EFFECT OF PARTICIPATIVE GOVERNANCE AND HUMAN CAPITAL ON THE ORGANIZATIONAL PERFORMANCE OF DAIRY CO-OPERATIVES IN KENYA

Abstract

Purpose: The purpose of this study was to investigate the effect of participative governance and human capital on the organizational performance of dairy co-operatives in Kenya.Methodology: The study adopted the positivist research philosophy and descriptive correlational research design. The population of the study consisted of 198 executive directors/managers of active dairy co-operatives in eight counties in the Mt. Kenya region. A sample size of 184 was drawn using stratified random sampling, and data was collected using self-administered questionnaires. The data was then analyzed using descriptive statistics of frequency, mean, and standard deviation. Additionally, inferential data analysis methods of Pearson’s correlation, ANOVA, and multiple linear regression were used to test the hypotheses.Results: The results of multiple regression showed that market orientation significantly predicted revenue per customer, b = 1.64, t(141) = 7.66, p < .05; ROA, b = 2.14, t(141) = 5.9, p < .05; and product innovation, b =1.89, t(141) = 5.77, p < .05. Participative governance was not significant in explaining revenue per customer, return on assets, and product innovation. Although the results of multiple regression analysis showed that human capital was not significant in explaining revenue per customer or ROA, it significantly affected product innovation, b = .94, t(141) = 2.01, p <.05. In addition, the regression indicated that revenue per customer explained 49.7% of the variance, (R2 = .497, F(5, 125) = 20.10, p < .05, while ROA explained 29.4 %,  (R2 = .294, F(5, 123) = 9.06, p < .05, and product innovation explained 41.2%, (R2 = 0.412, F(5, 124) = 15.18, p < .05.Unique contribution to theory, practice and policy: This study contributes to theory of corporate governance by using stewardship theory to underpin research into organizational performance of a member-based agricultural enterprise. The study contributes to practice by suggesting that participation of members and shareholders in organizations may have other benefits, including non-economic ones, but enhancing organizational performance may not be one of them. In terms of policy, the study suggests that dairy co-operatives should put emphasis on acquiring employees with requisite knowledge and skills or their performance may be hamstrung by inadequate intellectual capital to facilitate their innovation and performance.