Strategic Management Practices and Performance of Savings and Credit Cooperatives in Nairobi City County, Kenya

Abstract

This paper has discussed the effects of strategic management practice on the performance of the Savings and Credit Cooperative Societies (SACCOs) that are based in Nairobi City County, Kenya. The particular dimensions of strategic management explored included strategic intent, strategy formulation, strategy implementation, and strategic control. The analysis was pegged on the Resource-Based View, Strategic Management Theory, Contingency Theory, and the Balanced Scorecard model. The research design used was descriptive and 30 mature SACCOs that were at least three years old were identified out of a population of 176 licensed SACCOs in Nairobi City County. The methodology used was census and structured questionnaires were used to collect the data by administering them to 210 senior and operational managers, where 164 valid responses were obtained indicating a response rate of 78.1. Pilot testing was done to determine the reliability of the instruments and Cronbach alpha of the individual constructs were found to be 0.69-0.73 and the reliability of the questionnaire as a whole was found to be 0.86. Descriptive statistics, Pearson correlation, and multiple regression were used to analyse quantitative data, and qualitative data based on open-ended questions were analysed by thematic analysis. The results showed that the strategic intent, strategy formulation, strategy implementation, and strategic control played a positive and significant role in SACCO performance. Correlation analysis showed that all strategic practices had strong positive correlation with performance (r = 0.68 to 0.76, p < 0.01). The regression analysis of individual practices revealed that each strategic practice is a predictor of performance, and strategy implementation has the greatest variance (R 2 = 0.578). The four strategic practices were found to explain 67.6 percent of the variance of performance (R 2 = 0.676, F (4, 159) = 83.52, p < 0.001). Strategy implementation (= 0.40), strategic intent (= 0.28), strategy formulation (= 0.13), and strategic controls (= 0.11) were the strongest predictors, which validated that strategic management practices are important determinants of the performance of SACCOs in Nairobi City County. The research findings conclude that strategic management practice is an important determinant of SACCO performance. It advises SACCO management to improve strategy implementation mechanisms, improve strategic control systems, improve stakeholder involvement in strategy formulation, and frequently communicate strategic intent to all members and staff.