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Does the Internal Control Environment Drive the Performance of Cooperatives? A PLS-SEM Perspective

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  • Dr.Muganda Munir Manini

    (Department of Economics, Finance and Accounting, Kibabii University)

  • Dr.Umulkher Ali Abdillahi

    (Department of Economics, Masinde Muliro University of Science and Technology)

Abstract

This study examined the relationship between the internal control environment and financial performance of deposits taking savings and credit cooperative societies (DT-SACCOs) in Kenya. Using the Agency theory as a framework, the study focused on integrity and ethical values, commitment to competence, organization’s structure, management philosophy, and operating styles. The research utilized a quantitative approach and PLS-SEM as the main design, with data collected through a structured questionnaire from 110 DT-SACCO managers. The study revealed that the internal control environment positively impacts financial performance. Commitment to competence (β = 0.441, p 0.05). The study provides valuable insights for policymakers, regulators, and DT-SACCOs, emphasizing the importance of a strong internal control framework for effective risk mitigation and enhanced governance practices. By focusing on building a robust internal control environment, DT-SACCOs can optimize their financial performance. The study extends the literature on the link between internal control environment and performance in Kenya and provides a basis for future research.

Suggested Citation

  • Dr.Muganda Munir Manini & Dr.Umulkher Ali Abdillahi, 2023. "Does the Internal Control Environment Drive the Performance of Cooperatives? A PLS-SEM Perspective," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(7), pages 721-745, July.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:7:p:721-745
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