RESEARCH METHODOLOGY

This section provides a brief description of the research methodology comprising: research paradigm, sampling design, the measuring instrument, data collection methods and data analysis. The purpose of this section is to only provide a brief highlight, since Chapter 6 will provide a detailed discussion of the research methodology followed in this study.

1.6.1 Research paradigm

According to Collis and Hussey (2003), there are two main types of research paradigms ranged on a continuum from a positivistic to a phenomenological approach. The positivistic approach attempts to explain social phenomena by establishing a relationship between variables which are information converted into numbers. This approach is referred to as "quantitative research". The phenomenological paradigm, on the other hand, assumes that social reality lies within the unit of research and that the act of investigating the reality has an effect on that reality. This paradigm pays considerable attention to the subjective or qualitative state of the individual, hence this approach is referred to as qualitative research.

The research objective of this study was to investigate factors that affect the level of strategy implementation in MFOs in Kenya. Hence, the aim was to quantify the significance of these factors on the level of strategy implementation, which required that a positivistic or quantitative approach be used. The section below provides details of the sampling design.

1.6.2 Population

There is no comprehensive database of MFOs in Kenya. In 2008 there were about 5122 savings and credit cooperatives (SACCOs), 35 Microfinance institutions (members of the Association of Microfinance Institutions [AMFI]), 150 NGOs and companies and

numerous informal lenders that provide financial services to SMEs in the country (Central Bank Kenya [CBK Report] 2008:6). Hence, there are an overall estimated 5307 MFOs in the country. Some of these MFOs are members of AMFI while others are not. However, the population for this study was drawn from the available database provided by the CBK in 2005, indicating there were an estimated 150 NGOs and 3000 SACCOs providing financial services to SMEs in the country. Hence, there were an estimated 3150 MFOs in the country in 2005. Only about 20% of these MFOs had been in operations for 10 years or longer. This study assumed that strategy development for MFOs that had been less than 10 years in operation was at a nascent stage or was just emerging, and therefore the managers might not provide substantial contributions to the factors that influence the level of strategy implementation in their MFOs. The total study population was 630 MFOs that had been in operation for more than 10 years.

1.6.3 Sampling design

A non-probability sampling procedure, namely purposive sampling, was used to select MFOs that were members of AMFI Thereafter, convenience sampling was used to select the other MFOs. In total, 135 MFOs were involved in this study. Where managers in an MFO were not responsive to the study, they were replaced by others. From each MFO, the CEO and one middle-level manager were selected as respondents to the measuring instrument, since senior managers should be at the helm of strategy development and its implementation. To ensure that the managers had a firm grip on strategy implementation issues of the MFOs, one was to have been with the MFO for at least two years. A sample of 135 MFOs was taken and in each MFO, two managers completed the questionnaire. Four hundred and fifty questionnaires were distributed and a total of 300 usable questionnaires were returned and used for analysis purposes.

1.6.4 The measuring instrument

The instrument in this study was self-administered questionnaires using the survey method. The questionnaire was constructed using a five-point Likert-type scale. The

following are the sections of the measuring instrument. Sections A to E measured responses based on an ordinal scale (1 = strongly disagree, 2 = Disagree, 3 = Neutral, 4 = Agree and 5 = strongly agree) and Section F used a nominal scale:

 Section A: Perceptions regarding influence of content factors on level of strategy

implementation;

 Section B: Perceptions regarding influence of context factors on level of strategy

implementation;

 Section C: Perceptions regarding influence of operational process factors on level

of strategy implementation;

 Section D: Perceptions regarding the extent or level of strategy implementation in

microfinance organisations in Kenya;

 Section E: Perceptions regarding outcomes/results of effective strategy

implementation;

 Section F: Biographical information (gender, position in organisation, number of

employees, years of MFO existence, type MFO registration, financial services provided, number of clients and level of strategy implementation).

1.6.5 Pilot study

The questionnaires were pre-tested in 22 MFOs where 40 respondents (CEOs and managers) completed the questionnaires. The purpose was to test the measuring instrument for validity and reliability.

1.6.6 Data collection

1.6.6.1 Secondary data

Secondary data consisted of an in-depth literature review on strategy implementation, analysis of the business environment in Kenya, and operations of MFOs. Sources for secondary data comprised textbooks, journal articles and the Internet.

1.6.6.2 Primary data

Primary data was collected from the CEOs and senior managers of the sampled MFOs by means of a survey using self-administered questionnaires. The survey targeted a CEO and one senior manager in each MFO. Introductory letters to the MFOs were solicited from AMFI, CBK and the Ministry of Cooperatives. These letters assisted in soliciting cooperation from the MFOs and addressing any fears and suspicions from the MFOs and the respondents regarding the study. Questionnaires were given to the respondents through email communication and hand delivery by research assistants. Completed questionnaires were either sent through email by the respondents or collected by the research assistants. The section below highlights the methods used to undertake data analysis.

1.6.7 Data analysis

The SPSS computer programme (SPSS 20.0 Brief Guide 2006) was used to analyse the data. The following are types of analysis used:

 Descriptive statistics to establish the mean, mode, median and standard

deviation;

 Frequency distributions of the biographical data of the respondents;

 A reliability analysis to assess the internal consistency of the research instrument

(Cronbach’s alpha values);

 Exploratory factor analysis to test construct validity;

 Regression and correlation analysis to investigate the relationship between

dependent and independent variables of the study and to test the hypotheses. The section below provides the outline of the main chapters of the study.

1.6.8 Validity and reliability of the measuring instrument

This section briefly highlights the validity and reliability of the measuring instrument.

1.6.8.1 Validity

Validity of the measuring instrument (questionnaire) will be ensured by conducting an exploratory factor analysis. Factors with a loading of less than 0.50 will be excluded from further analysis. Construct validity will be assessed by means of convergent and discriminant validity. To ensure face and content validity of the questionnaire, use was made of expert judgement, and a pilot study was conducted.

1.6.8.2 Reliability

The reliability of the measuring instrument will be assessed by means of Cronbach’s alpha values.