Stakeholder Management Strategies And Financial Performance Of Deposit Taking Saccos In Kenya

ABSTRACT

This study sought to establish the relationship between stakeholder management

strategies and the financial performance of deposit taking SACCOs in Kenya. The

SACCO subsector is part of the Kenyan Co-operative sector comprising of both

financial and non financial cooperatives. Saving and credit co-operative (SACCO) are

the financial cooperatives. They are an important part of the financial sector in Kenya,

providing savings, credit and insurance services to a large portion of the population.

Stakeholder management is paramount in creating trust and confidence to key

stakeholder especially in deposit taking SACCOs and in keeping them satisfied with the

services provided. It has been argued that stakeholder management is decisive in

determining whether or not a company is or will remain successful, and that it has direct

environment and bottom line result of an organization. Panic in deposit taking financial

institutions can cause great negative repercussions and loss of customers and hence the

need for a proactive stakeholder management. Systematic attention to all parties who

affect or may be affected by the organization‘s behavior is critical to that organizations

success. Stakeholder management studies have mostly concentrated on normative

branch of stakeholder management theory. It is however important to extend the study to

member - based co-operatives. The objective of this study was to look into the

relationship between stakeholder management generic strategies and performance of

SACCO societies in Kenya. Stratified random sampling was done to determine sample

size. Data was collected from a sample of 64 Deposit taking SACCOs out of a

population of 180 licensed DTS. The sample size was 130 respondents. Descriptive

research method was used in this study. Questionnaires were used to collect primary

data. To ensure that the research instrument yields valid data, the researcher engaged

expert in the relevant field in scrutinizing it. The designed instrument was counter

checked by the supervisor and peers in the area of specialization. Pilot study was carried

out to check on the reliability and validity of the instrument and a Cronbach‘s Alpha of

0.914 was obtained. Collected data was then edited in the field to clean it up. Data was

processed using descriptive analysis and multiple regression analysis performed to

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determine the relationships between the stakeholder generic strategies and performance

of SACCO societies. Data analysis was done using Statistical Package of Social Science

(SPSS). Research findings were that: there was a significant positive relationship

between offensive, defensive, swing, hold, defensive, CSR strategy and financial

performance of DTSs individually. The combined model had a significant positive

relationship with the performance of deposit taking SAACOs. The conclusion was that

stakeholder management strategies significantly influenced financial performance of

DTSs. The research contributes to stakeholder management theory by supporting

previous studies that stakeholder management strategies have positive relationship with

firms‘ performance. The study offered practical recommendations to managers to be

proactive in stakeholder management and should adopt corporate social responsibility

strategy to enhance various relationships and financial performance of their SACCOs.

These strategies should be incorporated in the strategic plans for achievement of good

results and should not be used as disjoined activities. The study has provided

instrumental contribution to stakeholder theory by finding out that, member – based

firms who employ stakeholder management strategies enhance their financial

performance, hence extending the body of knowledge.