INFLUENCE OF CORPORATE GOVERNANCE PRACTICES ON ORGANIZATIONAL PERFORMANCE OF DEPOSIT-TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES. A CASE STUDY OF NAIROBI CITY COUNTY, KENYA

Nicholas Wandeo Otieno, Dr. John Karihe

Abstract


Background: The study’s main goal is to explore the effect of corporate governance practices on organizational performance of Nairobi City County’s deposit taking SACCOs. Specifically, the study focused on the following objectives: to examine the impact of board diversity on the performance of deposit-taking SACCOs in Nairobi City County; and to assess the effect of board composition on the performance of deposit-taking SACCOs in Nairobi City County.

Methodology: The study employed the use of descriptive research design. and the population for this study included the 45 deposit-taking SACCOs within the county. A total of 268 senior management of the SACCOs since they were the ones tasked with driving the business in their respective SACCOs and was therefore conversant with it. a sample of 160 respondents was drawn.

Findings: The findings pointed out that board composition possessed a moderately significant impact towards the performance of the Nairobi City County’s DT SACCOs. Board composition had a Pearson correlation of 0.287, pointing to a weak positive correlation with DT SACCO performance. From the regression analysis, it was established that board composition had positive coefficient of 0.329, implying a positive impact on the DT SACCO perfoprmance. The results also pointed to board diversity having a moderately significant effect towards the performance of the Nairobi City County DT SACCOs. The study established that board diversity had a Pearson correlation of 0.530, pointing to a moderate positive correlation with DT SACCO performance. From the regression analysis, it was established that board diversity had positive coefficient of 0.616, an implication of a positive impact on the SACCO perfoprmance.

Recommendations: First, deposit taking SACCOs in Nairobi City County should enhance better composition in their boards and in particularly should strive to have adequate number of board members, encourage electing to the board directors with expansive work experiences, and with good knowledge/skills. This improves their decision making and strengthens their supervisory role in the SACCO. Secondly, deposit taking SACCOs in Nairobi City County should promote diversity and enhance it in their board. In particular, they should strive to have a balance and mix in terms of age, gender and even ethnicity among their board members. This scenario promotes having of diverse views and thus better decision making, management of risks, and better guidance on the running of the SACCO operations.

Keywords: Organizational Performance, Board Composition, Board Diversity, Corporate Governance, SACCOS


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References


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