External environment's direct influence on organizational performance has not attracted as much scholarly attention as the strategic management practice. The main objective of the study was to establish the influence of external environment on performance of Kenyan State corporations. The three dimensions of external environment namely munificence, complexity and dynamism were used to measure the variable while performance was measured along all the indicators of the sustainable balanced score card. The study's population consisted of 108 Kenyan state corporations and data was collected from 98 organizations. The results revealed that all the hypotheses were supported. It was established that external environment had a positive significant influence on all the indicators of performance. It was evident from the findings that the effect of external environment on organizational performance, while conventionally thought to be negative, the research showed otherwise. It is most likely that Kenya state corporations have ensured a proper environmental scanning that has led to an accurate stakeholders mapping. The stakeholders mapping has most likely led to favorability of relationships hence the positive effect of external environment. External environment ought not to impact organizational performance negatively. Results also reveal that indeed the external environment has a direct relationship and influence on organizational performance. Industrial organization economics theory suggested the structure-conduct-performance paradigm which was later matched with strategic management's the environment-strategy-performance. The results of this study seem to allude to an environment-performance paradigm. More scholarly poking is therefore necessary to determine the extent to which the direct relationship exists.