Competitive strategy and performance of deposit Taking savings and credit cooperative organizations in Kirinyaga County, Kenya

Abstract

Performance is an essential indicator of the success or failure of any organization. Increased competition and rapid changes in the global business environment have an impact on organizational performance. To remain competitive and increase performance, businesses are increasingly adopting competitive strategies. This study sought to establish the influence of competitive strategies on the performance of deposit-taking SACCOs in Kirinyaga County. The specific objectives of the study were to establish the influence of cost leadership, differentiation, and focus strategies on the performance of deposit-taking SACCOs in Kirinyaga County. The study was anchored on Porter’s Generic Strategies Theory, Porter’s Five Forces Model and Resource Based View Theory. The study used a causal explanatory research design and adopted a census survey where all six licensed deposit-taking SACCOs operating in Kirinyaga County were considered. The study population was managers of deposit-taking SACCOs in Kirinyaga County giving 43 respondents. Primary data was collected using questionnaires. The reliability of instruments was tested using Cronbach’s Alpha Coefficient while instrument validity was determined through peer review and expert review. Data analysis was done using descriptive statistics and inferential statistics. Frequencies, percentages, mean and standard deviation were used to analyze quantitative data and the findings were summarized in tables and graphs whereas qualitative data was coded into thematic areas, and reported in narrative verbatim. Pearson’s correlation analysis and multiple linear regression analysis were used to establish the relationship between the independent variables and dependent variable. The study results revealed that the overall Pearson correlation coefficient (r) of the study predictor variables (competitive strategies) was 0.678, which means that competitive strategies have a strong and positive relationship with the performance of deposit-taking savings and credit cooperative organizations in Kirinyaga County, Kenya. Specifically, there is a strong positive correlation between cost leadership strategy, differentiation strategy and SACCO performance, while there is a moderate and statistically significant correlation between focus strategy and SACCO performance. The coefficient of determination, adjusted R-squared for the regression model, yielded a value of 0.409 with a standard error of estimate of 0.26210. This suggests that variations in the independent variables namely; cost leadership strategy, differentiation strategy and focus strategy explained 40.9% of the variation in the dependent variable, SACCO performance. The study recommends that the deposit-taking SACCOs should focus on implementing effective competitive strategies. The SACCOs should identify and prioritize impactful strategies especially cost leadership strategies and differentiation strategies that contribute most to SACCO's performance. Additionally, the SACCOs should have continuous monitoring and adaptation and invest in training and capacity building since equipping staff with the knowledge and skills necessary to understand and implement competitive strategies effectively is crucial.