The performance of governments in the delivery of services to the pub-lic—which constitutes the customers who are the tax payers, is affected and influenced by a multitude of factors, some controllable and others outside the control of governments. In addition, each of the diverse factors impacts uniquely on performance while others may have only tangential influence. According to Hansen (1989), there are two streams of research regarding the determinants of firm performance. One is based on the economic tradition and emphasizes external market factors that are largely outside the control of firm management, while the other builds on the behavioral and sociological paradigms focusing on organizational factors as they fit into the environment; the latter therefore focuses on factors internal to the firm. A combination of various factors working together however, has the potential to generate a blend of influences, which is a significant departure from the impact of any factor taken on its own. The ensuing study is set out to establish the joint effect of performance measurement, political stability and global competitiveness—critical internal and external factors that affect or influence the performance of governments—on public service delivery and its customer satisfaction derivative in Kenya. The study was based on the results of measurement and evaluation of the performance of 470 public agencies that operated on performance contracts between 2004 and 2011. Using regression analysis, it was found initially that each of the three factors had a uniquely significant effect on the relationship between public service delivery and customer satisfaction, with performance measurement showing a strong positive relationship (R = 0.858) with customer satisfaction. Performance measurement explained 73.6 percent (R2 = 0.736) of customer satisfaction levels with the remaining 26.4 percent accounted for by other factors. Global competitiveness on the other hand, had a weak positive relationship with customer satisfaction. The results showed that global competitiveness explained 0.7 percent (ΔR2 = 0.007) on the direct effect of performance measurement on customer satisfaction and had an average mean of 3.698 on a scale of 1 (very low) and 5 (very competitive). It turned out that there was no significant moderating effect of global competitiveness on the relationship between performance contracting, measurement and public service delivery in Kenya. The performance measurement variable had a t-value of 5.789 and was statistically significant while the effect of global competitiveness was positive although not statistically significant. Preliminary findings established initially that on its own, political stability had no significant relationship with or influence on customer satisfaction. It however had an effect on the relationship between performance contracting, measurement and public service delivery, where a unit change in political stability contributed negatively to customer satisfaction by a factor of 0.235, though not statistically significant. Correlation analysis established further that social chaos and turmoil, which result in political instability, negatively influenced the attractiveness of a country in the global arena. Overall, the results showed that performance measurement, political stability and global competitiveness were positively related to customer satisfaction. The joint effect of the three independent variables explained 78.5 percent (R2 = 0.785) of customer satisfaction levels with the remaining 21.5 percent accounted for by other factors implemented in the public sector.
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