Abstract
Purpose: The purpose of this study was to investigate the effect of comprehensive strategic decision-making and long-term orientation on the organizational performance of dairy co-operatives in Kenya.Methodology: The study adopted the positivist research philosophy and descriptive correlational research design. The population of the study consisted of 198 executive directors/managers of active dairy co-operatives in eight counties in the Mt. Kenya region. A sample size of 184 was drawn using stratified random sampling, and data was collected using self-administered questionnaires. The data was then analyzed using descriptive statistics of frequency, mean, and standard deviation. Additionally, inferential data analysis methods of Pearson’s correlation, ANOVA, and multiple linear regression were used to test the hypotheses.Results: The multiple linear regression results indicated that long-term orientation significantly predicted revenue per customer, b = 9.85, t(141) = 3.35, p <.05 and product innovation, b = 1.56, t(141) = 1.43, p < .05. It was also found that revenue per customer explained 49.7% of the variance, (R2 = .497, F(5, 125) = 13.27, p < .05, while ROA explained 29.4 %, (R2 = .294, F(5, 123) = 9.06, p < .05. Product innovation explained 41.2% of the variance, (R2 = 0.412, F(9, 120) = 9.35, p < .05. In relation to the moderating variable, the regression results revealed that market orientation significantly predicted revenue per customer, b = 1.64, t(141) = 7.66, p < .05; ROA, b = 2.14, t(141) = 3.35, p < .05; and product innovation, b =1.89, t(141) = .53, p < .05. It was also found that revenue per customer explained 49.7% of the variance, (R2 = .497, F(5, 125) =13.27, p < .05, while ROA explained 29.4 %, and product innovation explained 41.2%. However, the results showed that market orientation did not significantly moderate the relationship between corporate governance and organizational performance. Comprehensive strategic decision-making was not significant in explaining revenue per customer, ROA, and product innovation.Unique contribution to theory, practice and policy: While previous studies on corporate governance of co-operatives have relied largely on agency theory and shareholder wealth maximization, this study was based on stewardship theory to show its effect on the organizational performance of dairy co-operatives. The inclusion of market orientation as a moderating variable is of great interest to academia in establishing a better link between corporate governance of co-operatives and similar agricultural enterprises, and their performance. The co-operative sector, other social enterprises and the government of Kenya will benefit from this study as its results can help identify the areas for governance policy development as well as regulatory legislation needed by the sector so as to improve dairy farming for the farmers and the national economy as a whole.
Highlights
1.1 Background of the StudyThe 2007 global financial crisis and the corporate scandals a few years earlier, which nearly brought the international financial systems to a halt, catapulted corporate governance to the fore (Essen, Engelen, & Carney, 2013)
For long-term orientation, the results show the mean for “In our co-operative the board holds the management accountable for performance”, (M = 3.99, SD = 1.17), and the mean for “To what extent does investing for long-term profits affect ROA in your co-operative”, (M = 2.43, SD = 1.37)
It was found that revenue per customer explained 49.7% of the variance, (R2 = .497, F(5, 125) =13.27, p < .05, while ROA explained 29.4 %, and product innovation explained 41.2%
Summary
1.1 Background of the StudyThe 2007 global financial crisis and the corporate scandals a few years earlier, which nearly brought the international financial systems to a halt, catapulted corporate governance to the fore (Essen, Engelen, & Carney, 2013). To analysts, policy makers and researchers, the co-operative institutions, that dominated agriculture, housing finance, banking and life assurance markets, escaped relatively unscathed from the financial crisis (Narvaiza, Aragon-Amonarizz, Iturrioz-Landart, Bayle-Cordier, & Stervinou, 2016). This was attributed to the co-operative model and its unique characteristics of member ownership, long-term and risk-averse stance, high level of reserves and capitalization, and transparency (Altman, 2015). A stewardship approach in corporate governance has been shown to lead organizations to greater investment in R&D (Hitt, Ireland, & Hoskisson, 2012), long-term orientation (Hernandez, 2012; Hiebl, 2015), and greater trust and transparency (Choi, Choi, Jang, & Park, 2014)
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