Market Orientation, Firm Characteristics, Dynamic Capabilities and Performance of Deposit Taking Savings and Credit Cooperative Societies in Kenya

The overall objective of this study was to determine the effect of market orientation, firm characteristics and dynamic capabilities on the performance of deposit taking savings and credit cooperative societies in Kenya. The study objectives were; to determine the influence of market orientation on organizational performance, assess the effect of firm characteristics on organizational performance, determine the effect of firm characteristics on the relationship between market orientation and organizational performance, and examine the influence of dynamic capabilities on the relationship between market orientation and organizational performance. In addition the study sought to determine the joint effect of market orientation, dynamic capabilities and firm characteristics on organizational performance. The hypotheses that guided the study were derived from the stated objectives and were tested using simple and multiple regression analysis. The target population consisted of the 184 deposit taking SACCO‟s licensed by the SACCO Societies Regulatory Authority (SASRA) in 2014. The study was anchored on the resource based theory and the dynamic capabilities theory and guided by the positivist research philosophy. Primary data was collected through a semi structured questionnaire and secondary data was obtained from published SASRA supervision reports. Descriptive statistics were used to profile the respondents while simple and multiple linear regressions were employed to test the hypotheses. The study revealed a positive and significant relationship between market orientation and non-financial performance. Similarly, a relationship was observed between size of the SACCO and financial performance. Dynamic capabilities were investigated as a mediator in the study and the findings were that dynamic capabilities fully mediated the relationship between market orientation and both financial and non-financial performance. The study however did not find any significant relationship between firm characteristics and organizational performance. Similarly, the moderating effect of firm characteristics on the relationship between market orientation and both financial and non-financial organizational performance and the joint effect of market orientation, firm characteristics and dynamic capabilities on organizational performance were not established as the results revealed that no significant relationship existed. It was proposed that this could be due to the suppressing effects of firm characteristics. The results have important implications for theory, policy and practice. The study findings demonstrated that dynamic capability complements the effects of market orientation on organizational performance. In addition the study supported findings of previous studies regarding the positive influence of market orientation on organizational performance. The study also provided evidence of the positive effects of dynamic capabilities on organizational performance. However, the study had a number of limitations. In particular, the study‟s focus on the SACCO subsector which has unique operating circumstances may limit the generalizability of the study findings to other sectors while use of a single informant for each SACCO may have introduced some bias to the data obtained. These limitations however did not detract from the studies rigor. It was recommended that future studies should incorporate data from the customers (members) in order to gather a more representative view of the sector. Further, a mixed methods approach incorporating both quantitative and in depth qualitative research is recommended.