The Moderating Influence of External Business Environment on The Relationship Between Leadership Style and Organisational Performance Among Housing Mortgage Finance Companies in Kenya

The effectiveness of leadership practices is widely recognised as contingent upon the environmental contexts within which organisations operate. This study examined the influence of external business environment on the relationship between leadership style and organisational performance among housing mortgage companies in Kenya. Guided by the Contingency Theory, the study adopted a positivist philosophical stance and an explanatory research design. A census survey was conducted among 195 senior managers drawn from all 39 housing mortgage finance companies licensed by the Central Bank of Kenya. Data were collected using structured questionnaires, of which 157 were returned, yielding a response rate of 80.5% and deemed suitable for analysis. Content validity was established through expert review, while reliability was assessed using Cronbach’s alpha coefficients ranging from 0.710 to 0.819. Data were analysed using descriptive statistics including means and standard deviations and hierarchical multiple regression analysis. The findings indicated that the interaction between leadership style and the external business environment significantly predicted organisational performance (R2 = .502, F(1, 155) = 156.18, p < .001). The moderation model explained 50.2% of the variance in organisational performance (R2 = .502). The findings support the proposition that environmental conditions influence the effectiveness of leadership practices. The study concludes that the external business environment significantly moderates the relationship between leadership style and organisational performance in Kenya’s housing mortgage finance sector. The study recommends the adoption of context-sensitive leadership approaches that align organisational practices with prevailing environmental conditions.