Board members’ Characteristics, Dispersion, Managerial cognition and Performance of Saving and Credit Co-operatives in Nairobi County

Abstract

The SACCO sector is a key contributor to Kenya’s attainment of Vision 2030. However, poor governance and management of the sector remains a challenge and threat to its survival. It is without no doubt that the sector influence will continue to be felt, however this may not be guaranteed if management of SACCOs is not well addressed. In the past several SACCOs have gone under, researchers and even authorities have emphasized that governance and management of SACCOs remain a challenge to the sector. Equally the number of dormant SACCOs continues to rise. This paper presents findings of a study on the influence of board members’ characteristics, dispersion and managerial
cognition on SACCOs performance. The study was anchored on upper echelons theory, resource-based view and dynamic capabilities view. The study used descriptive crosssectional survey research design and targeted 2,528 SACCOs that were in operation by the end of December 31st 2015. A sample of 254 was selected using simple random
sampling. Data was collected using a structured questionnaire that targeted board members of the sampled SACCOs. Multiple regressions were used to test the hypotheses and to make conclusions on the presumed relationship between variables. Board’s characteristics (age, functional background, and education level) were found to predict SACCOs performance. Gender was not significance in predicting performance when combined with other variables. The linear regression test revealed that managerial cognition was not a significant mediator, with the reported indirect effect being too small (0.63%). Through hierarchical multiple regression managerial dispersion was found to moderate between the board’s characteristics and SACCOs performance, and that this was an enhancing moderation. It is concluded that age, functional background, and education level are important predictors of SACCO performance and that this relationship is moderated by the social distance between the board members.