EFFECT OF INTELLECTUAL CAPITAL EFFICIENCY ON FINANCIAL SUSTAINABILITY OF SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN NAIROBI COUNTY, KENYA
Harith Isack Sheikh - Master Student (Finance), Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Joshua Matanda Wepukhulu - Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
The increasing importance of intellectual capital as the main assets for organizations in the changing knowledge-based economy, where IC played an important role in the existence and continuity of those organizations, in addition to locating it between competitors. Many accounting problems related to identifying the methods of measuring the intellectual capital and presenting it at the financial statements arise. Measuring the intellectual capital is considered to be one of the main problems at the contemporary economy. The traditional accounting model focuses on the physical assets and ignores most of the intellectual capital assets. The objective of the study was to establish the effect of intellectual capital efficiency on financial sustainability of Savings and Credit Cooperative Societies in Nairobi County, Kenya. The specific objectives were to determine relational capital, financial innovativeness, structural capital, human capital and customer capital effect on financial sustainability of SACCOs Nairobi County. In this study, Explanatory cross-sectional design was used. The study’s target population was 433 management staff working in Sacco societies licensed by SASRA in Kenya. Stratified random sampling technique was employed in this study generating a sample of 204 respondents from the targeted managers in Saccos in Kenya. The study collected the primary data from the Saccos management employees in Kenya. Primary data was used in this study where it was collected by use of Questionnaires. Statistical Package for Social Sciences (SPSS Version 25.0) was used to analyze the collected data. For the received questionnaires, referencing was done and questionnaire items coded to enable the entry of the data. After cleaning of the data which includes sorting errors which occurred during entry of the data, descriptive statistics like frequencies, percentages, mean score as well as standard deviation was approximated for every quantitative variable and presentation done in tables. Conceptual content analysis was used to analyze the qualitative data from the open-ended questions and presented in paragraphs. The study found that customer satisfaction affects the financial sustainability of SACCOs in Nairobi County to a great extent. The study found that innovative employees are rewarded. The study also found that structural capital helps develop the organizational activity of the firm in effective and efficiently manner to facilitate small enterprise growth. The study also found that human capital is very crucial to Savings and Credit Cooperative Societies performance and the banks should increase investment in Human Capital. Further, the study found that there is longevity of relationships. The study concluded that relational capital strategy had the greatest effect on financial sustainability of SACCOs in Nairobi County, followed by structural capital strategy then customer capital, then financial innovativeness strategy while human capital strategy had the least effect on financial sustainability of SACCOs in Nairobi County. The study recommends that standards should be created for human resources identification and measurement to enhance valuation of human capital, ensure a higher degree of utility to stakeholders, uniformity in disclosures and will show a reliable comparison of human capital values. SACCOs should update their database promptly to enable utilization of structural capital to spur performance.
