Moderating Effect of Institutional Governance on the Relationship Between Outsourcing Decision Factors and the Efficacy of Outsourcing Strategy in Selected Public Universities in Kenya

Public universities in Kenya have turned to outsourcing to cut costs, raise service quality and work more efficiently, yet many have not seen these gains in full. This study examined how procurement policy, legal framework and client–vendor relationship relate to the efficacy of outsourcing strategy, and whether institutional governance moderates these relationships. A correlational design was used. Questionnaires went to 60 senior administrative officers in 12 public universities, and 53 were returned complete (88.3% response rate). The data were analysed using descriptive statistics, Pearson correlation and hierarchical multiple regression. All three decision factors correlated strongly with outsourcing efficacy (r = .875 to .951). When the three were entered together, however, only legal framework (β = .531, p < .001) and client–vendor relationship (β = .565, p < .001) remained significant; procurement policy did not (β = −.112, p = .204). Together, the three factors explained 94.3% of the variance in outsourcing efficacy. Adding institutional governance and its interaction terms raised this to 95.7% (ΔR² = .014, p = .005), and all three interactions were significant. The strongest interaction involved client–vendor relationship (B = 0.156, p = .002), followed by procurement policy (B = 0.087, p = .043) and legal framework (B = 0.031, p = .044). The study concludes that outsourcing works best where contracts are well managed, vendor relationships are actively looked after, and top management provides committed oversight. Procurement policy exists on paper but needs more flexible application if it is to add value. Universities should invest in contract management skills, structured vendor relationship management and regular evaluation of outsourced services.