Social Capital Resource Attributes Affecting Performance in Deposit-taking Savings and Credit Co-operatives in Kenya

Abstract

The paper reports the findings of research on the role of social capital resource attributes on the performance of deposit-taking savings and credit co-operative societies in a developing country context. The research was premised on the logic of the resource-based view that postulates that resources are the basis of performance variances across firms in the same industry. In addition, the study constructs are supported by the institutional theory and the social capital theory. Three attributes of social capital resources, specifically networking, reputation, and culture, were used to operationalize the construct. Data was obtained from representatives of functional areas involved in strategic decision-making in 38 deposit-taking SACCOs in Nairobi, Kenya. Data was collected using a 5-point Likert scale questionnaire whose computed Cronbach's alpha score showed that the instrument was reliable and internally consistent at above α=0.9. The study recorded a response rate of 71%. The study found that the three attributes of social capital are embedded in the deposit-taking SACCOs to a high extent and contribute towards improved performance of the deposit-taking SACCOs by explaining 51.3% of the variation of performance. The findings contribute towards explaining the strategic management process through which the components of social capital contribute towards the performance of the sampled organizations and raise several implications on relevant strategic management practices suitable to create and sustain social capital resources for enhanced organizational performance.