EFFECT OF COMPREHENSIVE STRATEGIC DECISION-MAKING AND LONG-TERM ORIENTATION ON THE ORGANIZATIONAL PERFORMANCE OF DAIRY CO-OPERATIVES IN KENYA
DOI:
https://doi.org/10.47941/hrlj.202Keywords:
comprehensive strategic decision making, long-term orientation, market-orientation, organizational performance, dairy co-operatives.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.
Downloads
References
Abernethy, M. A., Bouwens, J., & Lent, L. v. (2013). The Role of Performance Measures in the Intertemporal Decisions of Business Unit Managers. Contemporary Accounting Research , 30 (3), 925-961.
Ahern, G. M. (2015). Imagining What Underlies Corporate Sustainability. Journal of Management Development , 34 (4), 494-504.
Altman, M. (2015). Cooperative Organizations as an Engine of Equitable Rural Economic Development. Journal of Cooperative Organization and Management , 14-23.
Amin, M., Thurasamy, R., Aldakhil, A. M., & Kaswuri, A. H. (2016). The Effect of Market Orientation as a Mediating Variable in the Relationship between Enterpreneurial Orientation and SMEs Performance. Nankai Business Review International , 7 (1), 39-59.
Bordean, O., Borza, A., & Maier, V. (2011). The Involvement of Boards in Strategy Implementation. Review of International Comparative Management , 12 (5), 986-992.
Brigham, K. H., Lumpkin, G. T., Payne, G. T., & Zachary, M. A. (2014). Researching Long-Term Orientation: A Validation Study and Recommendations for Future Research. Family Business Review , 27 (1), 72-88.
Camarero, C., & Garrido, M. J. (2012). Fostering Innovation in Cultural Contexts: Market Orientation, Service Orientation, and Innovations in Museums. Journal of Service Research , 15 (1), 39-58.
CAK. (2015, May 31). About Us. Retrieved from Cooperative Alliance of Kenya Ltd: http://www.cak.coop/
CETS. (2012b). Democratic Enterprise: Ethical Business for the 21st Century. (D. McDonnell, E. Macknight, & H. Donnelly, Eds.) University of Aberdeen & Cooperative Education Trust Scotland (CETS).
Chait, R. P., Ryan, W. P., & Taylor, B. E. (2013). Governance as Leadership: Reframing the Work of Nonprofit Boards. New Jersey: John Wiley & Sons, Inc.
Cheney, G., Cruz, I. S., Peredo, A. M., & Nazareno, E. (2014). Worker Cooperatives as an Organizational Alternative: Challenges, Achievements and Promise in Business Governance and Ownership. Organization , 21 (5), 591-603.
Choi, E., Choi, W., Jang, S., & Park, S. (2014). Does the Effectiveness of Board of Directors Affect Firm Performance of Consumer Co-operatives? The Case of ICOOP Korea. Annals of Public and Cooperative Economics , 371-386.
Crow, P. R., & Lockhart, J. C. (2016). How Boards Influence Business Performance: Developing an Explanation. Leadership and Organization Development Journal , 37 (8), 1022-1037.
Davis, J. H., Schoorman, D. F., & Donaldson, L. (1997). Toward a Stewardship Theory of Management. Academy of Management Review , 20-47.
De Massis, A., Frattini, F., & Lichtenthaler, U. (2013). Research on Technological Innovation in Family Firms: Present Debates and Future Directions. Family Business Review , 26 (1), 10-31.
Donaldson, L. (1990). The Ethereal Hand: Organizational Economics and Management Theory. Academy of Management Review , 369-393.
Donaldson, L., & Davis, J. H. (1991). Stewardship Theory or Agency Theory: CEO Goverannce and Shareholder Returns. Australian Journal of Management , 49-64.
Donaldson, L., & Davis, J. (1993). The Need for Theoretical Coherence and Intellectual Rigour in Corporate Governance Research: Reply to Critics of Donaldson and Davis. Australian Journal of Management , 213-225.
Eddleston, K. A., Kellermans, F. W., & Zellweger, T. M. (2010, September). Exploring the Entrepreneurial Behavior of Family Firms: Does the Stewardship Perspective Explain the Differences? Entrepreneurship Theory and Practice , 1-21.
Essen, M. v., Engelen, P.-J., & Carney, M. (2013). Does 'Good' corporate Governance Help in a Crisis? The Impact of Country- and Firm-Level Governance Mechanisms in the European Financial Crisis. Corporate Governance: An International Review , 201-224.
Felekoglu, B., & Moultrie, J. (2014). Top Management Involvement in New Product Development: A Review and Synthesis. Journal of Product Innovation Management , 31 (1), 159-175.
Fernandez-Mesa, A., & Alegre, J. (2015). Entrepreneurial Orientation and Export Intensity: Examining the Interplay of Organizational Learning and Innovation. International Business Review , 24 (1), 148-156.
Filieri, R. (2015). From Market-Driving to Market-Driven: An Analysis of Benetton's Strategy Change and its Implications for Long-Term Performance. Marketing Intelligence & Planning , 33 (3), 238-257.
Flammer, C., & Bansal, P. (2017, February 7). Does a Long-Term Orientation Create Value? Evidence From a Regression Discontinuity. Strategic Management .
Friis, O., Holmgren, J., & Eskildsen, J. K. (2016). A Strategy Model - Better Performance through Improved Strategy Work. Journal in Modelling Management , 11 (3), 742-762.
Halliru, M. (2016). Competitive Advantage Through Market Driving: An Evaluation of Guaranty Trust Bank Experience in Nigeria. Journal of Finance, Accounting and Management , 7 (1), 12-29.
Hannan, R. (2014). Good Co-operative Governance: The Elephant in the Room with Rural Poverty Reduction. Journal of International Development , 701-712.
Hernandez, M. (2012). Toward an Understanding of the Psychology of Stewardship. Academy of Management Review , 37 (2), 172-193.
Hiebl, M. R. (2015). Agency and Stewardship Attitudes of Chief Financial Officers in Private Companies. Qualitative Research in Financial Markets, 7(1), 4-23.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic Management: Concepts: Competitiveness and Globalization (11th ed.). Cengage Learning.
Hoffman, C., & Wulf, T. (2016). Understanding the Performance Consequences of Family Involvement in the Top Management Team: The Role of Long-Term Orientation. International Small Business Journal , 34 (3), 345-368.
Hofstede, G. (2011). Dimensionalizing Cultures: The Hofstede Model in Context. Retrieved from http://scholarworks.gvsu.edu/orpc/vol2/iss1/8/
ILO. (2016, September 7). 100 Million Jobs. Retrieved from International Labour Organization: http://www.ilo.org/wcmsp5/groups/public/@ed_emp/@emp_ent/documents/publication/wcms_101313.pdf
Jaworski, B. J., & Kohli, A. K. (1993). Market Orientation: Antecedents and Consequences. Journal of Marketing , 57, 53-70.
Kuria, N. C. (2014). The Role of Cooperatives to Sustainable Development: Contributions, Challenges and Strategies. United Nations Expert Group Meeting and Capacity Building Workshop, (pp. 1-6).
Kwon, Y.-C. (2010). Market Orientation of Korean MNC Subsidiaries and their Performance in the Chinese and Indian Markets. International Marketing Review , 27 (2), 179-199.
Lan, H. J., & Heracleous, L. (2010). Rethinking Agency Theory: The View from Law. Academy of Management Review , 35 (2), 294-314.
L'Huillier, B. M. (2014). What does 'Corporate Governance' actually mean? Corporate Governance , 14 (3), 300-319.
Li, Y., Wei, Z., & Liu, Y. (2010). Strategic Orientations, Knowledge Acquisition, and Firm Performance: The Perspective of the Vendor in Cross Border Outsourcing. Journal of Management , 47, 1457-1482.
Liang, Q., Hendrikse, G., Huang, Z., & Xu, X. (2015). Governance Structure of Chinese Farmer Cooperatives: Evidence from Zhejiang Province. Agricbusiness: An International Journal , 31 (2), 198-214.
Lofsten, H. (2016). Organisational Capabilities and the Long-term Survival of New Technology-based Firms. European Business Review , 28 (3), 312-332.
Lumpkin, G., Brigham, K. H., & Moss, T. W. (2010). Long-term Orientation: Implications for the Entrepreneurial Orientation and Performance of Family Businesses. Entrepreneurship & Regional Development , 22 (3-4), 241-264.
Maleki, A., & de Jong, M. (2014). A Proposal for Clustering the Dimensions of National Culture. Cross-Cultural Research , 48 (2), 107-143.
Mumanyi, E. A. (2014). Challenges and Opportunities Facing SACCOs in the Current Devolved System of Government in Kenya: A Case Study of the Mombasa County. International Journal of Social Sciences and Entrepreneurship , 288-314.
Musuya, D. N. (2014). Corporate Governance Practices and Performance of Coffee Farmer's Cooperative Socieities in Kenya. International Journal of Social Sciences and Entrepreneurship , 1-13.
Mwamuye, M. K., Nyamu, H. M., & Mrope, N. P. (2012). Factors Influencing Performance of Agricultural Companies in Kenya: A Case of Coast Province. Internatinoal Journal of Business and Commerce , 25-38.
Narvaiza, L., Aragon-Amonarizz, C., Iturrioz-Landart, C., Bayle-Cordier, J., & Stervinou, S. (2016). Cooperative Dynamics During the Financial Crisis: Evidence From Basque and Bretton Case Studies. Nonprofit and Voluntary Sector Qurterly , 1-20.
Narver, J. C., & Slater, S. F. (1990, October). The Effect of a Market Orientation on Business Profitability. Journal of Marketing , 20-35.
Nkuru, F. N. (2015). Factors Affecting Growth of SACCOs within the Agricultural Sector in Kenya: A Case of Meru Farmers SACCOs. Global Journal of Commerce & Management Perspective , 34-45.
Park, Seung-Bae, Chung, N., & Woo, S.-C. (2013). Do Reward Programs build Loyalty to Restaurants? The Moderating Effect of Long-term Orientation on the Timing and Types of Rewards. Managing Service Quality , 23 (3), 225-244.
Sajjaviriya, C., & Ussahawanitchakit, P. (2015). Market-Driving Strategy Orientation and Marketing Performance: An Empirical Investigation of Software Businesses in Thailand. The Business and Management Review , 68-81.
Saunders, M., Lewis, P., & Thornhill, A. (2016). Research Methods for Business Students (Seventh ed.). Harlow: Pearson.
Scholl, M., & Sherwood, A. (2014). Four Pillars of Cooperative Governance. Cooperative Grocer , 18-21.
Sun, W., Stewart, J., & Pollard, D. (2012, February 12). A Systemic Failure of Corporate Governance: Lessons from the Ongoing Financial Crisis. European Financial Review . Retrieved June 20, 2015, from http://www.europeanfinancialreview.com/?p=2042
Swamy, V. (2011). Corporate Governance and Firm Performance in Unlisted Family Owned Firms. International Journal of Business Insights & Transformation , 4 (2), 37-52.
Wanyama, F. O. (2014). Cooperatives for African Development: Lessons from Experience. Expert Group Meeting on "The Role of Cooperatives in Sustainable Development: Contributions, Challenges and Strategies. Nairobi: United Nations Department of Economic and Social Affairs (UNDESA).
Zahra, S. A., & Wright, M. (2011). Entrepreneurship's Next Act. Academy of Management Perspectives , 25 (4), 67-83.
Downloads
Published
How to Cite
Issue
Section
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
