The Moderating Role of Environmental Munificence in the Relationship between Financial Resources and the Performance of Deposit-Taking Savings and Credit Cooperative Societies in Kenya
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Date
2023
Authors
Kabue, Lydiah Wanjiru
Kilika, James M.
Waithaka, Paul M.
Journal Title
Journal ISSN
Volume Title
Publisher
IAJHRBA
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 deposittaking 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. Deposittaking 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.
Description
Article
Keywords
Financial resources, Firm resources, Internally Generated Funds, Externally Sourced Funds, Environmental Munificence, Firm Performance, DepositTaking Savings, Credit Co-Operative Society
Citation
Kabue, L. W., Kilika, J. M., Waithaka, P. M. (2023) 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. International Academic Journal of Human Resource and Business Administration, 4(2), 442-464.