The Effect of Corporate Governance Practices on Strategy Implementation in Deposit Taking Saccos in Nairobi City County, Kenya

Abstract

Corporate governance is intended to increase the accountability of the management of a company to the shareholders. It provides assurance that management is acting in the best interest of all stakeholders in order to deliver long term success of the company. Strategy implementation states that if the organization’s goal is to maximize profits or increase turnover/ revenue, then the organization will put into place strategy that will focus towards cutting down the costs, offering price discounts to encourage large scale purchases among others. The general objective of the study was to determine the effect of corporate governance practices on strategy implementation in Deposit taking Saccos in Nairobi City County, Kenya. This study was anchored on three theoretical perspectives namely: The Upper echelons theory, the Stakeholder theory and the Agency theory. The target population for this study was all Deposit taking Saccos in Nairobi County Kenya. Cross sectional design was used because large samples are realistic and give statistically significant results even when analyzed using several variables. This study used primary data. Primary data was collected by use of a questionnaire which was semi-structured and was self-administered to the Finance managers. The results of the research found that board independence, board diversity, ownership structure and participative governance have a significant and positive relationship while CEO duality has a negative relationship with strategy implementation in Deposit taking Saccos in Nairobi City County, Kenya. From the regression analysis, there is a positive relationship between corporate governance practices and strategy implementation. The study recommends that SACCO board of directors should be well composed to include experts in management, finance and the company industry. This will make the company more responsive to the needs and preferences of strategic implementation. In conclusion, corporate governance practices had a significant relationship with strategy implementation.