Abstract

This study explored the impact of membership diversity on the financial performance of agricultural cooperatives, as well as the moderating role of legislation in this relationship. Using a quantitative research design, the study analyzed data from 31 cooperatives in Kiambu and Kajiado counties, involving 57,640 members over a five-year period (2019–2023). Regression analysis revealed that membership diversity had a significant positive influence on financial performance. Specifically, 3.1% of the variation in financial performance was explained by diversity, with an R-value of 0.176 and an R Square of 0.031. The ANOVA results, with an F-value of 12.772 and a p-value of 0.000, confirmed the statistical significance of this relationship. The study further examined whether existing legislation moderated the relationship between diversity and financial performance. Although the moderation model showed a slight increase in explanatory power (R Square = 0.040, R-value = 0.201), the effect was relatively limited. ANOVA results still showed statistical significance (F-value = 16.889, p = 0.000), suggesting that legislation does influence the relationship to a small extent. Overall, the findings suggest that while legislation plays a modest role in enhancing the diversity-performance link, membership diversity alone is a strong and direct driver of financial success in agricultural cooperatives. This has important implications for cooperative leaders and policymakers, emphasizing the value of fostering diverse membership as a strategy for improving financial outcomes. The study contributes to a better understanding of how internal cooperative dynamics and external regulatory environments interact to affect organizational performance.

Keywords

Agriculture, Cooperative, Diversity, Membership, Performance