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PATRICK GACHUIRI GATHONDU DBA 2018.Pdf INFLUENCE OF TRANSFORMATIONAL LEADERSHIP OUTCOMES ON PERFORMANCE OF STAFF IN MICROFINANCE INSTITUTIONS IN KENYA BY PATRICK GACHUIRI GATHONDU UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA SPRING 2018 ii INFLUENCE OF TRANSFORMATIONAL LEADERSHIP OUTCOMES ON PERFORMANCE OF STAFF IN MICROFINANCE INSTITUTIONS IN KENYA BY PATRICK GACHUIRI GATHONDU UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA SPRING 2018 iii INFLUENCE OF TRANSFORMATIONAL LEADERSHIP OUTCOMES ON PERFORMANCE OF STAFF IN MICROFINANCE INSTITUTIONS IN KENYA BY PATRICK GACHUIRI GATHONDU A Dissertation Report Submitted to Chandaria School of Business in partial fulfillment of the Requirement for the Degree of Doctor of Business Administration (DBA) UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA SPRING 2018 iv STUDENT’S DECLARATION I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution or university other than the United States International University in Nairobi for academic credits. Signed________________________________ Date____________________ Patrick Gachuiri Gathondu (ID NO: 645081) This dissertation report has been presented for examination with our approval as appointed supervisors. Signed _____________________________Date________________________ Stephen M. Nyambegera, PhD Signed ____________________________Date________________________ Michael Kirubi, PhD Signed ___________________________Date________________________ Dean Chandaria School of Business Signed _____________________________Date________________________ Deputy Vice Chancellor, Academic Affairs v COPYRIGHT All rights reserved. No part of this work may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the express written authorization from the writer. Patrick Gathondu © 2018 vi ABSTRACT Microfinance is a key sector in economic growth. This is mainly because it targets the unbanked and marginalized people especially in the rural areas and thus has direct impact on poverty eradication. However, various challenges define microfinance today and present a leadership challenge that needs to be tackled for the sector to improve and deliver its mandate. The overall research aim was to examine influence transformational leadership outcomes have on staff performance in Kenya‘s microfinance institutions. The study specifically looked at effects of learning, commitment, trust and staff satisfaction that are considered major outcomes of transformational leadership outcomes. This research employed descriptive research design. The study targeted institutions that were engaged in retail microfinance and that are members of Kenyan Association of Microfinance Institutions (AMFI). Primary data was gathered from the respondents whereas secondary data was collected from AMFI on performance of institutions. Analysis of unit was staff in microfinance institutions that were categorized into three: the senior management, middle level managers and the other staff who participated in daily activities of microfinance who were involved in a self-administered questionnaire. Performance was assessed through the load that microfinance officers carry in terms of the outstanding loan balance, the number of customers that individuals in the organization have as well as the portfolio quality and turnover rates within the organizations. The target population was 250 senior managers, 700 middle level managers and 4,883 other microfinance staff. Stratified sampling technique was used to obtain sample and sample size was determined using the Cochran‘s formula to be 385 which was large enough to allow for generalization. A pilot study was carried out in Embu County to test data reliability of the data gathering tools. Data analysis was done using (first write SPSS in full) SPSS. A multiple linear regression model that reflects relationship amongst factors was generated to reflect the extent that variables influence performance. The findings revealed that commitment, trust, learning and staff satisfaction haves a positive and significant relationship with staff performance in microfinance institution. The results show that commitment, trust, learning and staff satisfaction explain 76% of the variance in the staff performance of micro-finance staff. The study rejected the null hypothesis and concluded that commitment, trust, learning and staff satisfaction influenced performance in micro-finance institutions in Kenya. From the vii study findings, the study concludes that staff commitment, trust, learning and staff satisfaction as an outcome of transformational leadership have a positive and significant relationship to staff performance in micro-finance institutions in Kenya. Further, the study concludes that new entrance moderates the relationship between transformational leadership outcome and staff performance in Microfinance Institutions. The study recommends that transformational leadership in micro-finance institutions should be associated with very high self-evaluation that is characterized by high self-realize, efficacy and high control locus and stability in emotions in order to foster commitment within the institution. viii ACKNOWLEDGMENT I acknowledge my supervisors Prof. Stephen Nyambegera and Associate Professor Michael Kirubi for the guidance and valuable input they gave during the process of coming up with this thesis. I am very thankful to Chandaria School of Business for the molding and my DBA colleagues for encouragement and support. I salute my family for the moral support and encouragement though the journey. May God bless you all. ix DEDICATION This work is dedicated to my dear family, wife Lilian and sons Lee and Bill for the moral support. x TABLE OF CONTENTS STUDENT’S DECLARATION ......................................................................................... v COPYRIGHT ..................................................................................................................... vi ABSTRACT ....................................................................................................................... vii ACKNOWLEDGEMENT .................................................................................................IX DEDICATION .................................................................................................................... X LIST OF TABLES .......................................................................................................... xvii LIST OF FIGURES .......................................................................................................... xx ABBREVIATIONS .......................................................................................................... xxi CHAPTER ONE: INTRODUCTION ............................................................................... 1 1.1 Background of the Problem …………………………………………………………….1 1.1.1 Microfinance Institutions in Kenya ......................... ………………………………4 1.2 Statement of the Problem…………………………………………………………... ..... 6 1.3 General Objective............................................................................................................ 9 1.4 Specific Objectives.......................................................................................................... 9 1.5 Research Hypotheses ...................................................................................................... 9 1.6 Justification of the Study ............................................................................................... 10 1.7 Scope of Limitations of the Study ................................................................................. 11 1.8 Definition of Terms ....................................................................................................... 12 1.9 Chapter Summary.......................................................................................................... 13 CHAPTER TWO: LITERATURE REVIEW ................................................................ 13 2.1 Introduction ................................................................................................................... 14 2.2 Theoretical and Conceptual Framework ....................................................................... 14 2.2.1 Transformational Leadership Theory .................................................................... 15 2.2.2 Social Learning Theory of Leadership .................................................................. 19 2.2.3 Goal Setting Theory .............................................................................................. 20 2.2.4 Resource Based View Theory ............................................................................... 21 2.2.5 Conceptual Framework ......................................................................................... 22 xi 2.2.6 Performance in Microfinance Institutions ............................................................. 25 2.2.7 Commitment and Performance .............................................................................. 26 2.2.8 Trust and Performance .......................................................................................... 30 2.2.9 Learning and Performance .................................................................................... 33 2.2.10 Staff Satisfaction and Performance ..................................................................... 37 2.3 Critical Review of Literature
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