Strategic Leadership, Strategy Execution and Organizational Performance: A Survey of Savings and Credit Cooperatives in Kenya

Abstract

Organizations strive to achieve satisfactory performance in order to satisfy the needs of their stakeholders. However, the fact that some organizations experience poor organizational performance continues to attract the interest of scholars. Cooperative societies contribute to the socio-economic development of the country including economic empowerment and poverty eradication yet their performance has not been satisfactory. However, scarce research has been conducted focusing on strategic leadership practices and performance of organisations and cooperative societies in particular. In this study, the influence of strategic leadership on organizational performance of Savings and credit cooperative societies in Kenya, and the mediating role of strategy execution was examined. A cross-sectional descriptive survey of 133 societies from a target population of 175 was conducted using structured questionnaires to collect primary data from managers in these organizations while secondary data was collected from published performance reports. This was a 76% response rate. The specific objectives of the study were: to establish the influence of strategic direction on performance; to assess the influence of human capital focus on performance; to establish the influence of strategic control on performance; and to assess the mediating effect of strategy execution on the relationship between strategic leadership and organization performance of SACCO’s in Kenya. Data on performance, namely capital adequacy, asset quality, management ratios, and liquidity abbreviated as CAMEL, was collected from the SACCO regulators’ published performance reports using a data collection sheet. The performance data was coded as “1” if there was an upward trend and “0” if there was a downward trend over the three years from 2016 to 2018 for which data was collected. While 1 represented satisfactory performance, 0 was unsatisfactory performance. Data was analysed to generate frequency distributions, means and standard deviations, and associations, correlations and regressions coefficients and hypotheses. There was moderate practice of strategic leadership, strategy execution and that performance was moderately satisfactory. Strategic direction, human capital focus and strategic control had positive significant relationship (p <.05) with performance (Strategic leadership was moderately practised in the SACCOs and had a significant positive relationship (p < .05) with organisational performance (strategic control: r = .526; strategic direction: = .473; human capital focus: r = .328). Strategy execution also had a significant positive relationship with performance (r = .328, p < .001). While human capital focus (Wald = 29.768, p < .001, exp (B) = 2.092) and strategic control (Wald = 10.721, p = .001, exp (B) = .698) significantly influenced the odds for satisfactory organisational performance, strategic direction did not (Wald = 1.652, p = .199 > .05, exp (B) = .917). Further, strategy execution had a partial and significant mediating effect on the relationship between strategic leadership and performance. These findings clarify the disposition of strategic leadership, its influence on organizational performance and how strategy execution mediates the relationship between strategic leadership and performance. The findings have applied, policy and theoretical implications for SACCOs performance and can be used improve the performance of SACOs hence their contribution to improved socioeconomic development.