Investigation of Organizational Factors That Affect The Sustainability of Coffee Coperative Unions in the PostLiberalization Era in Kenya:
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St. Paul's University
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Abstract
Coffee Cooperative unions have not been in the limelight for about two decades now.
However, this is a departure from the 1970s and 1980s when cooperatives were seen to
grow in leaps and bounds. Economic liberalization of the Kenyan economy generally
and the cooperative sector specifically, negatively affected the performance of the coffee
cooperative unions in Kenya. The dismal performance of coffee cooperative unions has
affected the livelihoods of over 700,000 smallholder coffee farmers, numerous people
along the coffee supply chain and the economy of this country in terms of their
contribution to the gross domestic product. This study was anchored on two main
theories and one model, which relate to sustainability and the independent variables. The
sustainable growth rate Model, the agency theory and the resource dependence theory
relate closely with this study. In addition, the works of other researchers related to this
study in Kenya, Tanzania, Ethiopia, Nigeria, Uganda, Malawi, Sri Lanka, Kuwait,
Pakistan and India were examined to provide more insight into the topic of study. This
study used descriptive research design. The sampling design and procedure used to
identify the study participants was stratified sampling design and purposeful sampling
procedure. From 126 leaders, staff and sub-county cooperative officers, 70 respondents
consisting of 29 staff, 35 leaders and 6 cooperative officers were sampled to participate
in this study. The main instruments of data collection were questionnaires for the staff
and cooperative officers and focus group discussions for the leaders. Data was collected
from 24 staff, 6 sub-county cooperative officers and 4 focus group discussions
comprising of 20 leaders. Data collected was both quantitative and qualitative. The data
collected was organized, summarized and interpreted using Statistical Package for Social
Sciences (SPSS). The analysed data was presented using both qualitative and
quantitative analysis. The main tools of analysis were frequency distribution tables. The
study established that corporate governance plays a significant role in the sustainability
of coffee unions in Kenya. The study further established that coffee unions in Kenya
often adhere to corporate governance principles, that there is a high level of
transparency, accountability and adherence to the rule of law by most of the unions.
The study also established that capital structure has a high effect on the sustainability of
coffee cooperative unions with a majority of the unions found to finance their operations
from members’ equity and retained earnings. In addition, the study found out that
organization culture highly affects the sustainability of coffee unions by determining
productivity and performance of unions. Further to this, coffee unions were found to
have clearly established and practiced core values, business ethics and principles that
largely guide behaviour while personal values of members, leaders and staff were found
in most cases to be in line with values and culture of the unions. The unions were found
to have clearly established strategic objectives to align priorities and guide the union
activities on a day-to-day basis as articulated in their strategic plans. The study,
therefore, concludes that corporate governance, capital structure and organization culture
certainly affects the sustainability of coffee cooperative unions. The study, therefore,
recommends upholding and practice of good corporate governance
principles,establishment of the right mix between equity and debt; routine setting of debt
ratio and embracing of the tenets of modern cooperatives or better still new generation
cooperatives that operate competitively in the market place to enhance organizational
sustainability of the coffee cooperative unions.
