Regulatory compliance, strategic agility and sustainable performance of non governmental organizations in lake region economic bloc, Kenya

Abstract

Non-Governmental Organizations (NGOs) play a vital role in promoting socioeconomic development in Kenya through humanitarian, advocacy, and development interventions. However, many NGOs continue to experience sustainability challenges arising from declining donor funding, increasing operational costs, governance constraints, changing stakeholder expectations, and evolving regulatory requirements. Although Strategic Agility is recognized as an important organizational capability for enhancing adaptability and resilience, empirical evidence on its relationship with Sustainable Performance remains limited, particularly regarding the moderating role of Regulatory Compliance. This study examined the moderating role of Regulatory Compliance in the relationship between Strategic Agility and Sustainable Performance among national NGOs operating within Kenya’s Lake Region Economic Bloc (LREB). Specifically, the study sought to determine the effect of Strategic Agility on Sustainable Performance, examine the effect of Regulatory Compliance on Sustainable Performance, and establish its moderating role in the Strategic Agility–Sustainable Performance relationship. The study was guided by a positivist research philosophy and anchored on Dynamic Capability Theory and Institutional Theory. A quantitative explanatory cross-sectional research design was adopted. The target population comprised 674 registered NGOs. Taro Yamane’s (1967) formula was used because the study had a known finite population and required a 5% level of precision, yielding an initial sample of 251 NGOs. Proportionate sampling ensured representation across NGO sectors. A pilot study involving 25 NGOs, representing approximately 10% of the initial sample, was randomly conducted in five LREB counties to assess the clarity, feasibility, consistency, and suitability of the research instrument, after which necessary refinements were made. Following exclusion of the pilot participants, 226 NGOs constituted the main study, from which 217 valid questionnaires were obtained, representing a 96% response rate. Data were collected electronically using structured questionnaires through Kobo Toolbox and analyzed using descriptive statistics, simple linear regression, and hierarchical multiple regression.The findings showed that Strategic Agility had a statistically significant positive effect on Sustainable Performance (β = .563, p < .001; R² = .564; F = 278.02, p < .001). Regulatory Compliance also positively predicted Sustainable Performance (β = .637, p < .001; R² = .606). In hierarchical regression, adding Regulatory Compliance increased explained variance from 56.4% to 67.7% (ΔR² = .113; F = 224.57, p < .001). Adding the Strategic Agility × Regulatory Compliance interaction increased explained variance further to 71.7% (ΔR² = .040; F = 179.84, p < .001). The interaction was negative and statistically significant (β = −.148, p < .001), indicating that higher Regulatory Compliance reduces the incremental contribution of Strategic Agility to Sustainable Performance. The findings therefore demonstrate that while Strategic Agility and Regulatory Compliance independently contribute positively to Sustainable Performance, their interaction is conditional. The study concludes that sustainable NGO performance requires balancing strategic adaptability with regulatory accountability. The study contributes to Dynamic Capability Theory and Institutional Theory by demonstrating how organizational capability and institutional governance jointly shape NGO Sustainable Performance in the LREB