Effects of Strategic Formulation on the Organizational Performance of Deposit-Taking Savings and Credit Cooperative Society in Machakos Sub-County, Kenya
Abstract
Savings and Credit Cooperative Societies (SACCOs) are organizations that pool resources from their members to economically empower and grow them. To achieve this, SACCOs have invested heavily in strategic planning processes to improve their organizational performance. Despite significant investment and consistent efforts in developing strategic plans, many SACCOs have experienced poor performance, and some have collapsed with members’ savings. Additionally, some have engaged in unethical financial practices, such as obtaining loans to pay high dividends and manipulating their annual financial reports to appear financially stable. Therefore, this study investigated how strategic formulation affects organizational performance of DT SACCOs in Machakos Sub-County. Contingency theory and Balanced Scorecard served as the foundation for the study. A descriptive survey research design was used in the study. Chief executive officers, human resource managers, operations managers, financial staff, line managers, and supervisors who work with the four DT SACCOs in Machakos Sub-County that recruit members and provide SACCO products and services were the target group. Purposive sampling was used to select 62 respondents from this targeted population. The instruments applied in the study were found to be reliable, as the Cronbach alpha coefficients were above the suggested value. Descriptive statistics indicated that perceptions were high for strategic formulation (M = 4.419), and organizational performance (M = 4.137). Correlation analysis showed that there are positive and significant relationships between organizational performance and strategic formulation (r = 0.695, p < 0.05). Regression analysis showed that strategic formulation (B = 0.810, t = 3.589, p = 0.001) is a significant predictor of performance. This study has found that the primary source of performance is strategic formulation, and greater attention should be paid to its implementation. Adjusted R2 stood at 0.477, and further research is recommended to identify leadership styles, external environment, and digital transformation as explanatory factors to the remaining 52.3 percent variation in performance.
Keywords: Strategy formulation, performance, DT SACCOs, Machakos Sub County, Kenya
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