SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE

The interest in this study arose from the great attention currently being given to the role of co-operative enterprises in achieving the United Nation’s goals of reducing poverty, promoting gender equality, providing health care services and ensuring environmental sustainability. The study investigated co-operative enterprises’ strategic planning intentions and processes and their impact on the ecosystems, societies, and environments of the future. Although survey questionnaires were the main instrument for primary data collection, semi-structured follow-up interviews were also conducted to supplement the method. The study found out that co-operative enterprises integrate environmental and social policies in their business model thereby representing a fundamentally distinct type of the modern firm characterized by a governance structure that in addition to financial performance, accounts for the environmental and social impact. The study established that co-operative enterprises also seek to promote the fullest possible participation in the economic and social development of groups of people who have hitherto encountered economic difficulties within the existing economic infrastructure that is not able to provide them with opportunities. Seventy nine percent of the co-operatives enterprises surveyed rated their performance as either satisfactory. JEL: E24, J24, O15  Article visualizations

TOWARDS A TRIPLE-BOTTOM LINE PERFORMANCE MODEL: THE CASE OF WORKER CO-OPERATIVES

This study, carried out in Britain, sought to find out the triple-bottom line performance initiatives adopted by worker co-operatives and to determine the level of satisfaction with their performance as an indicator for effective achievement of objectives. Although survey questionnaires were the main instrument for primary data collection, semi-structured follow-up interviews were also conducted to supplement the method. The study found out that apart from the achievement of the economic and social well-being of members, worker co-operatives have also responded effectively to the social challenges of their communities by trying to solve the problems of unemployment and social exclusion. Some of their objectives include democratization of the work place; integration of the marginalized members of the society; fair trade and environment conservation. The study also found out that worker co-operatives seek to promote the fullest possible participation in the economic and social development of groups of people who have hit her to encountered economic difficulties within the existing economic infrastructure that is not able to provide them with opportunities. JEL: E24, J24, O15  Article visualizations

LEVERAGING THE JOB OWNERSHIP STRUCTURE BY WORKER CO-OPERATIVES

This study examined the causal link between the job ownership structure and increased commitment and motivation in worker co-operatives. The separation of job ownership from management and the effective alignment of the interests of job managers and the owners have generated a lot of discussion in the past. Proponents of the agency theory have, on the one hand, recommend actions that maximize shareholders value. On the other hand, the adoption of sweeping statements of purpose by many business organizations, have led to the recommendation of the stakeholder and the stewardship theories as being the appropriate guides to corporate actions. However, given the complexities of modern business organizations where the expectations of the workers and job owners are increasingly getting blurred, reliance on these theories does not provide a satisfactory solution. Survey questionnaires were the main instrument for primary data collection in this study. Semi-structured follow-up interviews were also conducted to supplement the method. The research design included three phases of data collection and analysis. Phase one was a qualitative method of informal, semi-structured interviews while phase two was a quantitative survey, the findings of which were used to construct further semi-structured follow-up interviews with worker co-operative stakeholders. The study concluded that the job ownership structure adopted by worker co-operatives has resulted into increased commitment and motivation which has in turn lead to increased productivity and improved performance.  Article visualizations

The challenge of competitiveness in worker co-operatives in Britain : an integrative strategy framework perspective

This study responds to the need for further research on worker co-operatives as an alternative business model following the resurgence of interest in co-operatives by many international organizations including the United Nations. The study particularly seeks to fill the gaps identified in the previous research studies with regard to worker co-operatives’ competitive environments and to their strategy formulation processes. The main objective of this thesis is to establish that an integrative strategy framework offers a more effective analysis of the challenge of competitiveness in worker co-operatives in Britain. Unlike most previous studies in this field, the point of departure for this thesis is the contention that the challenge of competitiveness in worker co-operatives in Britain can be better understood if their strategic variables are considered together in an integrative strategy framework. The thesis aims at finding the rationale for formulating strategy frameworks that integrate variables from both the external and the internal environments of the worker co-operatives in order to effectively achieve objectives. This thesis additionally seeks to establish that despite all the external and internal forces that work against the growth and development of worker co-operatives in Britain, they still perform very well and are satisfied with their performance. This would confirm that a non-hierarchical management structure based on the principles of democratic control actually works. It would also confirm that loyalty, commitment and greater participation from members (co-operative environment) is the main force behind worker co-operatives’ successful performance. The thesis utilizes a typology for strategy classification that identifies the strategic variables in both the external and the internal environments that are critical to the competitiveness of worker co-operatives in Britain. It specifically focuses on the strategic integration of the key variables in worker co-operatives’ environments and the strategic alignment of their internal environment (e.g. financial, physical and entrepreneurial) with their external environment (e.g. social, economic, political and legal). The thesis additionally examines how worker co-operatives are influenced by a unique environment that arises from their strong adherence to the universal cooperative principles and core values. This unique environment, known as the co-operative environment, consists of the multi-faceted relationships that exist between worker co-operatives and their members and among the members themselves. According to the Worker Co-operatives Statistical Review 2nd Revision 2005, which is published by Co-operatives-UK (the umbrella body for worker co-operatives), there are approximately 390 worker co-operatives in Britain. One hundred and thirty one (131) of these worker co-operatives participated in the research study. The research method adopted for the thesis integrated the quantitative data collection and analysis methods with the qualitative and, hence, more descriptive approaches. Interviews were conducted and survey questionnaires were also completed on various factors that influence the competitiveness of worker co-operatives. The study concludes that the use of an integrative strategy framework provides a richer picture of the challenge of competitiveness in worker co-operatives in Britain. It also concludes that many worker co-operatives attribute their satisfactory performance to loyalty, employee empowerment and unparalleled commitment from the members. This confirms that a non-hierarchical management structure based on the principles of democratic control actually works and that the revival of worker co-operatives in Britain will be maintained, and will probably expand.EThOS - Electronic Theses Online ServiceGBUnited Kingdo

Effect of Short-term Debt to Total Assets Ratio on Financial Performance of Medium-sized and Large Enterprises in Kenya

The purpose of this study was to establish the effect of short-term debt to total assets ratio on the financial performance of medium-sized and large enterprises in Kenya. The study drew on secondary data consisting of audited financial statements from 60 large enterprises listed at the NSE and 30 medium-sized enterprises which are among the Top-100 medium-sized enterprises totaling to 90 enterprises for a six year period (2011 to 2016). The main objective of the study was to establish the effect of short-term debt to total assets ratio on financial performance of medium-sized and large enterprises in Kenya. Short-term debt to total assets ratio was used as capital structure proxy while ROE and ROA were used as measures of financial performance. The study was anchored on positivism paradigm and guided by the following capital structure theories: Irrelevance theory, static trade-off theory, pecking order theory and free cash flow theories. Descriptive statistics (mean and standard deviation) and inferential statistics (Pearson Correlation, simple regression) were used to analyze data. Simple regression was used to establish the extent the independent variable (SDTAR) affected the dependent variable (financial performance) while Pearson correlation was used to measure strength of the effect of short-term debt to total assets ratio on financial performance. The hypothesis was tested using calculated value of F and the critical value of F. The study established that SDTAR had a significant negative effect on ROE and ROA. In conclusion the study established that a decrease in financial performance was attributed to an increase in short-term debts total assets ratio. It was recommended that the enterprises reduce the usage of short-term debts in financing operations so as to improve their financial performance. It was also recommended that future studies to look into the effects of credit terms or policies to establish the cost of short-term debts in Kenya, and further studies to be undertaken to investigate into other factors that account for the variability in financial performance of medium-sized and large enterprises in Kenya. Keywords: Short-term Debt, Total Assets, Financial Performance, Capital Structur

Moderating Effect of Firm Characteristics on the Relationship Between Capital Structure and Financial Performance of Medium-sized and Large Enterprises in Kenya

The purpose of this study was to establish the moderating effect of enterprise characteristics on the relationship between capital structure and financial performance of medium-sized and large enterprises in Kenya. The study drew on secondary data consisting of audited financial statements from 60 large enterprises listed at the NSE and 30 medium-sized enterprises totaling to 90 enterprises for six year period (2011 to 2016). The objective of the study was to establish the moderating effect of enterprise characteristics on the relationship between capital structures and financial performance of medium-sized and large enterprises in Kenya. SDTAR, LDTAR and TDTET represented capital structure proxies; ROE and ROA represented financial performance while size and age represented enterprise characteristics. The study was anchored on positivism paradigm and guided by the following capital structure theories: static trade-off theory, pecking order theory and free cash flow theory. Descriptive statistics and inferential statistics were used to analyze data. Multiple regressions were applied to establish the extent of the effect of enterprise characteristics on the relationship between capital structures and financial performance while Pearson correlation was used to ascertain the moderating effect of firm characteristics on the relationship between capital structure and financial performance. The hypothesis was tested using calculated F-value and the critical value of F. The study established significant positive moderating effect of enterprise characteristics on the relationship between capital structures and financial. However, size and age reduced the explanatory powers of accounting for the variability in ROE while they increased explanatory powers for ROA. In conclusion the study found that decrease in ROE and increases in ROA were attributed to change in size and age. In improving financial performance it was recommended that enterprises invest in easily re-locatable and quality. Future studies to investigate other factors that account for variability in financial performance and other enterprise characteristics of medium-sized and large enterprises in Kenya. Keywords: capital structure, enterprise characteristics, financial performanc

FINANCIAL CONDITION AND PERFORMANCE OF ISLAMIC AND NON-ISLAMIC BANKS IN KENYA: A COMPARATIVE STUDY

This study compares the financial condition and performance of the Islamic banks against those of the conventional banks in Kenya along the dimensions including profitability, liquidity and solvency. The study applies “descriptive financial analysis” research design and is longitudinal in nature spanning a period of six years from 2010 to 2015. A sample of seven banks has been studied covering two fully fledged Islamic banks and five non-Islamic banks under the same small peer group according to the CBK bank supervision report of 2014. Secondary data collected from the banks’ financial statements has been utilized in this study. The study concludes that the difference in profitability and solvency between the Islamic banks and the conventional banks is not statistically significant. On liquidity, however, Islamic banks have proven to be significantly better than the Non-Islamic banks. JEL: G21, G24, E50  Article visualizations

Effect of Debt Financing Options on Financial Performance of Firms Listed at the Nairobi Securities Exchange, Kenya

In spite of the dominance of the capital structure debate among both academic researchers and practitioners in the field of corporate finance over the last three decades, finding an optimal capital structure remains an ever-elusive gem. In particular, many contemporary firms are yet to find the optimum debt levels that maximises shareholder value. The purpose of this study was to examine the effects of debt configurations namely short-term, long-term and total debt on firm financial performance measured as return on assets and return on equity of listed firms in Kenya. The study utilizes panel econometric techniques named pooled ordinary least squares (OLS), fixed effects (FE) and random effects (RE) to analyze the effects of debt on financial performance of 40 non-financial firms listed on the Nairobi Securities Exchange between 2009 and 2015. Empirical results show that short-term, long-term and total debt have negative and statistically significant effects on returns on assets across OLS and RE. However, the debt measures have no significant effects on returns on equity across all estimation methods. These mixed empirical results partially follow both the trade-off and Modigliani and Miller’s theoretical predictions and partly contradict the very theories. Consequently, financial managers should adjust debt levels to ensure that they operate at the optimum points. On the other hand, credit institutions should only finance businesses up to the point where profitability is maximized to mitigate against default risks associated with overleveraging

Effect of Equity Financing Options on Financial Performance of Non-Financial Firms Listed at the Nairobi Securities Exchange, Kenya

Corporate finance managers worldwide have for a long time consistently sought to maximize shareholders’ wealth and their firm’s market value through their decisions on firm’s capital structure. However, both scholars and practitioners of corporate finance are yet to agree on the optimal mix of equity and debt that maximizes a firm’s financial performance. The purpose of this study was to examine the effects of equity financing options namely common stock (CS), retained earnings (REN) and total equity (TED) as ratios of total assets on the financial performance measured as return on assets (ROA) and return on equity (ROE) of Kenya’s listed firms. Utilizing panel econometric techniques namely pooled ordinary least squares (OLS), fixed effects (FE) and random effects (RE), the study analyzes the effects of equity variables as ratios of total assets on the financial performance of 40 non-financial firms listed at the Nairobi Securities Exchange between 2009 and 2015. The study’s empirical results show that CS ratio significantly and negatively affects ROA while REN ratio has a statistically significant and positive effect on ROA. Overall, TE ratio positively and significantly affects ROA. On the contrary, ROE is not significantly affected by the equity variables in the sample. While the non-significant effects of equity on ROE find support in Modigliani and Miller’s capital structure irrelevance theory, the positive effects of REN ratio and the negative effects of CS ratio on ROA, which are largely supported by the trade-off theory, may explain the pecking order theory’s prioritization of internal capital sources over debt and equity issuances. Thus, corporate finance managers should find a place for internal financing options particularly retained earnings to maximize equity holders’ returns on assets employed. Additionally, corporate finance managers should endeavour to minimize on the use of CS due to its negative effects on shareholder earnings on their assets. Nonetheless, a reasonable balance between CS and REN should be considered since the positive effect between TE and ROA is an appraisal for an optimum mix of equity financing options

The Challenge of Competitiveness in Worker Co-operatives in Britain: An Integrative Strategy Framework Perspective

This study responds to the need for further research on worker co-operatives as an alternative business model following the resurgence of interest in co-operatives by many international organizations including the United Nations. The study particularly seeks to fill the gaps identified in the previous research studies with regard to worker co-operatives’ competitive environments and to their strategy formulation processes. The main objective of this thesis is to establish that an integrative strategy framework offers a more effective analysis of the challenge of competitiveness in worker co-operatives in Britain. Unlike most previous studies in this field, the point of departure for this thesis is the contention that the challenge of competitiveness in worker co-operatives in Britain can be better understood if their strategic variables are considered together in an integrative strategy framework. The thesis aims at finding the rationale for formulating strategy frameworks that integrate variables from both the external and the internal environments of the worker co-operatives in order to effectively achieve objectives. This thesis additionally seeks to establish that despite all the external and internal forces that work against the growth and development of worker co-operatives in Britain, they still perform very well and are satisfied with their performance. This would confirm that a non-hierarchical management structure based on the principles of democratic control actually works. It would also confirm that loyalty, commitment and greater participation from members (co-operative environment) is the main force behind worker co-operatives’ successful performance. The thesis utilizes a typology for strategy classification that identifies the strategic variables in both the external and the internal environments that are critical to the competitiveness of worker co-operatives in Britain. It specifically focuses on the strategic integration of the key variables in worker co-operatives’ environments and the strategic alignment of their internal environment (e.g. financial, physical and entrepreneurial) with their external environment (e.g. social, economic, political and legal). The thesis additionally examines how worker co-operatives are influenced by a unique environment that arises from their strong adherence to the universal cooperative principles and core values. This unique environment, known as the co-operative environment, consists of the multi-faceted relationships that exist between worker co-operatives and their members and among the members themselves. According to the Worker Co-operatives Statistical Review 2nd Revision 2005, which is published by Co-operatives-UK (the umbrella body for worker co-operatives), there are approximately 390 worker co-operatives in Britain. One hundred and thirty one (131) of these worker co-operatives participated in the research study. The research method adopted for the thesis integrated the quantitative data collection and analysis methods with the qualitative and, hence, more descriptive approaches. Interviews were conducted and survey questionnaires were also completed on various factors that influence the competitiveness of worker co-operatives. The study concludes that the use of an integrative strategy framework provides a richer picture of the challenge of competitiveness in worker co-operatives in Britain. It also concludes that many worker co-operatives attribute their satisfactory performance to loyalty, employee empowerment and unparalleled commitment from the members. This confirms that a non-hierarchical management structure based on the principles of democratic control actually works and that the revival of worker co-operatives in Britain will be maintained, and will probably expand