Organizational Capabilities, Government Regulations and Performance of Mwalimu National Savings and Credit Cooperative Society, Kenya

Abstract

Savings and Credit Cooperative Societies (SACCOs) have emerged as pivotal players in enhancing financial inclusion, supporting economic development, and empowering communities in Kenya. Despite the vital role played by SACCOs, their performance has remained inconsistent and, in some cases, unsustainable, with many struggling to remain competitive in the face of changing regulatory frameworks, technological demands, and human resource challenges. As such, the purpose of this study was to examine the effect of organizational capabilities, government regulations and the performance of Mwalimu National Savings and Credit Cooperative Societies in Kenya. The specific objectives of the study were; to examine the effect of Human Resource Capabilities on the performance of Mwalimu National SACCO; to assess the effect of Technological Capabilities on the performance of Mwalimu National SACCO; to establish the effect of Financial Capabilities on the performance of Mwalimu National SACCO; and to evaluate the moderating effect of Government Regulations on the relationship between organizational capabilities and the performance of Mwalimu National SACCO. The study was anchored on the Resource-Based View (RBV), Dynamic Capabilities Theory, Balanced score card framework and Institutional Theory. This study employed an explanatory research design. The study target population included 98 senior and mid-level managers at Mwalimu National SACCO. The research used primary data, collected using a structured questionnaire. A pretest was conducted on 10 senior and mid-level managers at Harambee SACCO. Data collected was analyzed with the aid of Statistical Package for Social Sciences (SPSS) version 29.0. Descriptive analysis showed high ratings across human resource (M=4.12, SD=1.06), technological (M=4.16, SD=1.04), and financial capabilities (M=4.15, SD=1.07), while performance was rated highest (M=4.18, SD=1.06). Government regulations were also positively perceived (M=4.13, SD=1.11). Correlation results indicated significant positive relationships between organizational capabilities and performance, strongest for technological capabilities (r=0.608, p<0.05). Regression analysis showed organizational capabilities explained 39.1% of performance variance (R²=0.391), while adding government regulations increased explanatory power to 45.7% (R²=0.457). However, moderation testing revealed that the interaction effect was insignificant (β=-0.629, p=0.098). Strengthening SACCOs through enhanced organizational capabilities not only improves institutional sustainability but also aligns with Kenya’s Vision 2030, the Sustainable Development Goals (SDGs), and the African Union Agenda 2063 by fostering financial inclusion, economic empowerment, and resilient cooperative development.