THE MODERATING ROLE OF ENVIRONMENTAL MUNIFICENCE IN THE RELATIONSHIP BETWEEN FINANCIAL RESOURCES AND THE PERFORMANCE OF DEPOSIT-TAKING SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN KENYA
THE MODERATING ROLE OF ENVIRONMENTAL MUNIFICENCE IN THE RELATIONSHIP BETWEEN FINANCIAL RESOURCES AND THE PERFORMANCE OF DEPOSIT-TAKING SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN KENYA
Lydiah Wanjiru Kabue - Department of Business Administration, School of Business, Tourism and Economics, Kenyatta University, Kenya
James M. Kilika - Department of Business Administration, School of Business, Tourism and Economics, Kenyatta University, Kenya
Paul M. Waithaka - Department of Business Administration, School of Business, Tourism and Economics, Kenyatta University, Kenya
ABSTRACT
The paper reports the findings of research on the role of environmental munificence in the relationship between financial resources and performance of deposit-taking savings and credit co-operative societies in Kenya. Deposit-taking SACCOs need financial resources to run their business. Internally generated funds are not always sufficient to support the deposit-taking SACCOs lending activities. As a result, they have to acquire scarce resources in a dynamic environment. This calls for the deposit-taking SACCOs to form partnerships and alliances with suppliers. The study is premised on the logic of the resource dependence theory that postulates that firms do not always possess the resources that they require to run their activities but rather depend on the environment to supply their deficits. The study is supported by the resource-based view and the institutional theory. The financial construct of the study was operationalized as internally generated funds and externally sourced funds. Further, the study explored the moderating effect of environmental munificence on the relationship between financial resources and the performance of deposit-taking SACCOs in Kenya. Data was obtained from representatives of functional areas involved in strategic decision-making in 38 deposit-taking SACCOs in Nairobi, Kenya. Data was collected using a 5-point Likert scale questionnaire whose computed Cronbach's alpha score showed that the instrument was reliable and internally consistent at above α=0.9. The study recorded a response rate of 71%. The study results indicated that financial resources contributed to the performance of deposit-taking SACCOs by explaining 82.2% variation of the performance. The study concluded that funds generated internally and those that are sourced externally contribute positively and significantly to the performance of the firm. In addition, deposit-taking SACCOs depended on external players such as financiers, government regulators and other suppliers for critical resources. Due to the deposit-taking SACCOs dependence on external players for resources, the study further concluded that environmental munificence moderated the relationship between financial resources and performance of deposit-taking SACCOs. The study recommends that deposit-taking SACCOs should form processes that aid them in acquiring scarce resources in the environment. In addition, the deposit-taking SACCOs should form and maintain meaningful relations with regulatory bodies, financiers and other partners to enable them acquire scarce resources with ease. Deposit-taking SACCOs should put a lot of strategic thought in the selection of strategic partners since the selection of one partner is likely to lock them out from partnering with other partners in future.
