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.
Keywords: External Environment, TMT Characteristics, Organisational Performance, Ugandan State
Agencies