EFFECT OF DIVERSIFICATION STRATEGIES ON THE MARKET PERFORMANCE OF SMALL AND MEDIUM-TIER DEPOSIT-TAKING SACCOS IN KENYA
Abstract
Purpose: The aim of the research was to evaluate the effect of diversification strategies on the market performance of small and medium-tier deposit-taking SACCOs in Kenya.
Design: The study used a positivist approach and descriptive research design, with data collected from CEOs through questionnaires. Descriptive and inferential statistics, including regression and correlation analyses, were used to examine relationships between variables.
Findings: The study revealed a robust positive linear correlation between diversification strategies (β = 0.179, p=0.000) and market performance, signifying that these strategies account for a considerable portion of the market performance variance.
Conclusion: Diversification strategies have a statistically significant positive effect on performance.
Recommendation: SACCOs should prioritize strategic partnerships to boost overall growth.
Keywords: diversification strategies, market performance, deposit-taking SACCOs, regression analysis, descriptive research design
References
Abdikadir, A. A. (2017). Impact of diversification strategies on financial performance of commercial banks in Kenya. [Unpublished doctoral dissertation]. University of Nairobi.
Abofaied, A. (2017). Financial reforms and business opportunities in Africa. African Journal of Business and Economic Development, 5(1), 65-79.
Agutu, K. (2022). The role of diversification strategies in the performance of Kenyan SACCOs. Journal of African Finance, 7(3), 112-125.
Alharahsheh, H. H., & Pius, A. (2020). Research paradigms: A review of paradigms and their applications. International Journal of Innovation, Creativity and Change, 13(2), 113-126.
Ansoff, H. I. (1965). Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion. McGraw-Hill.
Auma, J., & Waithaka, S. (2020). Growth strategies in public universities in Kenya. Kenyan Journal of Education and Development, 14(2), 45-60.
Bell, E., Bryman, A., & Harley, B. (2023). Business Research Methods (5th ed.). Oxford University Press.
Bulle, B. (2020). Growth strategies for Telkom Kenya Limited. Journal of Telecommunications and Management, 11(3), 78-92.
Bulle, S. A. (2020). Effect of diversification strategies on financial performance of steel manufacturing firms in Kenya. [Unpublished doctoral dissertation]. University of Nairobi.
Cirjevskis, A. (2019). Mergers and acquisitions: Implications for the knowledge management and organizational efficiency. Journal of Business Research, 102, 185-195. https://doi.org/10.1016/j.jbusres.2019.05.002
Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297-334.
Gilmore, A. (2018). Strategic partnerships and market performance: A study of external knowledge acquisition. Strategic Management Journal, 39(3), 870-885. https://doi.org/10.1002/smj.2750
Grey, C. (2015). The Role of Content and Construct Validity in Research Instruments. Journal of Research Methodology, 9(3), 32-45.
Iheanachor, N. E., Nwankwo, S. C., & Akinmoladun, A. A. (2021). Diversification strategies and the performance of financial institutions in Nigeria. African Journal of Economic and Management Studies, 12(2), 158-172. https://doi.org/10.1108/AJEMS-09-2020-0365
Iheanachor, N., Madu, C., & Okoro, J. (2021). Financial service diversification in Nigeria. Nigerian Journal of Financial Services, 8(1), 101-114.
Jayasuriya, S. (2023). The Ansoff Matrix and strategic management: A theoretical perspective. International Journal of Business and Management, 18(1), 45-56.
Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business Review Press.
Kariuki, J. (2017). Growth strategies for SACCOs and their impact on performance. Kenya Journal of Management Studies, 10(2), 23-34.
Komen, J., Nyongesa, A., & Otieno, L. (2024). Growth and performance of deposit-taking SACCOs in Kenya. Kenyan Financial Review, 16(1), 34-46.
Kothari, C. R. (2008). Research Methodology: Methods and Techniques. New Age International.
Kuya, J. (2021). Research Design: Theory and Practice. Journal of Applied Research and Innovation, 14(2), 23-38.
Labourn, S., & Kobia, M. (2014). The impact of SACCOs on economic and social development. Kenyan Journal of Social and Economic Development, 6(3), 102-115.
Lynch, R. (2003). Corporate Strategy: Theory and Practice. Financial Times Prentice Hall.
Maithya, P. K. (2021). Growth strategies and profitability of SACCOs in Kenya: An empirical investigation. International Journal of Financial Studies, 9(2), 45-60. https://doi.org/10.3390/ijfs9020045
Malmir, B. (2018). Validity and Reliability Testing in Research. International Journal of Research in Business and Social Science, 7(4), 23-34.
Maragia, M., & Kemboi, P. (2021). The effects of diversification strategy on the organizational performance of manufacturing companies in Uasin Gishu County. Journal of Business Research, 15(2), 134-146.
Masuku, M. B. (2014). Content Validity in Research Instruments. Journal of Educational Research and Reviews, 12(2), 45-56.
Mbugua, J. (2020). Data Analysis Techniques in Research. Journal of Research Methods, 11(1), 55-68.
Mbugua, J. (2020). Global competition and strategic management in the 21st century. International Journal of Strategic Management, 8(2), 22-34.
Muchele, M. (2019). Diversification strategies in manufacturing firms in Nairobi County, Kenya. Kenya Business Review, 11(2), 23-34.
Mugenda, O. M., & Mugenda, A. G. (2003). Research Methods: Quantitative and Qualitative Approaches. Acts Press.
Murguiyia, K. (2018). Strategic management in steel firms in Kenya. African Journal of Business Strategy, 5(1), 12-27.
Muriithi, K. (2024). The effectiveness of diversification strategies in SACCOs. Journal of Strategic Management, 11(2), 98-110.
Mwangi, R. (2016). The impact of diversification strategies on the performance of Kenyan commercial banks. Journal of Banking and Finance, 10(2), 12-25.
Mwania, J. (2017). Diversification strategies in Kenyan commercial banks. Kenya Financial Review, 8(1), 24-38.
Mwilu, M., & Njuguna, G. (2020). Business expansion strategies and their impact on productivity of SACCOs in Nairobi County. African Journal of Business Management, 14(5), 121-130. https://doi.org/10.5897/AJBM2019.9050
Mwita, G. (2022). Strategic growth and performance of SACCOs in Kenya. African Journal of Business Administration, 9(1), 78-90.
Mwithiga, G. M., Kiruja, L. J., & Nyaboga, T. M. (2017). Cronbach’s Alpha Coefficient in Reliability Testing. Journal of Banking and Finance, 16(2), 112-124.
Ncurai, T., Oloko, M., & Rambo, B. (2022). The effect of liberalization on the growth of SACCOs in Kenya. Journal of Financial Studies, 13(2), 27-39.
Njambi, S., & Kariuki, E. (2018). The relationship between capital base and competitiveness in the Kenyan financial sector. International Journal of Business and Social Science, 9(8), 47-55. https://doi.org/10.30845/ijbss.v9n8p6
Njera, B. (2023). Evaluating growth strategies for SACCOs in Kenya. International Journal of Cooperative Economics, 15(1), 45-58.
Njuguna, M. (2019). The impact of diversification techniques on the profitability of non-financial enterprises listed on Kenya's NSE. East African Journal of Business Management, 13(1), 56-70.
Njuguna, M. (2021). Challenges facing small and medium-sized SACCOs in Kenya. Journal of Financial Management, 14(1), 56-68.
Njuguna, M., & Mwilu, G. (2020). The role of strategic management in enhancing the performance of SACCOs in Kenya. Journal of Business and Management Studies, 12(4), 45-56.
Njuguna, S. (2019). Diversification, integration, and profitability in Kenyan-listed non-financial enterprises. Journal of African Business, 20(1), 112-130. https://doi.org/10.1080/15228916.2019.1571230
Ojwaka, H., & Deya, N. (2018). The impact of diversification strategies on performance in the Kenyan market. Journal of Strategic and International Studies, 12(3), 55-68. https://doi.org/10.2139/ssrn.3185270
Oladimeji, A., & Udosen, J. (2019). Ansoff's Growth Matrix and Strategic Planning. Journal of Strategic Business Planning, 6(1), 15-29.
Ommala, S. (2021). Diversification strategies for sugar manufacturers in Kenya. Journal of Agricultural Economics, 9(3), 55-68.
Paul, D., & Wachira, N. (2021). The influence of service diversification strategy on the growth of registered hotels in Kitui Town. African Journal of Hospitality and Tourism Management, 9(1), 22-36.
Paul, T., & Wachira, G. (2021). The effect of investment diversification on the growth of Kenyan organizations. African Journal of Finance and Management, 18(2), 68-82. https://doi.org/10.1111/jfca.12265
Phantasmal, K. (2019). Strategic partnerships and their impact on firm capabilities. International Journal of Technology Management, 78(4), 500-514. https://doi.org/10.1504/IJTM.2019.10026574
Pilcher, R. (2020). Ansoff’s Matrix and Strategic Growth. International Journal of Business Strategy, 12(3), 88-104.
Proctor, T. (1997). Strategic Marketing: An Introduction. Routledge.
Ramakrishna, P. (2023). Diversification strategies and market performance in Kenya. African Journal of Economics and Management, 8(2), 67-80.
Sang, B., Muriithi, K., & Wafula, A. (2021). Diversification strategies in SACCOs in Meru County, Kenya. Journal of Cooperative Studies, 12(4), 23-37.
SASRA. (2021). Annual Report on Deposit-Taking SACCOs in Kenya. Savings and Credit Co-operative Regulatory Authority (SASRA).
Saunders, M., Lewis, P., & Thornhill, A. (2012). Research Methods for Business Students (6th ed.). Pearson Education.
Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill Building Approach (7th ed.). Wiley.
Thirathon, P., & Meeprom, T. (2020). Horizontal product diversification and organizational growth: A review of the literature. Journal of Business Strategy, 41(6), 23-36. https://doi.org/10.1108/JBS-07-2019-0185
United Nations (UN). (2020). Sustainable Development Goals Report. United Nations Publications.
World Council of Credit Unions (WOCCU). (2021). Global credit union movement: Annual report. WOCCU.
Abofaied, A. (2017). Financial reforms and business opportunities in Africa. African Journal of Business and Economic Development, 5(1), 65-79.
Agutu, K. (2022). The role of diversification strategies in the performance of Kenyan SACCOs. Journal of African Finance, 7(3), 112-125.
Alharahsheh, H. H., & Pius, A. (2020). Research paradigms: A review of paradigms and their applications. International Journal of Innovation, Creativity and Change, 13(2), 113-126.
Ansoff, H. I. (1965). Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion. McGraw-Hill.
Auma, J., & Waithaka, S. (2020). Growth strategies in public universities in Kenya. Kenyan Journal of Education and Development, 14(2), 45-60.
Bell, E., Bryman, A., & Harley, B. (2023). Business Research Methods (5th ed.). Oxford University Press.
Bulle, B. (2020). Growth strategies for Telkom Kenya Limited. Journal of Telecommunications and Management, 11(3), 78-92.
Bulle, S. A. (2020). Effect of diversification strategies on financial performance of steel manufacturing firms in Kenya. [Unpublished doctoral dissertation]. University of Nairobi.
Cirjevskis, A. (2019). Mergers and acquisitions: Implications for the knowledge management and organizational efficiency. Journal of Business Research, 102, 185-195. https://doi.org/10.1016/j.jbusres.2019.05.002
Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297-334.
Gilmore, A. (2018). Strategic partnerships and market performance: A study of external knowledge acquisition. Strategic Management Journal, 39(3), 870-885. https://doi.org/10.1002/smj.2750
Grey, C. (2015). The Role of Content and Construct Validity in Research Instruments. Journal of Research Methodology, 9(3), 32-45.
Iheanachor, N. E., Nwankwo, S. C., & Akinmoladun, A. A. (2021). Diversification strategies and the performance of financial institutions in Nigeria. African Journal of Economic and Management Studies, 12(2), 158-172. https://doi.org/10.1108/AJEMS-09-2020-0365
Iheanachor, N., Madu, C., & Okoro, J. (2021). Financial service diversification in Nigeria. Nigerian Journal of Financial Services, 8(1), 101-114.
Jayasuriya, S. (2023). The Ansoff Matrix and strategic management: A theoretical perspective. International Journal of Business and Management, 18(1), 45-56.
Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business Review Press.
Kariuki, J. (2017). Growth strategies for SACCOs and their impact on performance. Kenya Journal of Management Studies, 10(2), 23-34.
Komen, J., Nyongesa, A., & Otieno, L. (2024). Growth and performance of deposit-taking SACCOs in Kenya. Kenyan Financial Review, 16(1), 34-46.
Kothari, C. R. (2008). Research Methodology: Methods and Techniques. New Age International.
Kuya, J. (2021). Research Design: Theory and Practice. Journal of Applied Research and Innovation, 14(2), 23-38.
Labourn, S., & Kobia, M. (2014). The impact of SACCOs on economic and social development. Kenyan Journal of Social and Economic Development, 6(3), 102-115.
Lynch, R. (2003). Corporate Strategy: Theory and Practice. Financial Times Prentice Hall.
Maithya, P. K. (2021). Growth strategies and profitability of SACCOs in Kenya: An empirical investigation. International Journal of Financial Studies, 9(2), 45-60. https://doi.org/10.3390/ijfs9020045
Malmir, B. (2018). Validity and Reliability Testing in Research. International Journal of Research in Business and Social Science, 7(4), 23-34.
Maragia, M., & Kemboi, P. (2021). The effects of diversification strategy on the organizational performance of manufacturing companies in Uasin Gishu County. Journal of Business Research, 15(2), 134-146.
Masuku, M. B. (2014). Content Validity in Research Instruments. Journal of Educational Research and Reviews, 12(2), 45-56.
Mbugua, J. (2020). Data Analysis Techniques in Research. Journal of Research Methods, 11(1), 55-68.
Mbugua, J. (2020). Global competition and strategic management in the 21st century. International Journal of Strategic Management, 8(2), 22-34.
Muchele, M. (2019). Diversification strategies in manufacturing firms in Nairobi County, Kenya. Kenya Business Review, 11(2), 23-34.
Mugenda, O. M., & Mugenda, A. G. (2003). Research Methods: Quantitative and Qualitative Approaches. Acts Press.
Murguiyia, K. (2018). Strategic management in steel firms in Kenya. African Journal of Business Strategy, 5(1), 12-27.
Muriithi, K. (2024). The effectiveness of diversification strategies in SACCOs. Journal of Strategic Management, 11(2), 98-110.
Mwangi, R. (2016). The impact of diversification strategies on the performance of Kenyan commercial banks. Journal of Banking and Finance, 10(2), 12-25.
Mwania, J. (2017). Diversification strategies in Kenyan commercial banks. Kenya Financial Review, 8(1), 24-38.
Mwilu, M., & Njuguna, G. (2020). Business expansion strategies and their impact on productivity of SACCOs in Nairobi County. African Journal of Business Management, 14(5), 121-130. https://doi.org/10.5897/AJBM2019.9050
Mwita, G. (2022). Strategic growth and performance of SACCOs in Kenya. African Journal of Business Administration, 9(1), 78-90.
Mwithiga, G. M., Kiruja, L. J., & Nyaboga, T. M. (2017). Cronbach’s Alpha Coefficient in Reliability Testing. Journal of Banking and Finance, 16(2), 112-124.
Ncurai, T., Oloko, M., & Rambo, B. (2022). The effect of liberalization on the growth of SACCOs in Kenya. Journal of Financial Studies, 13(2), 27-39.
Njambi, S., & Kariuki, E. (2018). The relationship between capital base and competitiveness in the Kenyan financial sector. International Journal of Business and Social Science, 9(8), 47-55. https://doi.org/10.30845/ijbss.v9n8p6
Njera, B. (2023). Evaluating growth strategies for SACCOs in Kenya. International Journal of Cooperative Economics, 15(1), 45-58.
Njuguna, M. (2019). The impact of diversification techniques on the profitability of non-financial enterprises listed on Kenya's NSE. East African Journal of Business Management, 13(1), 56-70.
Njuguna, M. (2021). Challenges facing small and medium-sized SACCOs in Kenya. Journal of Financial Management, 14(1), 56-68.
Njuguna, M., & Mwilu, G. (2020). The role of strategic management in enhancing the performance of SACCOs in Kenya. Journal of Business and Management Studies, 12(4), 45-56.
Njuguna, S. (2019). Diversification, integration, and profitability in Kenyan-listed non-financial enterprises. Journal of African Business, 20(1), 112-130. https://doi.org/10.1080/15228916.2019.1571230
Ojwaka, H., & Deya, N. (2018). The impact of diversification strategies on performance in the Kenyan market. Journal of Strategic and International Studies, 12(3), 55-68. https://doi.org/10.2139/ssrn.3185270
Oladimeji, A., & Udosen, J. (2019). Ansoff's Growth Matrix and Strategic Planning. Journal of Strategic Business Planning, 6(1), 15-29.
Ommala, S. (2021). Diversification strategies for sugar manufacturers in Kenya. Journal of Agricultural Economics, 9(3), 55-68.
Paul, D., & Wachira, N. (2021). The influence of service diversification strategy on the growth of registered hotels in Kitui Town. African Journal of Hospitality and Tourism Management, 9(1), 22-36.
Paul, T., & Wachira, G. (2021). The effect of investment diversification on the growth of Kenyan organizations. African Journal of Finance and Management, 18(2), 68-82. https://doi.org/10.1111/jfca.12265
Phantasmal, K. (2019). Strategic partnerships and their impact on firm capabilities. International Journal of Technology Management, 78(4), 500-514. https://doi.org/10.1504/IJTM.2019.10026574
Pilcher, R. (2020). Ansoff’s Matrix and Strategic Growth. International Journal of Business Strategy, 12(3), 88-104.
Proctor, T. (1997). Strategic Marketing: An Introduction. Routledge.
Ramakrishna, P. (2023). Diversification strategies and market performance in Kenya. African Journal of Economics and Management, 8(2), 67-80.
Sang, B., Muriithi, K., & Wafula, A. (2021). Diversification strategies in SACCOs in Meru County, Kenya. Journal of Cooperative Studies, 12(4), 23-37.
SASRA. (2021). Annual Report on Deposit-Taking SACCOs in Kenya. Savings and Credit Co-operative Regulatory Authority (SASRA).
Saunders, M., Lewis, P., & Thornhill, A. (2012). Research Methods for Business Students (6th ed.). Pearson Education.
Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill Building Approach (7th ed.). Wiley.
Thirathon, P., & Meeprom, T. (2020). Horizontal product diversification and organizational growth: A review of the literature. Journal of Business Strategy, 41(6), 23-36. https://doi.org/10.1108/JBS-07-2019-0185
United Nations (UN). (2020). Sustainable Development Goals Report. United Nations Publications.
World Council of Credit Unions (WOCCU). (2021). Global credit union movement: Annual report. WOCCU.
Published
2024-10-14
How to Cite
King’ori, P. G., Wachira, A. W., & Mwenda, L. K. (2024). EFFECT OF DIVERSIFICATION STRATEGIES ON THE MARKET PERFORMANCE OF SMALL AND MEDIUM-TIER DEPOSIT-TAKING SACCOS IN KENYA. African Journal of Emerging Issues, 6(16), 97-114. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/684
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