Corporate Governance Practices and Performance of Consumers’ Cooperative Societies in Addis Ababa City
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Date
2020-01
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Publisher
A.A.U
Abstract
Cooperatives are member owned and member financed organization. They have been a model for
collecting societies together across all sphere of life. As the members of the cooperatives whose
relationship with the cooperative managements are slight, the cooperatives are prone to governance
failure. Especially in the consumer cooperatives there is a separation between the members/owners of
cooperative and the cooperative management body. This separation of ownership and control creates the
governance problems. Since governance is the key for the success of any cooperatives, it needs high level
attention by the concerned bodies and societies. The main objective of the study is to describe the
governance practices and challenges of the consumer cooperative societies and examine whether the
governance have a significant effect on the performance of consumer cooperatives in Addis Ababa City.
There are 141 consumer cooperative Societies in the City and they have similar stages of development
and exhibit high level of homogeneity in aspects such as structure and leadership. For this the study used
census. The study seeks to analyze the effect of various corporate governance mechanisms particularly
board size, board educational qualification, board gender diversity and board meeting frequency and
used mixed research approach by adopting quantitative method. The Linear regression is also used to
quantify the strength of the relationship between the independent variables (Corporate governance
practices) and the dependent variable (performance). The finding indicated that the consumer
cooperatives are found to have operated in accordance with the country’s cooperative society’s
proclamation and regulation. The principles of corporate governance were adequately addressed in the
governance practice of consumer cooperatives. With respect to challenges of consumer cooperatives in
the implementation of corporate governance that the consumer cooperatives board of directors lacked
commitment and leadership; the cooperatives were suffered with the supplies of goods and services and
audit committees of the consumer cooperatives were incompetent to execute their duties. The finding also
indicated that the corporate governance variables of educational qualification and board size have high
impact on the performance of the consumer cooperatives whereas gender diversity and meeting frequency
have moderate effect on the performance of consumer cooperatives. Based on the result of the study it is
recommended that a separate cooperative governance code should be developed, board of
directors and members should be trained to improve the performance of the cooperatives and a
policy should be designed to strengthen the female participation in the board
Description
A research Project Submitted to the Department of Management in the Partial
Fulfillment of the Requirements for the Degree of Executive Master of Business
Administration
Keywords
Consumer cooperative, corporate governance Mechanisms, cooperative performance