It was indicated that there is a positive relationship between firm innovation and corporate financial performance. R squared value of 0.108 shows that only 10.8% of corporate financial performance is explained by firm innovation. The remaining 89.2 % is explained by other factors put in place by the oil marketing companies in order to enhance their performance. Finally it was revealed that that there is a positive relationship between leadership style and corporate performance. R squared value of 0.116 shows that only 11.6% of corporate performance is explained by the leadership style. The remaining 88.4 % is explained by other strategies put in place by the oil marketing companies in order to enhance their performance. The model was not significant as depicted by an F value of 1.714 and p value of 0.200. This is an indication that the CEO‟s leadership style on it is own has no significant effect on corporate performance. The study recommends that organizations need to put in place measures to enable value addition as well as understanding the relationship between TMT diversity and corporate performance. The study also recommends that organizations need to fully outline into the roles of different leadership styles in impacting performance in diverse teams. As well there is need to understand that diversity operates through two pathways; the first offers opportunities through the breadth and depth of available knowledge while the second creates challenges due to the emergence of emotional conflict. To date, ambiguous results surrounding these effects have remained unresolved. This can be well achieved by exploring the role of transformational and transactional leadership on performance