INFLUENCE OF BOARD COMPOSITION ON PERFORMANCE OF NONFINANCIAL FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE, KENYA

Abstract

Board composition remains a central pillar of corporate governance because it influences strategic oversight, accountability, and organizational decision-making. Despite extensive global research, evidence on its effect on firm performance remains inconclusive, particularly in emerging markets such as Kenya. This study examined the influence of board composition on the performance of non-financial firms listed on the Nairobi Securities Exchange (NSE). The study was anchored on Agency Theory, Resource Dependence Theory, Dynamic Capabilities Theory, and the ResourceBased View Theory. An explanatory research design was adopted, with a census of all 42 NSElisted non-financial firms. Primary data were collected from corporate secretaries using structured questionnaires, while secondary data were obtained from annual reports and corporate governance disclosures. Reliability was confirmed using Cronbach’s Alpha (0.759). Descriptive statistics, correlation, and ordinal logistic regression were used for analysis. Findings indicated moderate implementation of board composition practices, particularly regarding independent directors and professional qualifications. However, board composition had no statistically significant influence on firm performance (β = –0.126, p = 0.729), supported by a weak and insignificant correlation (ρ = –0.129, p = 0.453). Nevertheless, boards with greater diversity and technological expertise demonstrated stronger strategic responsiveness and innovation. The study recommends strengthening board diversity, digital expertise, and strategic competencies to enhance long-term firm performance.