The moderating effect of transformational leadership on organizational culture and firm performance in deposit taking Sacco’s in Nairobi County

Abstract

A firm’s performance is the measure of standard or prescribed indicators of effectiveness, efficiency and environmental responsibility such as cycle time, productivity, waste reduction and compliance. Successful performance of an organization does not only depend on employees and processes but also focusing on organization strategy, culture, processes and innovation. The financial performance of a SACCO is the first thing that potential members evaluate. They use indicators such as dividend rate payout rate, loan book and total deposits held by the SACCO. It is therefore important for SACCO leadership to actively seek to improve firm performance through new processes , technology adoption and culture change. As in other organizations, good performance is an indicator of financial wellness. According to SASRA report 2021, SACCO’S need to reinforce quality financial disclosure in financial statements. Good performance is an affirmation of effective management, it offers significant information that allows monitoring of performance. The report highlights a number of DTS that are on the verge of losing their licences because of mismanagement and poor performance. It indicates that the SACCO’s have not adequately met the minimum set conditions such as core capital ratios, institutional capital among other indicators. The main objective of this study is to determine the moderating effect of transformational leadership on organizational culture and firm performance in deposit taking SACCOs in Nairobi. To establish the effect of involvement culture on the firm performance of Deposit Taking Sacco’s in Nairobi County. Specifically, the study sought to establish how organizational culture (consistency culture, adaptability culture, mission culture) effect firm performance of Deposit Taking Sacco’s in Nairobi County and assess the moderating effect of transformational leadership on the relationship between organizational culture and firm performance of Deposit Taking Sacco’s in Nairobi County. The study utilized explanatory research design. The considered population was 1810 employees of SACCOs from which a sample of 133 was acquired. However, the study managed to acquire data for 106 respondents of SACCOs. The study used primary data which was collected through questionnaires. Descriptive statistics in the form of frequency tables and the mean and standard deviation was used, while inferential data inform of regression and correlational analysis was used to ascertain the relationship between variables under study. The study established that transformational leadership plays a positive and significant moderating effect on organizational cultures and the performance of the performance of D.T SACCOs in Nairobi. It can also be concluded that organizational cultures (involvement culture, consistency culture, adaptability culture and mission culture) influences the performance of the performance of D.T SACCOs in Nairobi positively and significantly. From the findings that nurturing and cultures such as involvement, consistency, adaptability and mission influences the performance of D.T SACCOs, the researcher suggests that SACCOs should nurture a culture of involving their employees in decision making since that will enhance the performance of SACCOs.