FACTORS INFLUENCING STRATEGIC ALLIANCES ON THE PERFORMANCE OF SACCOS IN NAIROBI, KENYA
Abstract
The changing operating environment has called on businesses to develop appropriate response strategies in order to remain competitive and deliver on organizational objectives. Strategic alliances have been one of the ways in which firms have adopted to build their competitive advantage and overcome some of the difficulties posed by the changing business environment. SACCOs rely on members’ contribution and interest charged on advanced loans as source of income. Some SACCOs have been collapsing while others have not served their clients well owing to their inability to undertake certain investments and to satisfy their customers’ financial needs. These needs keep changing owing to the dynamic market environments that the SACCOs operate in. In order to survive this situation, it has become paramount that SACCOs enter into strategic alliances with other strategic stakeholders for their efficient operations. This study therefore sought to determine the factors influencing strategic alliance on the performance of SACCOs particularly focusing on 38 licensed SACCOs in Nairobi for the financial year ending 31st Dec, 2017. The specific objectives of the study were: To establish the influence of cost sharing on the performance of SACCOs in Nairobi, Kenya and to assess the influence of risk sharing on the performance of SACCOs in Nairobi, Kenya. The study was guided by Resource Dependence Theory, Transaction Cost Theory and Risk Theory. The study adopted descriptive research design and the target population shall consist of human resource managers, operations and finance managers. The researcher collected primary data using structured questionnaires. The collected data was analyzed using both descriptive and inferential statistics that were enhanced through the Statistical Package for Social Sciences SPSS Version 21.0. Descriptive statistics involved the use of means and standard deviations while the inferential statistics involved multiple regression analysis. The study found that cost sharing influence the performance of SACCOs in Nairobi. Strategic alliances allow participating firms to earn economies of scale as well as allow firms to formulate policies suited for the benefit of the participants. Risk sharing influence the performance of SACCOs in Nairobi. Strategic alliance spread the investment risks and the participant share the instability risks in the market. Skill sharing influence the performance of SACCOs in Nairobi. The study recommended that firms should form strategic alliances to improve their performance through cost reduction associated with the strategic alliance. Firms should continue strategically aligning themselves to enhance their performance through spread of investment risks and sharing the instability risks.
Key words; Cost Sharing, Risk Sharing, Financial Performance
Full Text:
PDFReferences
Christoffersen, J., Plenborg, T., & Robson, M. J. (2014). Measures of strategic alliance performance, classified and assessed. International Business Review, 23(3), 479-489.
Išoraitė, M. (2009). Importance of strategic alliances in company’s activity. Intellectual Economics, 1(1), 39–46.
Rambo, C. M. (2012). Risk Factors Influencing the Survival of Strategic Alliances: Evidence from Kenya.
Christoffersen, J. (2013). A review of antecedents of international strategic alliance performance: synthesized evidence and new directions for core constructs. International Journal of Management Reviews, 15(1), 66-85.
Harrigan, K. R. (2015). Strategic alliances as agents of competitive change. Collaborative strategy a guide to strategic alliances. Cheltenham: Elgar Book Series.
Kokonya, L. N. (2015). Globalization and strategic alliances among Commercial Banks in Kenya (Doctoral dissertation, University of Nairobi).
Bwana, K. M., & Mwakujonga, J. (2013). Issues in SACCO development in Kenya and Tanzania: The historical and development perspectives. The International Institute for Science, Technology and Education Journal, 3(5).
SASRA. (2016) Licensing Report, 2017. Available from https://www.sasra.go.ke
SASRA. (2014). SACCO Supervision Report 2011. Sacco Societies Regulatory Authority. Available from http://www.sasra.go.ke/ Retrieved 297/04/2014.
Onje, F. (2016). Influence of strategic alliance on financial performance of commercial banks in Kenya, international journal of social science and information technology, 2(4), 12-29
Osano, M. (2016). Strategic Alliances and Performance of Non- Governmental Organisations in the Health Sector in Nairobi County Government in Kenya. MBA Project). University of Nairobi, Nairobi
Nzuki, N. (2016). Strategic alliance and performance by Kenya commercial bank group limited. MBA Project). University of Nairobi, Nairobi.
Kabue, L. W., &Kilika, J. M. (2016). Firm Resources, Core Competencies and Sustainable Competitive Advantage: An Integrative Theoretical Framework. Journal of Management and Strategy, 7(1), 98–108.
Zamir, Z., Sahar, A., & Zafar, F. (2014). Strategic Alliances; A Comparative Analysis of Successful Alliances in Large and Medium Scale Enterprises around the World. Educational Research International, 3(1), 25–39.
Tan, D., & Meyer, K. E. (2010). Business groups’ outward FDI: A managerial resources perspective. Journal of International Management, 16(2), 154–164.
Schmidt, J., & Keil, T. (2013). What makes a resource valuable? Identifying the drivers of firm-idiosyncratic resource value. Academy of Management Review, 38(2), 206–228.
Williamson, O. E. (1985). The Economic Institutions of Capitalism. New York: Free
Kogut, B. (1988). Joint Ventures; Theoretical and Empirical Perspectives. Strategic Management Journal. 9: 319-332.
Gulati, R. (1995). Does Familiarity Bread Trust? The Implication of Repeated Ties for
Contractual Choice in Alliances, Academy of Management Journal. 38: 85-112.
Ramanathan, K. Seth A., Thomason, H. (1997). Explaining Joint Ventures: Alternative
Theoretical Perspectives in P.W. Beamish J.P. Killing (Eds), Co-operative Strategies; Vol. 1 North American Perspectives; 51-85. San Francisco, C.A.; New Lexington Press
Hottenrott, H., & Lopes-Bento, C. (2016). R&D Partnerships and Innovation Performance: Can There Be Too Much of a Good Thing? Journal of Product Innovation Management.
Demeester, L., De Meyer, A., & Grahovac, J. (2014). The role of operations executives in strategy making. Journal of Operations Management, 32(7–8), 403–413.
Kinyeki, S., &Mwangi, E. (2013). Strategic Alliance in Developing Countries: A Case study of some selected Kenyan Institutions. Journal of Multidisciplinary Scientific
Liu, Y. Hong, & Jiang, I. Ming. (2012). Influence of investor subjective judgments in investment decision-making. International Review of Economics and Finance, 24, 129–142.
Dyreng, S. D., Lindsey, B. P., Markle, K. S., & Shackelford, D. A. (2015). The effect of tax and nontax country characteristics on the global equity supply chains of US multinationals. Journal of Accounting and Economics, 59(2), 182-202.
Doz, Y. & Gary H. (2012) Alliance Advantage: The Art of Creating Value Through Partnering,
Boston, MA: Harvard Business School Press.
Olk, P.M. and C. Earley. (2011) ‘Interpersonal Relationships in International Strategic Alliances: CrossCultural Exchanges and Contextual Factors’, in David Faulkner and Mark de Rond (Eds.) Perspectives of Cooperation: Confronting Complexity in Interorganizational Collaborations. Oxford University Press.
Chang, E. C., Lin, T. C., & Ma, X. (2015). The Tradeoff between Risk Sharing and Information Production in Financial Markets: Evidence from Stock Splits. Available at SSRN 2661293.
Das, T. K. (2012). Research in strategic alliances. Charlotte, NC: Information Age Publishing.
Contractor, F. J., & Lorange, P. (Eds.). (2012). Cooperative strategies and alliances. Oxford, UK: Elsevier Science.
Mwaura D.N. (2005). Factors affecting the performance of Savings and Credit Cooperative Societies in Kenya. A case study of Afya Cooperative Society Ltd. Nairobi, Kenya (MBA project). University of Nairobi, Nairobi Kenya.
Ngui, A. N. (2010). A survey of the use of financial performance indicators by SACCOS in Kenya, (MBA Thesis). University of Nairobi, Nairobi.
Ndulu, A. (2015). Influence of Cost Sharing on Students Academic Performance in Secondary Schools in Kenya: A Case of Kitui County. Strategic Journal of Business & Change.
Njeru, M. (2016). Effect of Liquidity Management on Financial Performance of Deposit Taking Saving and Credit Co-operative Society in Kenya.
Nthimba, A. (2013). The financial risk management strategies used by Savings and credit cooperative societies operating FOSA services in Nairobi county. (MBA Project). Kenyatta University, Nairobi.
Obudho, A. (2014). The relationship between financial risk and financial performance of insurance companies in Kenya.
DOI: http://dx.doi.org/10.61426/sjbcm.v5i2.699
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.