Strategic Leadership and Financial Sustainability of Non-Governmental Organizations in Kenya

Abstract

The purpose of this research was to determine the influence of strategic leadership on financial sustainability of NGOs in Kenya. This study was based on the following research questions: How does strategic direction influence financial sustainability of NGOs in Kenya? How does the firm's resource portfolio influence financial sustainability of NGOs in Kenya? How does effective organizational culture influence financial sustainability of NGOs in Kenya? How do ethical practices influence financial sustainability of NGOs in Kenya? How do balanced organizational controls influence financial sustainability of NGOs in Kenya? How does regulatory framework moderate the relationship between strategic leadership and financial sustainability of NGOs in Kenya? The study was pounded on strategic leadership theory and adopted post-positivism as the research philosophy. Based on quantitative research, the study utilized descriptive correlational research design. The study targeted active local NGOs based on the records of NGOs coordination Board in 2019. The study population consisted of 6.028 members of strategic leadership teams (SLTs). A sample of 413 was drawn from the total population using stratified random sampling technique. Data was collected through self-administered questionnaire. Descriptive statistics focused on relative frequency distribution, means and standard deviation. Inferential statistics included Spearman’s coefficient for correlation analysis, Chi-square test, one-way ANOVA and ordinal logistic regression. Regarding the first research question, ordinal logistic regression (Nagelkerke Pseudo R2) results indicated that 8.7% of the variance in financial sustainability was explained by strategic direction, R2= .087. The ordinal logistic regression parameter estimates showed that strategic direction significantly predicted financial sustainability β1= -2.086, p≤05. Hence, the null hypothesis was rejected implying that strategic direction has significant influence on financial sustainability. For the second research question, ordinal logistic regression (Nagelkerke Pseudo It2) results revealed that firm's resource portfolio explained 13.9% of the variance in financial sustainability, R2= .139, while the parameter estimates results showed that firm's resource portfolio significantly predicted financial sustainability, β2 = -2.725, p≤05. Therefore, the null hypothesis was rejected implying that the firm's resource portfolio has significant influence on financial sustainability. With reference to the third research question, ordinal logistic regression (Nagelkerke Pseudo R2) results revealed that effective organizational culture explained 17% of the variance in financial sustainability, R2= .17. However, proportional odds assumption for ordinal logistic regression was violated [LRx²(2)= 7.221,p < .05], and Pearson Chi-square statistic be (x²(2) = 6.853,p < .05] indicated a poor model fit thus failing to reject the null hypothesis that effective organizational culture does not have significant influence on financial sustainability. For the fourth research question, ordinal logistic regression (Nagelkerke Pseudo R²) results showed that ethical practices explained 15.4% of the variance in financial sustainability, R² = .154. The ordinal logistic regression parameter estimates results revealed that ethical practices significantly predicted financial sustainability, β4= -1979, p < .05. Hence, the null hypothesis was rejected suggesting that ethical practices have significant influence on financial sustainability. The ordinal logistic regression (Nagelketke Pseudo R²) results for the fifth research question showed that balanced organizational controls explained 11.5% of the variance in financial sustainability, R²= .115. However, proportional odds assumption was violated, LRx² (2) = 8.474, p < .05, and corresponding Pearson CM-square statistic {r² (2) = 8.061, p < .05] indicated a poor model fit; thus failing to reject the null hypothesis that balanced organizational controls do not have significant influence on financial sustainability. With respect to the sixth research question, ordinal logistic regression (Nagelkerke Pseudo R²) results revealed that the moderating effect of regulatory framework explained 39.9% of the variance in financial sustainability, R² = .399. However, the proportional odds assumption was violated [LR x² (2) = 8.474, p≤ .05]; and the model showed poor fit with the moderating variable, [X²(48) = 587.632, p≤.05]. Therefore, the null hypothesis was rejected implying that regulatory framework does not have a significant moderating effect on the relationship between strategic leadership and financial sustainability of NGOs. The study concluded that strategic direction, film's resolute portfolio and ethical practices significantly influence financial sustainability of NGOs in Kenya. The study recommends that strategic leadership actions together with supportive donor policies and regulatory framework should be developed to enhance financial sustainability. Since the independent variable was ordinal in nature and proportional odds assumption was violated repeatedly, further research should be conducted to explore the effect of continuous independent variables, on financial sustainability of the NGOs that have existed beyond 10 years.