Knowledge Management Capability and Performance of Savings and Credit Cooperative Societies in Mombasa County, Kenya

Knowledge Management Capability and Performance of Savings and Credit Cooperative Societies in Mombasa County, Kenya

Annebell Wairimu Mwadime., Titus Kising’u,

Jomo Kenyatta University of Agriculture and Technology, Kenya

DOI: https://dx.doi.org/10.47772/IJRISS.2025.908000508

Received: 12 August 2025; Accepted: 20 August 2025; Published: 18 September 2025

ABSTRACT

Knowledge management capability encompasses the processes and infrastructure that enable the creation, acquisition, storage, sharing, and application of knowledge both within and across the organization. The study assessed the influence of knowledge management capability on performance of savings and credit cooperative societies in Mombasa County, Kenya. The study was predicated on knowledge based theory and cross sectional survey research was used to determine the prevalence of phenomena, situation, problem, attitude, or issue by gathering perspectives from a cross-section of the population at the time of the study. Statistics from the Mombasa County Cooperatives Office indicated that there were three hundred and two (302) registered cooperative societies operating in Mombasa County, Kenya as at 31^st December 2024. The accessible population were strategy and business development managers in the savings and credit cooperative societies. This study used proportionate stratified random sampling to select the participating respondents. The study sample was divided into four strata to represent each category of savings and credit cooperative societies namely community based, occupational, microfinance and national from which managers in charge of strategy and business development were the respondents in the study. Questionnaires adopted a five-point Likert scale and were distributed through drop and pick-up method. Statistical Package for Social Sciences (SPSS) version 26 was used for data analysis and linear regression was carried out to assess the relationship between the independent variable and the dependent variable. The study established that knowledge management capability had a significant influence on performance of savings and credit cooperative societies in Mombasa County, Kenya. The study recommended that leaders should exemplify strategic thinking and decision-making skills that they expect from their teams.

Key words: Performance of SACCOs, Strategic Capabilities, Knowledge Management Capability

INTRODUCTION

Today’s business environment is highly competitive, challenging and complex, which is why every firm strives to stand against competition, and attracting and retaining customers (Sani & Febrian, 2023). This calls for embracing strategic capabilities which are resources and competences that proffer a competitive advantage over competitors, and this infers that a firm must seek for ways of obtaining resources and competences that can enable it to have a sustainable competitive advantage.

Strong strategic capabilities are essential for an organization to differentiate itself from competitors and gain a sustainable competitive advantage. They are the foundation for achieving organizational objectives, whether it’s increasing market share, improving profitability or enhancing customer satisfaction, and by which an organization translates its strategic goals into concrete actions and results (Adeniyi, 2023). Key areas challenging the success of credit cooperatives includes lack of adequate planning and education to members, not resolving organizational and structural problems.

Key performance indicators for savings and credit cooperative societies inform how finance managers track, visualize and optimize relevant financial processes in an efficient way. Among others, these measurements refer to transportation, warehouse and supply chain aspects (Ahmed & Garvin, 2022). Differences in performance are attributed to the diverse strategic capabilities that are at the disposal of companies in terms of resources and competences that they use or seek to embrace (Linden, 2021).

Statement Of The Problem

Even though the cooperative movement in Kenya is ranked high in Africa and is also classified as one of the best globally due to its massive asset base, there has been an insistence for better management of its asset base because a number of them have collapsed in the recent past. Cooperatives are key contributors to Kenya’s economy and 63% of the population are cooperative members or receive some benefits or services from cooperatives (Miroro et al., 2023). Over the years, savings and credit cooperative societies in Kenya have been expanding financially and some have even been given authority to operate banking services.

Performance in the SACCO sub-sector has not improved even with the increased regulatory reforms made in Kenya and according to SASRA’s annual report 2023, there have been a total of 13 deposit taking SACCOs whose operating licenses were revoked or not renewed between 2019 and 2023 mainly due to their extreme undercapitalization, incapacity to fulfill obligations to members and third parties, and unsustainably high external borrowing (Cheyo et al., 2023). Common issues affecting SACCOs include non-compliance, inadequate capital, poor asset quality, poor governance and poor liquidity (Opuko & Musiega, 2022).

Weritz et al., (2024) reviewed the impact of strategic capabilities on digital transformation success and firm performance with theory and empirical evidence. Idolor et al., (2023) examined strategic capabilities and their influence on performance of small and medium enterprises. Nwangi and Kariuki (2023) examined strategic capabilities and performance of selected media firms in Kenya. Consequently, some of the referenced studies were conducted in advanced economies, resulting in a contextual gap, while others were on subjects slightly different from the current study, resulting in conceptual and methodological gaps, hence this study reviewed the influence of knowledge management capability on performance of savings and credit cooperative societies.

Research Objective

The overall objective of this study was to examine the influence of knowledge management capability on performance of savings and credit cooperative societies in Mombasa County, Kenya.

Scope Of The Study

The study focused on three hundred and two (302) savings and credit cooperative societies registered with Mombasa County Cooperatives office, which are categorized as community based, occupational, microfinance and national, and the SACCOs formed the unit of analysis. The unit of observation was made up of strategy and business development managers.

LITERATURE REVIEW

Theoretical Review – Knowledge Based Theory

The knowledge-based theory of the firm considers knowledge as the foremost strategically significant resource of an organization. Grant (1996) indicated that knowledge-based resources are difficult to imitate and are socially complex.

The economic change of material-based production to information-based production creates a reassessment of human capital in firms and progressively there are knowledge workers at the core of organizational functions and these include concept and technology designers as well as finance and management experts (Mishra et al., 2022).

The approach can be through the knowledge management processes of creating, acquiring, storing, sharing and deploying knowledge (Vashishth et al., 2024). Since knowledge management involves the aforementioned valuable processes which are key to firm performance, knowledge based theory therefore explained the variable knowledge management capability in this study.

Conceptual Framework

The conceptual framework depicts the relationship between the independent variable knowledge management capability and the dependent variable being performance of savings and credit cooperative societies in Mombasa County, Kenya.

Figure 1: Conceptual Framework

Discussion of Study Variables – Knowledge Management Capability

Knowledge management involves the processes of developing, sharing, transmitting, storing, identifying, acquiring, and implementing knowledge within an organization (Gatiti, 2021). It is viewed as a strategic asset for organizations, where generated knowledge is managed through sharing, distribution, and eventual application within the organization.

The way knowledge is articulated and the routines implemented have an impact on a firm’s performance level, as emphasized by Otioma (2023), who stated that a company can achieve exceptional performance by effectively utilizing its knowledge, skills, and experience to create value. Outstanding performance of companies is linked to advantages based on capabilities, which arise from superior access to and integration of information (Samad, 2022).

Individually produced knowledge, particularly by employees, may be shared within the framework of the organization to become established as organizational artifacts, which can lead the organization to achieve high levels of performance (Awan, 2021). Knowledge management can serve as a system for producing intelligence, distributing intelligence, and responding to intelligence.

Performance of Savings and Credit Cooperative Societies

Performance refers to the actual outcomes of an organization as evaluated and contrasted with its desired outputs, goals, and objectives. Consequently, firm performance indicates how well an organization achieves its aims by the conclusion of a program or a series of projects as planned (Pham, 2020). It encompasses three specific areas of organizational results: financial performance, which is assessed through metrics like profitability, return on assets, and return on investment; product market performance, which includes sales and market share

The performance indicators encompass quantitative measures, often referred to as objective, alongside qualitative measures, known as subjective. Quantitative measures focus on final outcomes like sales revenue and return on investment, while qualitative measures highlight the methods used to achieve these outcomes, including product or service quality, customer satisfaction, employee satisfaction, and commitment (Muiruri, 2024).

Firm performance can be evaluated at various levels of hierarchy, including individual, group, and organizational levels. It has also been noted that the assessment of firm performance hinges on who inquires and the rationale behind needing performance metrics (Githuku et al., 2022).

Empirical Review

Shafique et al., (2022) examined demystifying the link between knowledge management capability and innovation ambidexterity: organizational structure as a moderator. A review of the literature revealed that the influence of knowledge management capability and ambidexterity on promoting entrepreneurial creativity and entrepreneurial intensity remained unclear. The overall impact and self-reinforcing dynamics of these elements on improving firm performance had yet to be identified

AlMulhim (2023) reviewed knowledge management capability and organizational performance focusing on a moderated mediation model of environmental dynamism and opportunity recognition. The outcomes confirmed that knowledge management capability was directly and indirectly through opportunity recognition related to organizational performance. Environmental dynamism moderated the linkage between knowledge management capability and opportunity recognition, as well as between opportunity recognition and organizational performance.

Mwambingu (2023) examined knowledge management capabilities and performance of insurance firms in Kenya. The regression analysis, incorporating knowledge acquisition, application, transfer, and protection as predictors, unveiled a highly explanatory model. Knowledge protection emerged as the most influential factor, followed by knowledge acquisition, application, and transfer. The model explains approximately 93.6% of the variance in organizational performance, underscoring the collective impact of these knowledge management dimensions, affirming the critical role of knowledge management in shaping the performance outcomes in insurance companies.

CRITIQUE OF LITERATURE REVIEW

A significant portion of the existing research on strategic capabilities and organizational performance suggests that most studies were conducted in developed nations, resulting in a lack of local studies addressing this topic, particularly regarding savings and credit cooperative societies in Mombasa County, Kenya. Furthermore, the literature reviewed indicates that while several studies on strategic capabilities were well acknowledged, their specific impact on the overall performance of SACCOs remains largely peripheral and not clearly articulated.

Numerous additional studies on strategic capabilities have been undertaken in diverse industries such as manufacturing, healthcare, supply chain, and education, but very few, have been done especially at the level of strategic capabilities and organizational performance in savings and credit cooperative societies. While the previous studies were based on strategic capabilities fundamentals, they may not be completely validated for use in the local savings and credit co-operative societies sub-sector.

In general, the reviewed literature from related studies provided a synopsis and general perspective on examining strategic capabilities and how they influence performance of savings and credit cooperative societies, resulting in a few and disparate research works that set the pace on collective strategic capabilities and their influence on performance of savings and credit cooperative societies in Mombasa County, Kenya..

Research Gaps

There is a wealth of literature on strategic capabilities and their impact on organizational performance and application in various industries; however, the same cannot be said to be completely applicable in the savings and credit cooperative societies sector. The literature on strategic capabilities, particularly as applied in various sectors, demonstrated that they were more effectively implemented in complex and uncertain environments, and organizations generally use the dynamic capabilities approach without focusing on specific capability approaches.

Literature review shows that most organizations that implement various capabilities have characteristics that range from complex to simple, depending on the expertise required to respond to organizational needs. However, few studies have been conducted on the specific classification of capabilities, thus explaining the importance of categorizing them appropriately through thematic relationships and approaches.

RESEARCH METHODOLOGY

Samanth (2024) defined a research design as a general strategy for carrying out a research study in order to survey specific testable research hypotheses of interest, emphasizing that it is a general plan that specifies the methods and procedures for collecting and analyzing necessary data. This study used cross-sectional survey research design because it is appropriate for determining the prevalence of a phenomenon, situation, problem, attitude, or issue by gathering perspectives from a cross-section of the population at the time of the study.

A target population is the entire group of people, elements, or events that the researcher is interested in and that share specific characteristics; this is the larger population from which a sample is drawn to make inferences about the larger population because it is often impractical to study the entire population (Leavy, 2022). The target population is defined using the research objectives as well as the specific parameters or attributes being studied, and in cost-effectiveness analysis, characteristics of the target population and any subgroups should be described clearly. According to statistics by the Mombasa County Cooperatives Office, there were three hundred and two (302) registered cooperative societies operating in Mombasa County, Kenya as at 31^st December 2024, and formed this study’s unit of analysis. The accessible population were strategy and business development managers in these  societies and formed the unit of observation.

A sample is a subset of the population which is a true representation of the entire population to be studied, and sampling is a systematic selection of a representative number of elements out of the specific target population (Casteel & Bridier, 2021). Sampling is justified by the need to evaluate the characteristics of a chosen sample in order to assess the attributes of the entire population. This study adopted Slovin formulae to compute the study sample;

where:

n = Sample size

N = Population

e = Tolerance at desired level of confidence (take 0.05 at 95% confidence level).

The substituted values in determining the sample size from the target population are;

n = 302 / 1 + 302 (0.05²)

n = 302 /1.76

n = 171

The study used questionnaires to obtain data for analysis to reject or fail to reject hypotheses and confirm the evidence obtained from the qualitative and quantitative data analysis. A questionnaire is a research instrument that is used to collect data from a large sample and its objective is to translate the research objectives into specific questions, and answers for each question provide the data for hypothesis testing.

The questionnaire was divided into two sections where Part A consisted of the identification section where the respondents provided information on their designation, length of time they have worked and the number of years of operation of the respective SACCOs. Part B was focused on the major areas of this study being the study objectives, and the questionnaires contained closed-ended questions that reduced the chances of information bias and facilitate easy data analysis.

In order to ensure that the study complies with all ethical issues associated with research engagements, an approval letter authorizing the study was sought and obtained from the management of Jomo Kenyatta University of Agriculture & Technology, who also issued a request letter to savings and credit cooperative societies which participated in the research process of filling out questionnaires.

The questionnaires were distributed to the respondents who were requested to fill the same within a reasonable period of time to facilitate easy progression of the research process. On administration of questionnaires, there was explanation and guidance to respondents where necessary to ensure that appropriateness was observed while  answering the study questions. Where necessary, the researcher followed up with respondents via telephone and ensured the correct filling of the questionnaires which were served to respondents through drop and pick method.

RESEARCH FINDINGS AND DISCUSSION

Response Rate

A total of one hundred and seventy one (171) questionnaires were distributed to respondents identified to participate in the research study, out of which one hundred and thirty one (131) questionnaires were filled out and collected, accounting for 76.6% of the distributed questionnaires. Gawali (2023) noted that a response rate of at least 70% is considered appropriate for conducting analyses, drawing conclusions, and making deductions.

General Information

Results showed that 37% of the respondents were Master’s degree holders, 32% were of holders of undergraduate degrees while 31% were diploma holders. In addition, statistics showed that 30.5% of the respondents were from microfinance based SACCOs, 28.2% came from occupational SACCOs, 26.7% were from national SACCOs while the remaining 14.5% were from community based SACCOs.

Performance of Savings and Credit Cooperative Societies

Respondents gave their opinions on the statements under performance of savings and credit cooperative societies and results are shown in Table 1;

Table 1: Performance of Savings and Credit Cooperative Societies

Derived statistics indicated that standard deviation values for all the items under performance of savings and credit cooperative societies were less than two (< 2) confirming that there was convergence in opinion of respondents and the item with most convergence was on most companies having strong controls to ensure integrity of assets (M = 4.00, SD = .775). The results concur with Wekesa (2023) who examined the effect of financial technology on financial performance of Deposit-taking Savings and Credit Cooperative Societies in Nairobi County, Kenya, and found that financial technology indeed played a significant role on financial performance of deposit taking savings and credit cooperative societies.

Knowledge Management Capability and Performance of SACCOs

Respondents provided their thoughts on the item knowledge management capability and its influence on performance of SACCOs, and the findings are shown in Table 2;

Table 2: Descriptive Statistics for Resource Tracking

Table 4.6 shows that the questionnaire items had appropriate mean scores oriented towards affirmative views on the statements and returned standard deviation values below two (<2) indicating that there was convergence in respondents’ opinions. The statement about most companies always having new information related to previous information for better interpretation returned the highest score (M = 3.95, SD = .743). The results correspond with those of AlMulhim (2023) who examined knowledge management capability and organizational performance, with a moderated mediation model of environmental dynamism and opportunity recognition.

Regression Analysis

Bivariate regression analysis was carried out to assess the relationship between the independent variable being knowledge management capability and the dependent variable being performance of savings and credit cooperative societies. The linear regression model that was applied in this study is shown;

Y = β₀ + β₁X₁ + ε

Where;

Y = Performance of SACCOs

β_{0 =} Constant term

β_{1 =} Beta Coefficient

X₁ = Knowledge management capability

ε = Error term

Table 3: Model Summary

From the results in Table 3, the correlation coefficient (r) = .827 indicating a strong positive relationship between knowledge management capability and performance of savings and credit cooperative societies, with r square = .683 indicating that 68.3% of the variation in performance of SACCOs in Mombasa County, Kenya was explained by the regression model.  Adjusted r square of .675 meant that 67.5% variation in performance of SACCOs could be explained by the model after accounting for the predictor variable and the remaining 32.5% could be attributed to other factors not considered in the current model. The standard error of .42463 indicated the deviation from the line of best fit.

Table 4: ANOVA Results

In establishing the influence of knowledge management capability (X₁) on performance of SACCOs (Y), the regression model was found to be significant (F (1, 129) = 277.033, p – value = 0.000) indicating that knowledge management capability was a valid predictor in the model.

Table 5: Regression Coefficients

The regression equation was represented as;

                        Y = 2.716 + .527X₁

Where;

Y – Performance of SACCOs

X₁ – Knowledge management capability

As shown in Table 5, the beta coefficient for knowledge management capability was significant (β₁ = .527, t = 3.685, p-value = 0.000), surmising that for every single unit increase in the index of knowledge management capability, there was an improvement index of .527 in performance of savings and credit cooperative societies.

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

The general objective of this study was to examine the influence of strategic capabilities on performance of savings and credit cooperative societies in Mombasa County, Kenya. The study’s specific objectives were to determine the influence of managerial capability, to analyze the influence of information technology capability, to evaluate the influence of information technology capability, and to assess the influence of customer relationship management capability on performance of savings and credit cooperative societies in Mombasa County, Kenya. Derived statistics showed that 30.5% of the respondents were from microfinance based SACCOs, 28.2% came from occupational SACCOs, 26.7% were from national SACCOs while the remaining 14.5% were from community based SACCOs. The derived statistics showed that forty nine respondents came from SACCOs that had existed for between 5 and 10 years, forty eight were from those that had been in operations for over 10 years, whereas thirty four came from those below 5 years.

The study concluded that knowledge management capability had a significant influence on performance of savings and credit cooperative societies in Mombasa County, Kenya. The study found that access to relevant information and insights through knowledge management facilitated better choices and improved decision-making.  Knowledge management helped organizations to understand their customers better, anticipate needs, and provide superior service, contributing to a competitive edge.

The study recommended that managers should prioritize strategic thinking, vision development, and the alignment of operational strategies with overall goals. Leaders should create an environment where teams work effectively together, sharing information and collaborating on projects. Leaders should exemplify the strategic thinking and decision-making skills they expect from their teams, demonstrating a clear understanding of the organization’s vision.

This study used cross-sectional survey approach, which collects case data at a single point in time, even when implementation of strategic capabilities was at various times. In such cases, drawing strong conclusions about the model’s causal directions may be inappropriate. As a result, it may be essential to interpret the relationship between the study variables more cautiously, resulting in a lack of universal model interpretation, particularly for multiple regression. As a result, future research would benefit from using a longitudinal research design, in which data is collected alternately throughout time to allow for a reconsideration of the direction of causality between study variables.

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