Moderating Effect of External Environment on the Relationship Between Tmt Characteristics and Performance of Ugandan State Agencies

Abstract

The main objective of this study was to examine if the external environment moderated the relationship between top management team (TMT) characteristics and the performance of Ugandan state agencies. The external environment was measured using the three dimensions of dynamism, complexity, and munificence. TMT characteristics were measured using the behavioural, demographic, and psychological characteristics of the TMTs. The study was anchored on the upper echelons, environmental dependency, and dynamic capabilities theories. A descriptive cross-sectional research design was adopted. At least three TMT members of the 160 sampled state agencies out of the 201 state agencies in Uganda were selected. 152 agencies accounting for a 95% response rate responded and filled out the questionnaire. Primary data were gathered using a structured questionnaire. Hayes’ (2022) PROCESS Macro was used to test for moderating effect. The findings revealed that the external environment moderates the relationship between TMT characteristics and performance (Interaction term b=.857, t=3.773, p<0.05, ΔR2=.041, F=14.233). This study concludes that the external environment has a significant moderating effect on TMT characteristics and performance. This study recommends Ugandan state agencies to regularly assess and monitor the external environment to identify any changes that may impact the relationship between TMT characteristics and performance. In addition, state agencies should consider the specific TMT characteristics that are most important for driving performance in their particular operating context, and consider developing specific TMT characteristics to effectively navigate the external environment. This study also recommends policymakers consider the external environment when developing strategies to improve the performance of state agencies, evaluate the effectiveness of state agencies, and design and implement policies that affect state agencies.