The aim of this study was to establish the factors influencing improvement in performance and delivery of public services. Thus, the paper studied the effect of performance contracting and measurement on public service delivery in Kenya. The public services considered in the study included ministries, state corporations, local authorities and tertiary institutions, with a total of 470 public agencies. The crosssectional survey design was used. The study is based on performance evaluation results compiled over the period between 2004 and 2011. Using regression analysis, it was found that performance measurement was critical to improvement in public service delivery and explained 73.6 percent of improvement in service delivery, as evidenced by independent measurement of customer satisfaction with the services delivered by the public sector.

The performance of public agencies is influenced and affected by many factors, both internal and external. The internal factors are in many cases controllable, while external factors tend to fall outside the control of public sector managers. Moreover, the effect may serve to ameliorate performance or intervene to weaken performance and thereby adversely affect delivery of services. This paper explored the intervening effect of political stability, an external factor, on the relationship between performance contracting and measurement, and public service delivery (expressed as customer satisfaction) in Kenya. The study was based on the results of measurement and evaluation of the performance of 470 public agencies that operated under performance contracts between 2004 and 2011. Using regression analysis, it was found 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 0.257, though not statistically significant. Correlation analysis established further that social chaos and turmoil, which result in political instability, negatively impact the attractiveness of a country in the global arena.

The performance of governments in the delivery of services to the public-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 (R 2 = 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 satisfac