THE ROLE OF LEADERSHIP ON AGRICULTURAL COOPERATIVES PERFORMANCE: A CASE STUDY OF SELECTED COFFEE FARMERS COOPERATIVES IN ETHIOPIA. BY ASHENAFI KEBEDE GUTEMA STUDENT NUMBER: 45434417 E-MAIL ADDRESS: [email protected] [email protected] SUBMITTED IN ACCORDANCE WITH THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF BUSINESS LEADERSHIP (DBL) AT THE UNISA GRADUATE SCHOOL OF BUSINESS LEADERSHIP UNIVERSITY OF SOUTH AFRICA SUPERVISOR: PROF. A.A. OKHAREDIA November 2014 Declaration This work has not been previously submitted for a degree or diploma in any university. By submitting this dissertation, I declare that the entirety of the work contained therein is my own, original work, and that all sources have been accurately reported and acknowledged. i APPROVAL This is to certify that this dissertation entitled: The Role of leadership on Agricultural Cooperatives Performances in West, East and South Ethiopia has been prepared under my supervision and is ready for submission. Supervisor: Professor A. A. Okharedia Signature: ………………………………………… Date : ………………………………………… ii ACKNOWLEDGEMENTS I would like to acknowledge the following persons for their various contribution for the successful completion of this dissertation. My sincere gratitude goes to my academic supervisor: Professor and Academic Director Akhabue A. Okharedia, Advocate of the High Court of South Africa, for his academic guidance, commitment and readiness to help, including the professional listening skills rendered to me during the academic years. Without his especial support, help and encouragement this study would never have come to completion. I am lucky for he was my supervisor. With the submission of this dissertation, I have the desire to express my sincere thanks and appreciation to the following people that supported and encouraged me during my research work: My wife, Yeshi Bekele and my children Azeb, Kidist and Yosef Ashenafi, for their love, support and encouragement; My brother, Ejigu Kebede, who always trusted me and for his endless love and support; and in memoriam of my mother, Birke Fanta and the late my father Kebede Gutema. I would also like to extend my appreciation to Mr. Asfaw Wassie and Mulugeta GebreMedhin (PhD students at UNISA-SBL) for their support during peer discussion; and Mr. GobenaErba, YonasGemede, Mohammed Hamid and AsmamawuLegesse who were my supporters during conducting the dissertation. iii I extend my sincere gratitude to Mr.Tadesse Meskala, Managing Director and Desalegn Jena, deputy managing director of Oromia Coffee Farmers cooperatives Union (OCFCU) for the support in communicating me with leaders of primary coffee farmers’ cooperatives in different zones of Oromia regional state where the majority of respondents and data were obtained. And AtoTsegayeAnebo, Manager of Sidama Coffee Farmers Cooperative Union (SCFCU), for his support and collaboration in getting baseline data and liaison with primary cooperatives leaders. I want to thank the following enumerators who participated in data collection; Dagnachew Feleke(Sidama coop), Mershaye Berhane (Borana coop), Kemal (Harar coop),Hussen Abamecha (Jimma coop),Engda Ashenafi(Arsi coop),Semeon Emiru (Yirgacheffe coop), Wogari Ledi (Wollega coop) and Shifa (Illuababora coop). Without these enumerators this study could not be fruitful. I also extend my sincere gratitude to Mr. AdmasuAbera, Vice Dean of Faculty of Business and Economics, Dilla University, for his contribution during data entry process in computer program SPSS version 20 and Dessalegn Urgessa for his contribution during questionnaire construction. My deep gratitude and appreciation go to Mr. Tariku Berasso, former President of Dilla University; Dr. Tadesse Beriso, President, Dr. Balako Gumi, Academic and Research V/President, and Sultan Hussen, Director of Finance Management of Bule Hora University; Dr. Fikre Desalegn, Academic and Research V/President of Hawassa University for their support and constant encouragement during the time of writing this dissertation. AshenafiKebedeGutema iv ABSTRACT The relationship between the role of leadership and agricultural cooperatives performance were examined in East, West and South Ethiopia. The hypotheses were tested in a survey of N=162 leaders, managers and directors of primary coffee farmers cooperatives. The results of the test confirmed the overall positive relationship between the role of leadership and agricultural cooperatives performances. This study highlights and gives general view into how the role of leadership can significantly contribute to cooperatives business performances. The results and findings of the analysis indicated that leaders who are most effective at business performances are those who utilize leadership behavior and the skills and trainings required in the cooperatives business organizations. The study encourages further and comprehensive research into the interconnection between the role of leadership, education and skills of leaders, financial management knowledge and decision making competency. The study followed cross-sectional survey design, and employed evaluative quantitative analysis method. The analysis was based on primary data generated through a structured questionnaire distributed to the respondents. Responses to research statements were scaled and converted to analyze the quantitative data of dependent and independent variables based on the role of leadership and associated performance variables. The findings from correlation and multiple regressions in testing the hypotheses showed that there are significant and positive relationship between each of the five independent variables and a dependent variable of business performances. V The study concluded that leadership role was very important in cooperatives business performance and, therefore, recommended that leaders of coffee farmers’ cooperatives organizations that wanted to improve the efficiency and effectiveness of their businesses performances need to implement the suggestions stated in the recommendation part of this study about the leadership roles. Key Words: Leadership, Performance, Basic cooperatives principles, Leaders Responsibility, Financial Knowledge, Skills and training, Behavior of leadership, Multiple Regression, Descriptive Statistics, Conceptual Model. vi TABLE OF CONTENTS PAGES DECLARATION i APPROVAL ii ACKNOWLEDGEMENT iii ABSTRACT v TABLE OF CONTENTS vii LIST OF TABLES xi LIST OF FIGURES xiv LIST OF ABBREVIATIONS xv CHAPTER 1 INTRODUCTION 18 1.0 INTRODUCTION 18 1.1 BACKGROUND FOR THE STUDY 18 1.1.1 Coffee Cooperatives Societies of Ethiopia 28 1.2 STATEMENT OF THE PROBLEM 40 1.3 BASIC RESEARCH QUESTIONS 42 1.4 OBJECTIVE OF THE STUDY 43 1.4.1 Major Objectives of the Study 43 1.4.2 Specific Objectives of the Study 43 1.5 RESEARCH HYPOTHESES 44 1.6 IMPORTANCE OF THE STUDY 44 1.7 RATIONALE OF THE STUDY 46 1.8 DELIMITATION OF THE STUDY 46 1.9 ORGANIZATION OF THE STUDY 46 vii CHAPTER 2 LITERATURE REVIEW 48 2.1 THEORETICAL FRAMEWORK 48 2.1.1 Leadership Theories 48 2.1.2 Significance of Leadership 49 2.1.3 Trait leadership Theories 51 2.1.4 Behavioral Leadership Theories 52 2.1.5 Contingency or Situational Leadership Theories 53 2.1.6 Transformational Leadership Theories 57 2.2 REVIEW OF EMPIRICAL STUDIES 60 2.3 THE CONCEPT OF LEADERSHIP 67 CHAPTER 3 RESEARCH METHODOLOGY71 3.0 INTRODUCTION 71 3.1 RESEARCH DESIGN 71 3.2 Population and Sampling Method 72 3.3 Samples of the Study 73 3.4 Sample Selection 75 3.5 Data Collection Methods 75 3.6 Nature of Data 79 3.7 Operationalization 80 3.8 Measures of Basic Cooperative Principles Variables 81 3.9 measures of Primary Responsibilities Variables 82 3.10 Measures of Financial Knowledge in Decision Making Variables 82 viii 3.11 Measures of Leadership Behavior Variables 84 3.12 Measure of Leadership Skills and Training 86 3.13 Measure of Cooperative Business Performances 88 3.14 Data Analysis and Test of Hypothesis 89 3.15 Methodological Norms 91 3.15.1 Validity and Reliability of Data Collection Instruments 91 3.15.1.1 Reliability 91 3.15.1..2 Validity 93 3.15.2 Ethical Considerations 94 CHAPTER 4 PRESENTATION AND ANALYSIS OF DATA 95 4.1 INTRODUCTION 95 4.2 DESCRIPTIVE STATISTICAL ANALYSIS OF DATA 96 4.2.1 Data Screening 98 4.2.2 Missing Data 98 4.2.3 Normality, Linearity, Residuals and Outliers 99 4.2.4 Outliers Screening 100 4.2.5 Standard Deviations and Standard Errors 101 4.2.6 Results and Findings from Descriptive Statistical Analysis 103 4.2.7 Summary of Findings from Descriptive Statistics 106 4.3 EXPLORING RELATIONSHIP BETWEEN VARIABLES 118 4.3.1 Correlation Analysis 119 4.3.2 Testing Hypotheses 121 4.3.3 Multiple Regressions 123 ix 4.3.4 Multiple Regression Analysis 123 4.3.4.1. Normality 126 4.3.4.2 Linearity 127 4.3.4.3 Residuals 127 4.3.4.4. Multicollinearity 128 4.3.4.5. Evaluating the Model 129 4.3.4.6. Evaluating each of the Independent Variable 130 4.3.4.7 Summary of Multiple Regression Analysis 132 CHAPTER 5 DISCUSSION, FINDINGS AND RECOMMENDATIONS 142 5.0 INTRODUCTION 142 5.1 RESEARCH QUESTIONS AND HYPOTHESES 142 5.1.1 Basic Research Questions 142 5.1.2 Hypotheses 143 5.2 RESULTS AND FINDINGS FROM DESCRIPTIVE ANALYSIS 144 5.2.1 Research Question 1 144 5.2.2 Research Question 2 146 5.2.3 Research Question 3 147 5.2.4 Research Question 4 147 5.2.5 Research Question 5 148 5.3 Dependent Variable (BP) 148 5.4 REGRESSION ANALYSIS 149 5.5 FINDINGS FROM TEST OF HYPOTHESES 150 5.6 SUMMARY 151 x 5.7 RECOMMENDATIONS 153 5.8 CONTRIBUTION TO EXISTING BODY OF KNOWLEDGE 154 5.9 SUGGESTION FOR FUTYRE RESEARCH 155 5.10 CONCLUSIONS