Article Published In Vol.6 (Nov-Dec-2018)

Organization Structure and Financial Performance of Savings and Credit Co-Operatives in Western Region, Kenya

Author : Mackline Wamukota, Dr. Muganda Munir and Dr. Benedict Ondieki Alala

The organization structure is the foundation of an effective system of internal control. Most of the well-publicized failures including not only Enron and WorldCom, but also the governance failures that led to the 2008 financial crisis were, at least in part, the result of weak control environments. In the absence of a demonstrably effective control environment, no level of “design and operating” effectiveness of controls within business and IT processes can provide meaningful assurance to stakeholders of the integrity of an organization’s internal control structure. The main objective of the study was to examine to establish the influence of organizational structure on the financial performance of SACCOs in Western region. The study adopted a cross section research design using the quantitative approach. The target population was 177 senior members in nine licensed SACCOs operating in Western Region. A sample of 123 respondents was selected by use of stratified random sampling out of which a response rate of 110 was obtained. Both primary and secondary data were collected with the aid of structured questionnaires and document analysis. Validity of the research instruments was determined using expert judgment while Cronbach’s alpha coefficient was used to measure internal consistency with the alpha coefficient of above 0.976 thus considered reliable. Data was analyzed by use of descriptive and inferential statistics. Multiple regression and Pearson correlation were used for inferential statistics. Data was presented by use of tables and figures. The study found out that organization structure had a positive and significant effect of financial performance of SACCOs. The study concluded that organization structure lead to more financial growth of SACCOs. The study thus recommended that for increase in financial performance of SACCOs, more resources should be diverted in expansion of SACCOs, putting up an elaborate and functioning organization structure and increasing the level of integrity and ethical values within the SACCOs.

Keywords: Organization structure, SACCOs, Financial Performance, Internal control environment