Investigation of Organizational Factors That Affect The Sustainability of Coffee Coperative Unions in the PostLiberalization Era in Kenya:

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.