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EFFECTS OFPARTNERSHIPS ON THE PERFORMANCEOF LOCALNONGOVERNMENTAL ORGANIZATIONS IN PELUM KENYA NETWORK

BY
PAULINE G. KIMANI

MASTER OF BUSINESS ADMINISTRATION (CORPORATE MANAGEMENT)

KCA UNIVERSITY
2013

EFFECTS OF PARTNERSHIPS ON THE PERFORMANCEOF LOCALNONGOVERNMENTAL ORGANIZATIONS IN PELUM KENYA NETWORK


BY
PAULINE G. KIMANI

A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT


OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS
ADMINISTRATION IN THE SCHOOL OF BUSINESS AND PUBLIC MANAGEMENT
AT KCA UNIVERSITY

NOVEMBER 2013

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DECLARATION
I declare that this dissertation is my original work and has not been previously published or
submitted elsewhere for award of a degree. I also declare that this contains no material written or
published by other people except where due reference is made and author duly acknowledged.
Student Name: PAULINE KIMANI

Reg,No. KCA07/03717

Sign: ___________________________________ Date: __________________

I do hereby confirm that I have examined the masters dissertation ofPauline Kimani,
and have certified that all revisions that the dissertation paneland examiners recommended have
been adequately addressed.
Sign: ___________________________________ Date: __________________

DR JAGONGO
Dissertation Supervisor

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EFFECTS OF PARTNERSHIPS ON THE PERFORMANCE OF LOCAL NONGOVERNMENTAL ORGANIZATIONS IN PELUM KENYA NETWORK
ABSTRACT
In the wake paradigm shift in donor interests, Non-Governmental Organizations (NGOs) have
increasingly embraced partnership as a key strategy in development work. Performance effect
attributable to partnership is sketchy given the numerous unique forms of partnerships.
Consequent to the gap left by research concerning how partnering affects performance among
non-government organizations in Kenya this study has the objective of establish the effect of
partnering on the performance of local NGOs in Kenya. The specific objectives were: (a) to
establish the effect of exchange of funds on performance in local NGOs in PELUM Kenya
network ;(b) to establish the effect of exchange of competencies on the performance in local
NGOs in and (c) to determine the effect of long term interaction on the performance of local
NGOs in PELUM Kenya network. This study was an exploratory and descriptive survey on all
the 40 NGOs registered and operating within the PELUM Network in Kenya. This study was
census of all the 40 NGOs in the network. Data was collected by use of a self-administered
questionnaire and interviews with the managers of the NGOs or officers involved in their daily
activities. The analysis of the data was done using mean and standard deviation. The relationship
between the dependent and the independent variables was assessed using linear regression. The
findings indicate that Performance was most strongly affected by the relevance of resources
received from donors to objectives, the increasing value of resources shared, partner NGOs
providing assistance in management, leadership, advocacy and campaigning; implementation of
activities defined in work plans; trust between partners, and appreciation of diversity that brings
forth comparative advantages and response of partnerships to NGOs strategic objectives. Best
performance was realized in few errors reported by outside auditors; high percent of output
delivered on schedule and the reviews done before approval. It is recommended that NGOs
should set out clear policies concerning why and how they wish to partner with other NGOs, be
they local or international.

Key words: Partnerships, performance, NGOs.

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ACKNOWLEDGEMENT
I am heavily indebted to various people and organizations that have supported this research in
different ways.
The staff of the KCA University Library provided the opportunity to use their facilities. From
these able staff I was able to access not only research reports from earlier MBA research findings
but I was able to access scholarly publication from the wider academic sphere.
My supervisor, Dr. Jagongo, provided much of the direction on what to do at each stage of this
research from the generation of the research idea, to its conceptualization, to the drafting of the
research proposal.
In my literature review I have cited quite a lot of scholarly publication. Some are from earlier
research finding from project done by other MBA students. I have used scholarly papers from the
wider academia.
I would wish, also to thank my brother Finlay Kimani-a student in the same class with whom we
encouraged each other throughout the period.

TABLE OF CONTENTS
DECLARATION.......................................................................................................................... iii
ABSTRACT .................................................................................................................................. iv
ACKNOWLEDGEMENT ............................................................................................................ v
LIST OF TABLES AND TABLES............................................................................................. ix
ACRONYMS AND ABBREVIATIONS ..................................................................................... x
OPERATIONAL DEFINITION OF TERMS ........................................................................... xi
CHAPTER ONE ........................................................................................................................... 1
INTRODUCTION......................................................................................................................... 1
1.0 Introduction ......................................................................................................................... 1
1.2 Background of the Study .................................................................................................... 1
1.3 Statement of the Research Problem .................................................................................. 9
1.4 Objectives of the Study ..................................................................................................... 10
1.5 Research Hypotheses......................................................................................................... 10
1.6 Significance of the Study .................................................................................................. 11
1.7 Scope of the Study ............................................................................................................. 12
1.8 Justification of the Study .................................................................................................. 12
1.9 Limitations of the Study ................................................................................................... 13
CHAPTER TWO ........................................................................................................................ 14
LITERATURE REVIEW .......................................................................................................... 14
2.1 Introduction ....................................................................................................................... 14
2.3 Theoretical Literature....................................................................................................... 15
2.4 Empirical Literature ......................................................................................................... 20
2.5Summary of Literature Reviewed .................................................................................... 24
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2.6 Conceptual Framework .................................................................................................... 25


CHAPTER THREE .................................................................................................................... 26
RESEARCH METHODOLOGY .............................................................................................. 27
3.1 Introduction ....................................................................................................................... 27
3.2 Research Design................................................................................................................. 27
3.3 Target Population.............................................................................................................. 27
3.5 Data Collection Tool ......................................................................................................... 28
3.6 Pretesting the Research Questionnaire ........................................................................... 28
3.7 Testing for Validity and Reliability ................................................................................. 28
3.8 Data Processing and Analysis........................................................................................... 29
3.9 Ethical Considerations ...................................................................................................... 30
CHAPTER FOUR ....................................................................................................................... 33
FINDINGS AND DISCUSSION ................................................................................................ 33
4.1 Introduction ....................................................................................................................... 33
4.2 Response Rate .................................................................................................................... 33
4.3 Data Reliability ................................................................................................................ 33
4.4 Exchange of Funds ............................................................................................................ 34
4.5 Exchange of Competencies ............................................................................................... 36
4.6 Long Term Interaction ..................................................................................................... 37
4.7 Performance ....................................................................................................................... 38
4.8 Regression Analysis ........................................................................................................... 39
4.9 Interpretation of Findings ................................................................................................ 44
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............................................ 46
5.1 Summary ............................................................................................................................ 46
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5.2 Conclusions ........................................................................................................................ 48


5.3 Recommendations ............................................................................................................. 49
5.4 Suggestions for Further Research ................................................................................... 50
APPENDICES ..................................................................................Error! Bookmark not defined.
Appendix I: Introduction Letter ............................................................................................ 57
Appendix II: Questionnaire ................................................................................................... 58
Appendix III: PELUM Kenya Local Members .................................................................... 63

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LIST OF TABLES AND TABLES


Fig. 2.1 Conceptual Framework.................................................................................................... 26
Table 4.1: Exchange of Funds ...................................................................................................... 35
Table 4.2: Exchange of Competencies.......................................................................................... 36
Table 4.3: Long Term Interaction ................................................................................................. 37
Table 4.4: Performance ................................................................................................................ .39
Table 4.5 Regression Analysis ..................................................................................................... .44

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ACRONYMS AND ABBREVIATIONS


HIV

Human Immunodeficiency Virus

HR

Human Resource

INTRAC International NGO Training and Research Centre


M&A

Mergers and Acquisitions

NGOs

Non-Governmental Organizations

NNGO

Nepali Non-Governmental Organization

PELUM

Participatory Ecological Land Use Management

RBS

Royal Bank of Scotland

UN

United Nations

USAID

United States Agency for International Development

OPERATIONAL DEFINITION OF TERMS


Partnership: this is a term that refers to activity that involves collaboration between
organizations (Abdel et al, 2011).
Performance: performance as the attainment of set goals using resources efficiently and
effectively (Schroeder, 2012).
NGOs: Nongovernmental Organizations are societal actors originate from the private sector with
their members being individuals, or local, regional, or national branches of an association. This
does not include the government (Rosenau, 2008).
Southern NGOs: these refer to NGOs in the developing countries (Brehm, 2004).
Northern NGOs: These are NGOs in the developed countries. The north is usually used to refer
to the developed countries in the Northern hemisphere and Australia (Brehm, 2004).
PELUM Network: PELUM stands for Participatory Ecological Land Use Management. It was
started in 1995 as a network of civil society organizations which work with grass-root
communities in East and Southern Africa (PELUM, 2013).

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CHAPTER ONE
INTRODUCTION
1.0 Introduction
This section sets the background of this research project. The section presents the definition of
NGOs, partnering among NGOs, performance and how partnering and performance are related.
The section also defines the problem to be investigated by this paper by setting clear objectives
to be met and the hypotheses guiding those objectives.
1.2 Background of the Study
In response to paradigm shifts in international development process, partnership has become a
priority strategy to Non-Governmental Organizations (NGOs). While the NGOs insist that
partnership goes beyond financial relationship, a lot of debate has been activated from within and
without the critiquing the aptitude of partnership as a driver to development. Partnership among
NGOs has been deeply critiqued as hypothetical comparing the ideals of partnerships with
inability to live up to those ideals. Thus the debate on partnerships among NGOs has tended to
become polarized between fashion and pragmatism (Brehm, 2001).
Intense discussions have heightened in comparing what NGOs purport to achieve through
partnerships against what they actually achieve on the ground. NGOs have scored high marks in
failing to achieve their aspirations. According to Mawdsley et al (2002) NGO partnerships are
expected to yield increased autonomy, empowerment and sustainability resulting to local civil
society strengthening .In this context, autonomy is meant to give an organization freedom to

dricomes locked into vertical relations, often with a donor, in such a way that its freedom to
determine its own strategic limited.
According toFowler (2008), enhancement of international development has been the ambition
that motivates NGOs partnerships. Later, Fowler (2000) posited that every NGO perceived
partnership with other NGOs in all development works as an important strategic response the
within the context of international development. Local ownership gained recognition as a
significant indicator to commitment to development.
According to Martens (2011) the term nongovernmental organization (NGO) was coined by
the United Nations (UN) and adopted in 1945. At this time, the term NGOs was used when
referring to organizations which were international bodies engaged within UN. Since then, the
term NGO has undergone metamorphosis and become popular term to other actors outside the
UN framework, both at the international and national levels.
Archer (2003) hypothesized that the term NGO is a discomfited title coined by the United
Nations to describe a vast range of international and national citizens organizations, trade
unions, voluntary associations, research institutes, public policy centers, private government
agencies, business and trade associations, foundations, and charitable endeavors. Bastid (2000)
gives the tern a legal definition within the international law context as groups of persons or
associations, voluntarily created on private initiative, which perform, without seeking profits, an
international activity of general interest, and do not come exclusively under national order.

A broad definition of NGOs can be stretched to include all relevant ideal-typical features. These
features are that NGOs are formal independent societal associations with a primary aim of
promoting common objectives at both national and the international levels. NGOs are societal
actors because they originate from the private sphere and their members are individuals, or local,
regional, or national branches of an association and usually do not include the government.
Promotion of public goods brings NGOs to one table to achieve common goals (Gordenker and
Weiss, 2008).
Presence of professionals and skilled staff who are salaried gives NGOs a formalized feature.
Furthermore, having clear organizational structures which allows NGOs to provide for
continuous work brings about a sense of formalization. This includes a headquarters, permanent
staff, and a constitution. Independence feature is seen as a result of being primarily sponsored by
membership fees and private donations. Though the receive funding from official institutions, the
extent is too limited to warrant any substantial control by the government (Rosenau, 1998). The
concept of partnership among NGOs can be likened to partnership among businesses. In
business, a partnership refers to a formal relationship between two or more businesses based on
shared goals or obligations or risks or altogether. From a development perspective, partnerships
definition can be based on two themes. The first theme concerns the exchange of funds and
competencies between organizations. Under this theme, partnerships are strategic alliances for
sharing of resources and responsibility for a common objective (Hudock, 2009).
Trust is the second theme that defines partnership among NGOs. In this context, partnership is
defined as a commitment to long-term interaction, sharing of responsibility for achievement,

reciprocation of obligation with focus on equality, mutuality and balance of power (Fowler,
2008.)
The study focuses on partnering from the perspective of resources exchange especially
concerning funding. According to Brehm (2010) a funding relationship arises when an NGO
with less financial endowment depends on another NGO with a higher financial endowment for
financial purposes. This funding may be coupled with capacity support and delegation of
responsibility having faith that objectives will be excellently met.
This study will focus on NGOs within the PELUM Network PELUM stands for Participatory
Ecological Land Use Management. PELUM was started in 1995 as a network of civil society
organizations which work with grass-root communities in East and Southern Africa. The aims of
PELUM were the promotion of participatory ecological land use management; building
members capacity to respond towards community empowerment; promotion of the use of
indigenous knowledge and innovations; strengthening linkages and collaboration among
partners; lobbying and advocating for change of policies targeting small scale farmers and
increasing visibility of small-scale farmers.
PELUM Kenya is umbrella body whose membership is drawn from both international NGOs and
local NGOs. Member NGOs use the linkage to partner with each other within the network and
with other non-member NGOs.Every local member NGO in the network works in partnership
with at least one other NGO either within or outside the network. The model of inter -NGOs
relationship provides the motivation of selecting PELUM for this study. Besides, local member-

NGOs are spread across various provinces in the country which makes the network a good
representative of Kenya.
1.2.1 Performance among NGOs
(Barney, 1997), recognizes controversy on different opinions of performance among
organizational researchers. Moullin (2008) equates performance to the economic efficiency and
effectiveness of an activity. Similarly, Daft (2007) recognizes efficiency and effectiveness as a
performance indicator as an organization strives to achieve its goals. None the less, he puts more
emphasis on the result achievement of set goals. Richardo (2009) simplifies performance as the
what -ability of an organization to achieve its goals and objectives and tends to ignore the howefficiency and effectiveness of the process.
Ricardo (2009) further identifies various concepts as key performance measures. These measures
include result-oriented behavior and relative measures, education and training, concepts and
instruments, management development and leadership training. He points out these concepts as
the necessary skills and attitudes of performance management. To this end, performance assumes
both a qualitative and a quantitative shape.
In this study performance will take the direction of cost efficiency. Rumble (1997) defines
efficiency as the ratio of output to input. In light of the same, a system is said to cost efficient if,
relative to another system, its output costs less per unit of input. A system increases cost
efficiency if the rate of change in input is less than proportionate for the same or higher levels of
output. Rumble (1997) divides efficiency into two: allocative efficiency and x-efficiency.
Allocative efficiency is achieved when resources are allocated in a manner that maximizes social
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welfare. X-efficiency is achieved when there is realization of more output without change in the
allocation of inputs.
1.2.2 Partnerships and Performance in NGOs
The effect of a partnership on the performance of each of the partnering organization is unique to
the nature of the partnership. Partnerships are seen to enable more efficient use of resources,
increased sustainability and improved beneficiary participation in development activities.
Furthermore, it is thought that the creation of synergy through partnership produces results that
partners could not obtain without collaboration (Brown, 2006).
According to INTRAC (2001) there are three types of partnering among NGOs. Funding-based
partnering are a partnerships in which at one end of the continuum there is funding only with no
dialogue while on the other extreme of the spectrum there is apartnership based on policy alone
dialogue with no funding. Capacity-based partnering is defined by a partner with limited capacity
requiring support from another partner with a strong, autonomy that shares the experience. In a
trust-based partnership, one NGO has control over another based on unconditional trust by the
other.
(Billis, 2003) acknowledges that the benefits of inter-organizational and cross-sectoral
partnerships were first put forth within the United States of America and Europe. Billis (2003)
identifies elements that should be present for a successful partnership. These elements include
mutual trust, complementary strengths, reciprocal accountability, joint decision making and
information sharing (Postma, 2004). USAID in their strategic guide to development partnership
(2007) shared similar views but added that the other elements include: clearly articulated goals;
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equitable distribution of costs and benefits; performance indicators with the mechanisms to
measure and; clear delineation of responsibilities and a process for handling disputes. Campbell
(2008) posited that partnership should also include transparency in financial matters, long-term
commitment to working together, and recognition of other partnerships. Tandon (2010) further
contributed that partnership should include shared perception in a context of the mutuality of
give-and-take.
Similarly, McQuaid(2010) argues that organizations should shift from individual implementation
of activities given the resource sharing opportunity, effectiveness and efficiency and legitimacy
advantages that accrues as a result of partnership.
However, there is frequently a variance between the theory and reality of NGO partnership
particularly when it comes to the control of money (Sizoo, 2006). Elliott (2007) suggested that
the control of money derails true partnership. Earlier on, Lewis (1998) had similar views when
he suggested that NGOs competing for scarce resources can resort to using the partnership to
promote their own institutional survival instead of advancing the set common objectives.
Likewise, McQuaid(2010) acknowledges that partnership face major drawbacks that deter
performance. These include, lack of clear goals, unequal powers, time consumed in decision
making, accountability problems, program coordination challenges as well as differences in
philosophies among partners.
There are numerous performance issues that arise in partnerships. Brown, (2006) posits that
strong personal relationships among partners lead to improved performance. Brown and Covey
(2009) argued that organizations focusing on social change are often loosely organized and
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depend on personal relationships. These relationships, although ensuring flexibility, make NGOs
vulnerable to changes or become challenges to the leadership. Consequently, partnership among
NGOs can bring about improved performance or bring about lower performance depending on
the level of synergy achieved or lost.
Shivji, (2007) identifies five operation and performance determining characteristics of NGOs in
Kenya. These key features include: their historical emergence and expansion; their ownership
structures; donor funding; their multiple orientation and their vague mission statements. Under
the historical emergence the earlier NGOs in Kenya emerged without critical evaluation of their
role, ideologies and premises. They mainly arose due to antigovernment pressure from the
international donor community.
Among Kenyan NGOs, the second feature is the thin line between their ownership and
leadership. Despite the NGOs being located in urban areas, formed and led by educated socially
well off individuals (Liston 2008), they do not practice democratic governance. They instead
have undemocratic power struggles for leadership, particularly during succession resulting to
operational inefficiency. NGO leadership, therefore, influences adoption efficient management
systems (Bujra and Adejumobi, 2002).
Thirdly,Bujra and Adejumobi (2002) further argue that majority of NGOs in Kenya lack
independent sources of funds and heavily rely on external donor funding This dependence
weakens their sustainability while simultaneously strengthening the impact of donors on the
NGOs agenda and leadership. The fourth characteristic is that most NGOs in Kenya operate in

multiple sectors that focus on particular areas like human rights, gender, children, development,
environment and governance, youth, road safety, Health and HIV (Shivji, 2007).
Finally, most NGOs have amorphous mission statements. The NGOs websites, registration
documentations and service charters reveal vaguely constructed and amorphous vision and
mission statements and priorities that do not even reflect the needs of their constituencies (Bujra
and Adejumobi, 2002).
1.3 Statement of the Research Problem
Various studies (McName 1992, Duta Duta and Das, 2011) have shown positive results effect of
partnership on performance. They have found that when firms come together, they result to
improved performance through the synergistic interrelations that arise. Salim (2011) who
assessed the effect of mergers in the banking sector concerning the Emirates Bank and National
Bank of Dubai (NBD) corroborated these findings about partnership and performance. Kemal
(2011)on the other hand found that partnering had negative effect on performance of the firms.
The same position was upheld by Mantravadi and Reddy (2008)who found that when
organizations came together, their performance underwent decline especially from financial
perspective. Saboo and Gopi (2009) found a negative performance effect on the cross border
mergers but did not find any significance effect among domestic organizations.
From the foregoing literature, it is evident that the effect of a partnering on the performance of
each of the partnering organization is not easy to predict due to the unique nature of the
partnership and what brought the organizations together in the first place. It is therefore seen that
there is no universally acceptable finding concerning the performance of organizations after
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partnering. Yet, partnerships between NGOs have an increasing trend. This study sought to fill
this gap by investigating the effect of partnering on performance among local NGOs in PELUM
network.
1.4 Objectives of the Study
This study had the following general and specific objectives;

1.4.1 General objective


The general objective of the study was to investigate the effect of partnering on the performance
of local NGOs in PELUM Kenya network.
1.4.2 Specific objectives
The specific objectives of the study were to:
i.

Establish the effect of exchange of funds on performance in local NGOs in PELUM


Kenya network.

ii.

Establish the effect of exchange of competencies on performance in local NGOs in


PELUM Kenya network.

iii.

Determine the effect of long term interaction onperformanceof local NGOs in PELUM
Kenya network.

1.5 Research Hypotheses


Concerning the effect of exchange of funds onperformancethe hypotheses are:

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H1a: Exchange of funds has no effect on performance in local NGOs in PELUM Kenya
network.
H1b: Exchange of funds affects performance in local NGOs in PELUM Kenya network.
Concerning the effect of exchange of funds on performance the hypotheses are:
H2a: Exchange of competencies has no effect on performance in local NGOs in PELUM
Kenya network.
H2b: Exchange of competencies affects performance in local NGOs in PELUM Kenya
network.
Concerning the effect of long term interaction on performance the hypotheses are:
H3a: Long term interaction has no effect on performance in local NGOs in PELUM
Kenya network.
H3b: Long term interaction has an effect on performance in local NGOs in PELUM
Kenya network.

1.6 Significance of the Study


The research is of benefit to different parties in different ways; Scholars and researchers will find
the study useful since it will fill up the existing research gap of the need for elucidating effect of
NGO from a southern perspective. Further, the study shed light on the nature of the relationship
between NGO partnership and performance with regard to the Kenyan environment. This will
then provide scholarly evidence that will, not only contribute to the scholarly discussions
concerning partnering among NGOs, but also provide citation material to later researchers on
topics that will find this research useful.
Local NGOs that are in partnerships with INGOs will have an opportunity to reflect and assess
the benefits they have reaped and or costs they have incurred as a result engaging in partnerships.
The study enabled northern NGOs to further understand issues underlying partnership from a
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southern context. This helped them identify areas of enhancing partnership relationship with the
southerners which in turn results to a reduction in northern- southern NGO partnership failures.
The study will also be instrumental to local NGOs that have not entered into partnership
relationships yet because the finding provides answers toward their possible skepticism
concerning partnering with other NGOs. Any NGO that will enter into a partnership will then do
so in a wiser and informed manner or have objective reasons for not engaging into partnerships
arrangement under the prevailing circumstances.
1.7 Scope of the Study
This study was limited to the relationship between NGO partnerships and their effect on
performance. Performance was further limited to efficiency. The study was also limited to the
local memberNGOs of PELUM Kenya network.
1.8 Justification of the Study
Scholars of organization partnerships have not been able to predict the results of the partnering
on the performance of the organizations. Some organizations achieve positive synergy and the
performance of the new organization becomes higher that when they were separate. Further,
some organizations realize a decline in the performance as a result of partnership. In Kenya,
partnership NGO increasingly being embraced yet a research gap exists on how the same is
affecting the performance of local NGOs in Kenya. The need to fill up the gap justified this
study.

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1.9 Limitations of the Study


The data covers a few NGOs, only 40. The findings may not be applicable across all times in
Kenya. The results given by this study are therefore limited to the instant when the NGOs
completed the questionnaire. The findings may, therefore, not apply across all times since the
relationship among the variables may vary from time to time dependent upon the policies
concerning how NGOs set their strategy.
The research has not provided an indication as to why the independent variables, namely, long
term interaction, exchange of competencies and exchange of funds are not strongly explaining
the variation in performance. The best it has done is to show that the explanation is weak, but the
source of the weakness has not been explained. This is because the study has fallen short of
determining whether or not there is a causal relationship between performance and the
independent variables.

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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This section begins with theoretical literature which provides various theories related to the
study. Major focus is on efficiency theory which provides a theoretical background to the study.
The section then follows witha review of findings of past research on the relationships among the
variables of the study finally; the section provides a conceptual framework which shows the
expected relationship between the variables.

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2.3 Theoretical Literature


There are various theories that explain why organizations come together. These theories include;
efficiency theory, market power theory, managerial entrenchment theory and theory of empirebuilding.
The theory of efficiency focuses on the potential of mergers taking place for social benefits.
According to this theory M&A occur due to the potential of lowering unit costs, affording
efficiencies of scale and provision of stronger purchasing power (Roller et al 2006). This
argument bases on the assumption that only the most efficient managers will remain and control
the merged organization. In addition, to the efficiency theory include the possibility of achieving
higher value from synergies that arise due to the combined firms. This theory is related to this
study since it provides a suggestion that when NGOs partner with others, synergies that arise
should lead to better performance of the whole new partnership.
Market power theory states that mergers come together with the aim to increase their market
share and market strength. In a horizontal merger, for instance, if a company acquires one of its
competitors, then it will have a greater share of the market. Holding all other factors constant,
firms with greater market power earn greater margins through the appropriation of consumer
surplus. Market power is said to allow for the deterrence of potential future entrants into the
market therefore reducing potential competition (Motta, 2004). This theory is related to this
study because it shows how an organization can achieve better performance standards through
having the power to set the standards it wants to achieve. NGOs can, therefore, partner to
become strong players within their operational areas in order to set performance standards.

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The theory of managerial entrenchment by Shleifer and Vishny (1999) is a theory that puts forth
the argument that unsuccessful mergers occur due to managers primarily making investments
that minimize the risk of their replacement. This theory posits that managers pursue projects not
to maximize enterprise value, but to entrench themselves in the organization by increasing their
individual value to the firm. Such managers will make investments that make it more costly for
shareholders to replace them. The result is that the value of the organization will be reduced
because free resources are invested in manager-specific assets rather than in assets that maximize
shareholders value. According to this theory, the suggestion is that some of the partnering
among NGOs may not lead to improved performance for the partnering may be due to the
management of the NGOs entrenching themselves in the organizations.
According to theory of empire-building, mergers are planned and executed by managers who aim
at maximize their own benefit instead of the value of their shareholders. This approach is rooted
in the need of the separation of ownership and control among corporations. Its underlying idea
was contained in the various managerial theories of the firm and explicitly formulated by
Mueller (2002). This theory is related to this study since it provides the suggestion that,
partnering among NGOs may be out of the partnering NGOs desire to become bigger, nit for the
benefit of stakeholders, but due to the need of the owners creating individual benefit arising from
their size.
Other than the theories identified above, NGOs may collaborate for three main reasons.
According to Brehm (2001) few NGOs have a formal classification of the types of relationships
they have with partners, but the diversity of partnerships can be based on the following

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classifications: funding, capacity and trust. A funding-only relationship arises when an NGO
with less financial endowment depends on another NGO with a higher financial endowment for
financial purposes. In a capacity based partnership, a partner NGO with limited capacity requires
support from a partnership NGO with a strong, autonomous organisation that contributes from its
own experience. A trust based partnership arises when a stronger and autonomous partner NGO
delegates responsibility to another partnering NGO having faith that objectives will be
excellently met.
A critical review of predominant theories for takeovers/mergers by Trautnein (1990)
acknowledged efficiency theory as the most widely accepted theory used to explain corporate
acquisitions. This was later echoed by Keitha (1996) who observed that while there are many
competing theories for motivation behind corporate acquisitions, the generation of efficiencies
due to synergetic gains provides the most widely accepted explanation. This study will majorly
focus on efficiency theory.

2.3.1 Efficiency Theory


Efficiency theory is based on the assumption that only the most efficient managers will remain
and control the merged organizationKeitha (1996) provided a review of efficiency where he
distinguished three types of synergies that bring forth efficiency. These are operational,
managerial and financial synergies. Under operational synergy, efficiency is realized by

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combining operational resources of two or more organization. Operational synergies include


economies of scale and scope, technological transfers and increased market power that result
from business combination (Simmonds, 1990; Seth, 1990).Managerial synergy exist where the
bidder manager possess superior planning and monitoring abilities. (Fama, 1980; Jensen, 1986;
Groff & Wright, 1989; Wong, 1992). Financial synergies are realized if the cost of capital of the
merged entity is lower than that of the individual companies. Examples of financial synergies
include co-insurance effects where firms with different patterns of cash flows are combined,
increased size of the combined firm and and/or a decrease in systematic risk. (Amit & Livnat,
1988; Asquith & Kim, 1982; Choi & Philippatos, 1983). Klein, (2001) introduces a different
view of efficiency where he argues that practically, synergies arise due to the identification and
combining the good parts of the organizations and eliminating what is not required.
The general acceptance of efficiency theory is based on the acknowledgement of the fact that the
shareholders rather than the management are the intended beneficiaries of organizations coming
together. This is therefore provides relevance to this study as it provides a suggestion that when
NGOs partner with others, synergies that arise should lead to better performance of the whole
new partnership with the ultimate aim benefiting the target beneficiaries. Economies of scale
and scope realized from combination are a motivation of NGO partnership. This is premised on
the fact that the key focus in development work is to benefit as many people as possible as well
as reach out to areas the where state actors are unable to reach. Similarly, technology transfer
among other competencies as a result of partnership widens the reach and rich of NGOs
operations.

18

Increased market power is said to allow for the deterrence of potential future entrants into the
market therefore reducing potential competition (Motta, 2004).Fundraising is one of the greatest
challenge facing NGOs as there are many NGOs that trying to access funds from few donors.
Having a sustainable competitive advantage in the market is therefore the number one priority of
any NGO to survive. Partnership is therefore a strategy that enables partners to become strong
players within their operational areas and allure more donors. This in turn increases
sustainability. Partnership between and Northern NGOs can also allow greater legitimacy as a
result of involving local participants(Southern NGOs) which further boosts market power.
Managerial synergy posited by efficiency theory plays a key role in NGO partnerships
particularly in this study whose focus is northern southern NGOs partnership. Northern NGOs
have superior planning and monitoring abilities that leads to improved performance of southern
NGOs upon partnering. Keitha (1996) further acknowledges that partnership between dissimilar
organizations results to diversification of risk which in turn produces financial synergies. This
proposition provides relevance to this study given that Northern NGOs operate at an
environment different from that of southern NGOs.
While efficiency theory provided a good groundwork to the study, it lacked a comprehensive
analysis of synergies brought about by business combinations which include partnerships.
Firstly, the theory focuses on managerial efficiency from one perspective of the acquiring firm.
The theorist therefore overlooks managerial efficiency realized by partnership attributable to
unique local proficiencies of the acquired organization. Yet, northern southern NGO
partnerships are premised on the fact that southern NGOs have local advantages which is a key

19

ingredient to development work. These include; local ownership that drives community
acceptance, local knowledge on the community dynamics language and legitimacy advantage.
Local advantages are a key ingredient to development work. Secondly, diversification of risks
through partnerships goes beyond financial synergies posited by Keitha (1996).Diversity
includes other aspects of synergies that are critical to development work such as cultural
differences, legal difference, and different climatic patterns.
2.4 Empirical Literature
This section discusses past research findings concerning the relationship between partnership and
performance among NGOs.
2.4.1 Partnership among NGOs
A study conducted by Rller, Stennek and Verbovens (2006) sought to find out how costs of a
firms in Finland were affected by mergers. This study was a survey that found out that there was
general reduction of costs among firms that had undergone M&A. The cost efficiencies were
realized through economies of scale, technological progress, purchasing economies, real costsavings and redistributive cost-savings. This study found that after mergers, resources were
shared leading to cost cutting.
Damlamian (2006) aimed at finding out how partnerships between corporations and
nongovernmental organizations (NGOs) seeking to promote sustainable development can be
achieved and the benefits that accrued. The research was a case study of two partnerships: Nepali
Non-Governmental Organization (NNGO) and the Paper Company between 1988 and 1989 and
in Bangladesh-the partnership between the Body Shop and the Handicrafts Organization in 1993.
20

The study found that the nature of the relationship and reasons for partnering determined the
level of performance and efficiency of the partnership. This showed that efficiency was relative
upon the uniqueness of a partnership and could therefore not be universalized.
A study conducted by Tennyson, Harrison and Wisheart (2008) investigated whether partnership
among NGOs and other sectors improved goal achievement among NGO activities. The study
covered a sample of eleven countries out of the 98 where World Vision was active and
interviewed over 100 staff from 86 companies covering a range of companies from
multinationals to national companies and SMEs and many different industry sectors. The study
also interviewed over 200 staff from 34 NGOs. The study found that despite potential in
sponsorship, marketing, advocacy, brokering, capacity building and business, serious challenges
arose from the nature of the partnerships. This indicated that goal achievement was highly
dependent upon the nature of the partnering.
A study conducted by FPS Foreign Affairs of Belgium (2010) sought to conduct an evaluation of
NGO partnerships aimed at capacity development in Belgium. It was to determine to what extent
and for which reasons the Belgian NGOs capacity development activities with their partners and
final beneficiaries have been effectively successful in the context of partnership relations. The
evaluation covered the period between 1998 and 2008 focusing on 21 Northern NGOs and 40
partnerships. The study concluded that in all countries studied there was successful partnership
which had made a contribution to capacity development. This came about due strong NGO
identity, vision and mission which resulted in clear expertise and made it possible for the

21

partners specific and relevant capacity development activities to be supported on the basis of its
own added value and clear vision regarding capacity development and its application in tools.
2.4.2Performance among NGOs
Kwoka and Pollitt (2007) conducted a survey to analyze the performance impact of the merger
wave which took place in the US electricity industry between 1994 and 2003. The analysis was
based on studying the impact of the mergers on operating and total costs in electricity
distribution. Using nonparametric technique to analyze the data and measure the efficiency of
each operating unit, it was found that electricity mergers were not consistent with improved cost
performance. This study indicated that partnering or merging of organizations did not
automatically lead to better performance.
Flood, Guthrie, Liu, Oregan, Armstrong, Maccurtain and Mkamwa (2008) examined the impact
of high performance work systems and partnership on firm-level performance in firms in Dublin,
Ireland. The study used data gathered from 132 organizations. Their results revealed that high
performance work systems and partnership practices were positively associated with the
productivity of labour, innovation at the workplace, but negatively associated with voluntary
turnover.
Kemal (2011) did a study to assess the performance of banks after merger. The study used
accounting ratios to analyze the financial performance of Royal Bank of Scotland (RBS) in
Pakistan after merger. The data used for the study were from the financial statements The Royal
Bank of Scotland for four years spanning 2006-2009 by using 20 vital financial ratios. The
results showed that the financial performance of The Royal Bank of Scotland in the areas of
22

profitability, liquidity, assets management, leverage, and cash flows had been quite satisfactory
before the merger deal. This meant that the merger deal failed to improve the financial
performance of the bank.
Schroeder, (2012) conducted a case study whose aim was to provide guidance to HR
professionals and those involved in the planning and implementation of post-merger integrations.
The study found that a lack of detailed integration plan and the absence of integration
performance metrics, as well as inadequate understanding of the likely impact of cultural
incompatibilities represented risks to a successful merger. This paper showed that the dynamics
of HR were specific to the merger relying upon the issues that arise and how the HR reacts to
them. This meant that performance was not an automatic issue after partnering.
Tambi (2010) did a study which evaluated the impact of Mergers on the performance of the
involved companies. The evaluation was done on Indian companies through a database of 40
Companies. The study utilized paired t-test for mean difference for total performance
improvement, economies of scale, operating synergy and financial synergy. The study revealed
that Indian mergers failed to contribute positively in the performance improvement. This study
suggested that mergers did not positively contribute to improved performance.
Bogdan, Gabriela and Eugenia (2010) investigated the relationshipbetween mergers and
acquisitions in Romania and the Romanian stock market, described by the Bucharest Stock
Exchange Trading Index indexes. By using the Granger causality test for the number of mergers
andacquisitions, the research results suggested that, for the market and period considered, one

23

way and both ways relationships are present. However, the study did not indicate whether
Mergers and Acquisitions improved or deteriorated performance.
Rajeev and Jyoti (2011) conducted a study from human resource performance perspective in
India. The study aimed at investigating how the human resource behaved after merger. He
conducted a survey on Indian companies that had successfully undergone M&A. The study
found out that there was general negative behavior of the employees in the acquired firm. The
study identified employees attitude as having the greatest responsibility on poor performance of
merged organizations. In his conclusion, he recommended that change management should be a
top priority in order to reduce employee resistance.
Weber, Rachman-Moore and Tarba (2012) based their performance on a similar dimension. They
conducted a survey with an aim of developing a model of M&A integration, based on research
on HR practices in M&A. The focus of the study was resource-based from an international
management perspective. Critical differences were explored between acquirers from diverse
countries in the way in which human resources issues are handled during cross-cultural conflict
situations. The study further tested HR practices and post-merger performance in multiple
countries. No clear best practice that would address the conflict situation and enhance M&A
performance was identified the study. The study concluded that the reaction of HR could not be a
generalized since it was company specific.
2.5Summary of Literature Reviewed
The theoretical review has provided the reasons that explain motivation to the phenomenon of
mergers and partnerships among profit and not for profit organizations. The empirical literature
24

has provided findingsonresults of partnerships among firms including NGOs. The theme among
most of the cited research papers is that the effect of the merger and partnering among
organizations is dependent upon the internal and external environment within the separate
organizations and the environment after the merger or collaboration. It, therefore, emerges that
the results cannot be expressly applied. This missing link formed the research gap of the study.
The study sought to fill the gap by conducting a survey of all PELUM Kenya Network local
NGOs to assess the effect of partnership on cost efficiency.
2.6Conceptual Framework
Fig. 2-1 below shows the manner in which the independent variables, namely, exchange of
funds, exchange of competencies and long term interaction affect the dependent variable which
is performance.

25

Fig. 2.1 Conceptual Framework

Dependent Variable

Independent Variables
Exchange of Funds

Relevance of resources
Trend of funding
Value of direct funding
Effect of direct funding
Presence of suspicions
Number of intermediary NGOs
Funding Conditions
Total value of funding
Finance Policy

Performance

Exchange of competencies
-

Management & Leadership


Financial Management
Transfer of technology
Technical
Advocacy
Long term Planning

Cost Efficiency

Long term Interaction


-

Success of negotiations
Success of implementation
Distribution of resources
Division of tasks
Flexibility of Management
Confidence and trust
Desire to continuepartnering
Number of long term plans
Response to strategy
Openness to influence

26

CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter outlines the research methodology that was used to conduct the study. The chapter
further discussed the research design, target population, data collection method, how the analysis
of the data was done and how findings were made available.
3.2 Research Design
The study design was descriptive in nature. The descriptive research was meant to enhance a
systematic description that is accurate, valid reliable and current regarding the responses on the
effect of partnerships among NGOs in the PELUM Network. The research design was also used
by Kwoka and Pollit (2007) when they conducted a study on whether mergers improved
efficiency of the US electric power sector.
3.3 Target Population
All the NGOs in the PELUM Kenya Network that work in partnership with other NGOs made up
the target population. However, the studyfocusedon the member NGOs that are local.The 40
local member NGOs made up the population of this study. Purposive sampling technique was
adopted since only local members of thePELUM Kenya Network were taken. The justification
for purposively choosing the 40 NGOs was because the size (40) is a manageable number and all
of them were accessible either physically or by email. In addition to individual NGO email
addresses, all the members actively participate in an online platform coordinated by PELUM.
27

3.5 Data Collection Tool


A structured questionnaire was the preferred data collection tool. Structured questionnaire was
delivered to the respondent NGO by the researcher by drop and pick later method after the
questionnaire has been completed. Only one person, the manager, per responding NGO
completed the questionnaire. The questionnaires was delivered to managers or one of those
involved in the day to day running of the NGOs and have the required information. The
completed questionnaires were collected after one week. In

the second instance, some the

researcher completed the questionnaire while interviewing the respondents, to facilitate faster
collection of data. Finally, those that were far away from Nairobi and Thika had their
questionnaires mailed to them since all PELUM Kenya member NGOs have access the internet.
To capture information the respondent may feltwas not captured by the research instrument, the
researcher interviewed the respondents on the same matter.
3.6 Pretesting the Research Questionnaire
The questionnaire was administered to five NGOs in the PELUM Network randomly sampled
from the list in Appendix I. Only one copy of the questionnaire was given to the manager of each
sampled NGO to provide the assessment. The respondents were free to make comments on the
questionnaire concerning difficult wording, or limited option, missing options. The five NGOs
used for pretesting did notparticipate in the main study.
3.7 Testing for Validity and Reliability
Bechtold (1959) defined validity as the extent to which an instrument measures what it purports
to measure. Content validity is the key type of validity for this study. Content validity focuses on
28

the degree to which the instrument fully assesses or measures the construct of interest. To
measure validity, each of the pretest respondents rated the questionnaire on a scale of 1 to 10
where 10 showed that the questionnaire was measuring what it purports to measu
measure. The
respondents were free to make comments on the questionnaire concerning difficult wording,
limited option or missing options. The average rate provided the general rating of the
questionnaire.

The Cronbachs Alpha was used to test the reliability of


of the responses from the respondents.
Reliability is the extent to which results are consistent over time and accurately represent the
characteristics of the total population under study. A study is reliable if the results of a studycan
be reproduced under a similar methodology.

3.8 Data Processing and Analysis


A qualitative analysis of the Likert responses from the questionnaire was done using the mean
and standard deviation to determine the extent to which
which each of the variables affected the
performance to the responding NGO and then tabulated. For each of the NGO the equally
weighted average mean of the Likert response for each of the variables was found. The
regression model for the analyzing the relationship between the independent variables and

Where
Performance
Constant term

29

Sensitivity of

to variable

Exchange of funds variable

Exchange of competencies variable

Long term interaction variable

The error term

The t-test
test at 95 % confidence level was used to test the statistical significance of the regression
constants

and

The F-test
test at 95 % confidence level was used to determine whether

the regression relationship between the dependent and


and the independent variables is statistically
significant strong relationship between the variables. This test helped to test whether there is a
strong relationship between partnering and performance. The coefficient of determination
and the adjusted

was used to determine the level of strength at which the variation in the

independent variables explains the variation in the dependent variable. Analysis was done using
SPSS 17.
3.9 Ethical Considerations
The study was done with full consideration of the legally and morally accepted ways of
conducting research. No respondent was coerced into giving out information either by force, by
blackmail or by reward. Participants were allowed to decide whether to participate
partic
in the study.
The information got was specifically
specificall for research purposes. It was,, therefore, not used in any

30

manner detrimental to the well-being of the responding NGOs or the people in the NGOs. In
addition the researcher conducted the research with utmost confidentiality.

31

32

CHAPTER FOUR
FINDINGS AND DISCUSSION
4.1 Introduction
This chapter is organized as follows: the first section details the analysis of exchanges of
resources variable, exchange of competencies variable, long term interaction variable and
performance variable. The chapter ends with investigating whether the independent variables,
namely, exchanges of resources, exchange of competencies and long term interaction have any
effect on performance of the NGOs.
4.2 Response Rate
The study sought to gather information from managers or any individual responsible for quality
management among NGOs in the PELUM Network. The research was designed to gather
information from 35 NGOs. However, of the total 35 only 30 responded which constituted 85.71
% response rate.
4.3 Data Reliability
The respondents were asked to indicate their level of agreement that the factors in the first two
tables in section A of the questionnaire affected the performance of the NGOs. The last table in
section B of the questionnaire required the respondent to rate their performance based on the ten
dimensions listed in it. A five point Likert scale was used in which 1 = not at all, 2 = very small
extent, 3 = small extent, 4 = large extent and 5 = very large extent.

33

The questionnaire was pretested on five NGOs who were to rate the questionnaire in terms of
whether in measured what it purported to measure. Pretesting was done by administering the
questionnaire to employees in the five NGOs who were randomly selected. These NGOs were
not included in the actual study.
Construct validity was ensured using factor analysis. Reliability of the instruments on multiple
items variables(e.g exchange of resource, exchange of competencies and long term interactions)
were tested using the Cronbach Alpha ().The higher the value, the higher the level of reliability
of the instrument. Cooper& Schindler (2008) indicated that an alpha value of at least0.7 is
reliable.
Table 4.0: Reliability of Variables

Cronbach Alpha ()

Exchange of funds

10

0.71

Exchange of competencies

10

0.73

Long term interaction

10

0.78

Performance

10

0.82

As shown in table 4.0, the data instrument was reasonably acceptable with Cronbach Alpha ()
values of more than 0.7.
4.4 Exchange of Funds
Exchange of funds variable in this subsection is analyzed as one of the component of partnership.
As shown in Table 4.1 the NGOs generally indicated that exchange of funds affected their
performance to a moderate extent with an average mean (M = 3.23) among the ten elements in
34

the questionnaire. The item in exchange of resource with the highest impact on performance was
the resource received from donors are relevant to your objectives with a mean (M = 4.80) which
showed a high level on the likert scale interpretation.It was followed by item that measured the
value of resource shared to be increasing with a mean (M = 4.13) very high level interpretation
on the likert scale. Performance was least affected by receipt of funding from many intermediary
NGOs with a mean of (M = 2.23) which was low on the likert scale interpretation, the ability of
funding through intermediaries to covers financial needs had a mean of (M = 2.57) which was
high on the likert scale interpretation and by strong suspicions concerning funding between the
intermediary NGOs and the local NGOs had a mean (M = 2.77) which was also high.
Table 4.1: Exchange of funds
Exchange of funds
The resources received from donors are relevant
to your objectives
The value of resources shared has been increasing
There is increased indirect funding through NGO intermediaries
as opposed to direct funding
Getting funding through other NGOs affects performance of your NGO
There are strong suspicions concerning funding between the
intermediary NGOs and the local NGOs
Your NGO receives funding from many intermediary NGOs
Intermediary NGOs has strong influence on the donor community
Conditions attached to funding affect our performance
The amount of funding through intermediaries covers your
financial needs
Your internal financial policies strictly observe conditions set by
the donor NGO
Total
(Source: Research Findings)
Key for interpretation of means

35

Mean
4.80
4.13
3.37
3.07
2.77
2.23
3.07
3.03
2.57
3.30
3.23

Mean range

Response mode

Interpretation

3.26-4.00

Very great extent

Very high

2.51-3.25

Great extent

High

1.76-2.50

Moderate extent

Low

1.00-1.75

Not at all

Very low

4.5 Exchange of Competencies


This subsection analyzes the effect of exchange of competencies variable on the performance of
the NGOs in PELUM Network. All the NGOs, as shown in Table 4.2 indicated that exchange of
competencies moderately affected their performance with an average mean (M = 3.27) for all the
ten items. Their performance was most strongly affected by Partner NGO providing assistance in
management and leadership (M = 3.53) and assistance in advocacy and campaigning (M = 3.77).
However, their performance was least affected by with assistance in long term planning (M =
2.90) and financial management (M = 2.93).
Table 4.2: Exchange of Competencies
Exchange of Competencies
Partner NGO provides us with assistance in management
and leadership
Partner NGO provides us with assistance in financial management
Partner NGO provides us with assistance in developing our
technical abilities
Partner NGO provides us with assistance in advocacy and campaigning
Partner NGO provides us with assistance in long term planning
Grand Mean
(Source: Research Findings)

Key for interpretation of means


36

Mean
3.53
2.93
3.23
3.77
2.90
3.27

Mean range

Response mode

Interpretation

3.26-4.00

Very great extent

Very high

2.51-3.25

Great extent

1.76-2.50

Moderate extent

1.00-1.75

Not at all

High
Low
Very low

4.6 Long Term Interaction


This subsection analyzes the long term interaction variable. Table 4.3 indicates that all the NGOs
were to a moderate extent affected by long term interaction with partner NGOs with an average
mean (M = 3.39) for the ten items in this section of the questionnaire. They indicated that their
performance was most affected by the implementation of activities defined in work plans (M =
4.07); building of confidence and trust among partners and recognition of respective comparative
advantages (M = 3.53) and response of partnerships to NGOs strategic objectives (M = 3.57).
Their performance was least strongly affected by NGOs willingness to open itself to the
influence of a partner NGO (M = 2.80).
Table 4.3: Long Term Interaction
Long Term Interaction
There is always successful negotiation of partnership agreements,
reflected in MOUs and work plans, and reflecting a common interest
The implementation of activities defined in work plans, lead to
concrete results
There is an equitable contribution of financial resources
There is an equitable division of tasks and a shared
responsibility for results
Development of flexible management procedures to guide
the partnership, respectful of the needs of both sides;
There is building of confidence and trust among partners, and
37

Mean
3.43
4.07
2.90
3.07
3.23
3.53

recognition of respective comparative advantages


A clear expression of mutual interest in continuing the
partnership relationship.
There are a significant number of long term interaction plans
with partner NGO
Your partnerships responds to your NGOs strategic objectives
Your NGO is always willing to open itself to the influence of a
partner NGO?
Grand Mean

3.77
3.50
3.57
2.80
3.39

(Source: Research Findings)

Key for interpretation of means


Mean range

Response mode

Interpretation

3.26-4.00

Very great extent

Very high

2.51-3.25

Great extent

High

1.76-2.50

Moderate extent

1.00-1.75

Not at all

Low
Very low

4.7 Performance
This subsection analyzes the performance variable. As shown in Table 4.4 the NGOs indicated
that their performance was moderate with an average mean of (M = 3.25) for the ten items
analyzed in the questionnaire for this section. Performance was best as indicated by few errors
reported by outside auditors (M = 3.67); high percent of output delivered on schedule (M = 3.50)
and the low number of formal reviews before plans are approved (M = 3.50). Performance was
most poorly indicated by high percentage variation from budget estimates (M = 2.63) and time
taken to complete projects (M = 2.67).

38

Table 4.4: Performance


Performance
Percent of deviations from cash plan is low
Errors reported by outside auditors are few
Number of complaints about inefficiencies or excessive paper are few
Percent of advances outstanding is low
Percent of output delivered on schedule is high
Percent variation from budget estimates is high
The number of beneficiaries is growing at a rate higher than rate at
which costs are rising
Shorter time is taken to complete projects
Your NGO can withstand external pressures to generate short-term
results at lower costs
The number of formal reviews before plans are approved based on
costs is low
Grand Mean

Mean
3.43
3.67
3.30
3.47
3.50
2.63
3.07
2.67
3.30
3.50
3.25

(Source: Research Findings)

Key for interpretation of means


Mean range

Response mode

Interpretation

3.26-4.00

very great extent

Very high

2.51-3.25

Great extent

High

1.76-2.50

Moderate extent

Low

1.00-1.75

Not at all

Very low

MODEL SUMMARY

Model

R Square

Adjusted R Square

Std. Error
Estimate

.897a

.875

.868

.21540

39

of

the

a. Predictors: (Constant), EXCOFCOMPETENCIES, EXCOFUNDS, LTINTERACTION


Adjusted R is the coefficient of determination which describes the variation in the dependent
variables due to changes in the independent variables. From the findings in the table the value of
adjusted R squared was .868 which is an indication that there was a variation of 86.8% on the
Peformance due to changes in Exchange of Funds, Exchange of competencies and Long term
Interaction. This shows that 86.8% changes in outcome of corporate rebranding could be
accounted for by Exchange of Funds, Exchange of competencies and Long term Interaction. R is
the correlation coefficient which shows the relationship between the study variables. From the
findings shown in the table above, there was a strong positive relationship between the study
variables shown by .897.

ANOVAa

Model

Sum of Squares
Regression

df

Mean Square

8.759

3.190

Residual

11.881

31

.067

Total

25.765

34

F
30.985

Sig.
.000b

a. Dependent Variable: PERFORMANCE


b. Predictors: (Constant), EXCOFCOMPETENCIES, EXCOFUNDS, LTINTERACTION

From the ANOVA statistics in the table above, the processed data had a significance level of 0%
which shows that the data is ideal for making a conclusion on the population parameter as the
40

significance(p-value) is less than 5%. The F critical at 5% level of significance was 30.985 since
F calculated is greater than the Fcritical (value= 1.684), this shows that the overall model was
significant and that Exchange of Funds, Exchange of competencies and Long term Interaction
significantly influence Performance.

COEFFICIENTSA

Model

Unstandardized
Coefficients
B
(Constant)

Std. Error

1.303

.364

EXCOFCOMPETENCIES

.910

.112

EXCOFUNDS

.790

LTINTERACTION

.259

Standardized
Coefficients

Sig.

Beta
3.975

.000

.239

11.013

.030

.101

.045

6.495

.000

.108

.602

.820

.000

a. Dependent Variable: PERFORMANCE


From the coefficients above it was revealed that holding Exchange of Funds, Exchange of
competencies and Long term Interaction to a constant zero, Performance would be at 1.303, a
unit increase inExchange of Funds would lead to increase in Performance by a factor of .910,
unit increase in Exchange of Funds would leading to an increase in Performance by factor of
.790, a unit increase in Long term Interaction would lead to an increase in Performance by a
factor of .259.

41

At 5% Level of significance and 95% level of confidence, Exchange of competencies had a


.030level of significance. Long term Interaction had a .000 level of significance, Exchange of
Funds had a .000 level of significance. Therefore, the most significant factor is Long term
Interactionand Exchange of Funds. Exchange of Funds, Exchange of competencies and Long
term Interaction were significant (p<0.05).
These results lead to a conclusion that Partnershipsignificantly explains the performance of
NGOs in Kenya.
Decision on the hypothesis is now analyzed basing on the research findings;
4.8 Regression Analysis
In the regression analysis presented in Table 4.5, the goodness of fit as reflected by the
coefficient of determination (R2) was satisfactory. This was supported by an R squared of 0.868.
The results indicated that all the three aspects of partnership included in the regression model
explain 86.8% of the variations in NGOs performance.
ANOVA statistic generated from the regression model revealed that the overall model was
significant. This was supported by an F statistic of 30.985(significance value of .000). These
further indicate that the independent variables are good joint predictors of NGO performance.
The coefficients section of this table indicates the extent to which each the aspect affects
performance and this is indicated by Beta values. For example, Exchange of funds has an impact
on performance of NGOs with a beta value of .910 with significance value of .030, which

42

showed a significant effect. This means that an increase inexchange of fundsby one unit results
to an increase in NGO performance by 0.91 units.
Likewise an increase in Exchange of competencies(assistance in management, assistance in
financial management, developing technical abilities, advocacy and campaigning and long term
planning)by one unit leads to an increase in NGO performance by 0.79 units.
However results tabulated shows that long term Interactions (beta .259; significance value of
000) accounts for the smallest variation in Partnershipwith 25.9% as compared to the other two
factors. Hence long term interactions in term of partnership agreements, implementations of
activities, contributions, equitable division of financial resources and tasks, development of
procedure affects NGOs performance by 25.9%.
These results lead to a conclusion that Partnershipsignificantly explains the performance of
NGOs in Kenya.
Decision on the hypothesis is now analyzed basing on the research findings;
Concerning the effect of exchange of funds on performance the alternative hypothesis was
validated H1a: Exchange of funds affects performance in local NGOs in PELUM Kenya
network.
Concerning the effect of exchange of competencies on performance the alternative hypothesis
was validated H2a: Exchange of competencies affects performance in local NGOs in PELUM
Kenya network.

43

Concerning the effect of long term interaction on performance the alternative hypotheses was
validated.H3a: Long term interaction affects performance in local NGOs in PELUM Kenya
network
Table 4.5 Regression Analysis
Variables regressed

R2

F-

Sig.

Interpretation

value

Decision
on Ho

Partnership Vs. Performance

.868

30.985

.000

Significant effect

Rejected

coefficients

Beta

Sig.

(constant)

1.303

3.975

.000

Exchange of funds

.910

11.013

.030

Significant effect

Rejected

Exchange of competencies

.790

6.495

.000

Significant effect

Rejected

Long term interactions

.259

.820

.000

Significant effect

Rejected

(Source: Research Findings)


4.9 Interpretation of Findings
This research has found that performance was affected exchange of funds especially the
relevance of resources received from donors to objectives and the increasing value of resources
shared. Exchange of competencies also affected performance. Assistance in management and
leadership and assistance in advocacy and campaigning had the strongest effect. Long-term
interaction with partner NGOs affected performance. The performance was most affected by the
implementation of activities defined in work plans, building of confidence and trust among
partners and recognition of respective comparative advantages and response of partnerships to
NGOs strategic objectives.Performancewas moderate with the best being few errors reported by

44

outside auditors; high percent of output delivered on schedule and the low numbers of formal
reviews before plans are approved.
The findings indicate that through long term interaction, exchange of competencies and
exchange of funds, partnership improved the performance of the local NGOs in PELUM
Network. The findings support those of Damlamian (2006) who studied how a partnership
between corporations and nongovernmental organizations (NGOs) was beneficial. This case
study of two partnerships: Nepali Non-Governmental Organization (NNGO) and the Paper
Company between 1988 and 1989 and in Bangladesh-the partnership between the Body Shop
and the Handicrafts Organization in 1993 showed that partnering affected performance, but the
performance depended on the nature of the relationship and reasons for partnering.
The findings also agree with those of Verbovens (2006) researched, by survey, on how costs of a
firms in Finland were affected by mergers. The study by Verbovens (2006) found that there was
general reduction of costs among firms that had undergone M&A. The cost efficiencies were
realized through economies of scale, technological progress, purchasing economies, real costsavings and redistributive cost-savings. This study found that after mergers, sharing of resources
led to cost cutting and therefore cost efficiency.

45

CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary
Theoretical postulation indicated that cost performance of NGOs improves due to partnering
with other NGOs. The channels through which the improvement is realized include long term
interaction, exchange of competencies and exchange of funds. This means there should be
positive relationships between performance and long term interaction, exchange of competencies
and exchange of funds. However, empirical studies have found variations of the relationships
between partnering and performance among mergers in all types of business organizations
including NGOs.
Results indicate that majority agreed to a great extent with the statements on exchange of funds.
This was revealed by a mean score of 3.23. Resources received from donors are relevant to NGO
objectives; increase in value of resources shared and adherence of conditions set by the donor
were agreed on to the greatest extent. However, results indicated that a majority agreed to a
moderate extent that NGOs receive funding from many NGOs and that the funding so received
covers their financial needs.
It was concluded thatExchange of funds has an effect on performance of NGOs with a beta value
of .910 with a significance value of .030, which showed a significant effect. This means that an
increase inexchange of fundsby one unit results to an increase in NGO performance by 0.91
units.

46

Results indicate that the majority agreed to a great extent with the statements on exchange of
competencies. This was depicted by a mean score of 3.27.Provision of assistance in management
and leadership, advocacy and campaigning were agreed on to avery greatextent. Financial
management and long term assistance was to a moderate extent.
It was concluded that exchange of competencies has an effect on the performance .Increase in
one unit leads to an increase in NGO performance by 0.79 units.Beta value of .790 with a
significance value of 000.
Long-term interaction statements were agreed on to a great extent with a mean score of
3.39.Implementation of activities defined in the work plans leading to concrete results and clear
expression of interest in continuing the partnership relationship were agreed on to a very
greatextent. Equitable contribution of financial resources and willingness for NGOs to open
themselves to be influenced were agreed on to a great.
Results tabulated shows that long term Interactionsaccounts for the smallest variation in
Partnership as compared to the other two factors. Increase in one unit leads to an increase in
NGO performance by 0.259 units. Beta value of .259 with a significance value of .000.
This research was designed to find out the unique relationship between performance and long
term interaction, exchange of competencies and exchange of funds among NGOs in Kenya.
Primary data was collected from the NGOs using a self-administered structured questionnaire.
Regression analysis was done to establish the relationship among the variables believed to be key
in partnership among NGOs.

47

5.2 Conclusions
From the finding of this research, the following conclusions are made.Performance was most
strongly affected by the relevance of resources received from donors to objectives and the
increasing value of resources shared. Performance was also affected by the relevance of
resources received from donors to objectives and the increasing value of resources shared.
Further, exchange of competencies moderately affected performance mostly through partner
NGO providing assistance in management, leadership, advocacy and campaigning.
Performance was moderately affected by long term interaction with through the implementation
of activities defined in work plans; building of confidence and trust among partners and
recognition of respective comparative advantages and response of partnerships to NGOs
strategic objectives. However, the performance of the NGOs was featured with few errors
reported by outside auditors, high percent of output delivered on schedule and the low numbers
of formal reviews before plans are approved.
It was concluded thatExchange of Funds has an impact on performance of NGOs with a beta
value of .910 with sig=.030, which showed a significant effect. This means that an increase
inexchange of fundsby one unit results to an increase in NGO performance by 0.91 units.
Likewise an increase in Exchange of Competencies (assistance in management, assistance in
financial management, developing technical abilities, advocacy and campaigning and long term
planning)by one unit leads to an increase in NGO performance by 0.79 units.

48

However results tabulated shows that long term Interactions (beta 259; significance value of
.000) accounts for the smallest variation in partnership with 25.9% as compared to the other two
factors. Hence long term interactions in term of partnership agreements, implementations of
activities, contributions, equitable division of financial resources and tasks, development of
procedure affects NGOs performance by 25.9%.
5.3 Recommendations
Based on the findings of this study, the following recommendations arise.
5.3.1 Policy Recommendations
NGOs should set out clear policies concerning why and how they wish to partner with other
NGOs, be they local or international. Local NGOs agreed to a moderate extent they are open to
be influence under partnership arrangement. This recommendation is premised on thefact that the
very NGOs agree to a very great extent that partnership arrangements assist them in leadership,
management campaigning and advocacy. If local NGOs open themselves to positive influence,
they would achieve even greater results. None the less, care should be taken to ensure that local
NGOs only open themselves to positive and not undue influence.
Secondly, there is need to strengthen, exchange of competencies from financial management and
long term planning perspective. This recommendation is based on two facts. One, if partnership
assists local NGOs in leadership, management, campaigning and advocacy. Then capacity
development through partnership is evident. Local NGOs only need to identify the how the
financial management and long term planning assistance components can be integrated in the
partnership models that they engage in. In addition, financial management skills are a key selling
49

point to donors in the wake of increased transparency and accountability standards. Donors are
looking for organizations that are not only able to effectively reach grass root communities but
also able to show their financial management diligence. This would give local NGOs a
competitive edge.
Thirdly, local NGOs should diversify their fundraising strategies. Results indicate that local
NGOs do not receive funding from many intermediary NGOs and when they do so, the funding
so received does not fully cover their running overheads. Diversification of sources of funding
would help the local NGOs reduce the unsystematic risk. This would help the local NGOs stand
in times of political and financial blows that would affect funding from donors from time to time.
5.4Suggestions for Further Research
Also given that Kenya is a key player in the East African community the study can be expanded
to cover other NGOs within the East African community in order to provide result that will be
useful in that context. A study can be done to cover all the NGOs in East Africa.
A future researcher can conduct the research with the aim of determining whether there are other
factors that affect the NGO performance. This will help provide an explanation of why the
coefficient of determination is not equal to one. Such a study will provide solution as to which
other factors are to be considered to make the relationship stronger.

50

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56

APPENDIX I: Introduction Letter

KCA UNIVERSITY
MBA PROGRAMME

TELEPHONE

P.O. BOX ..

TELEGRAMS:

NAIROBI, KENYA

TELEX:
July 20, 2012
The Manager,
.
Dear Sir/Madam,
RE: INTRODUCTION-PAULINE G. KIMANI
I am a student of the University of Nairobi, pursuing a Masters of Business Administration
degree. In partial fulfillment of the requirements for this degree, I am required to carry out a
management research project on a real topic in my area of study. I am conducting a survey to
find out theeffects of partnerships on the performance of local non-governmental organizations
in Participatory Ecological Land Use Management (PELUM) Kenya network.
I kindly request you to provide the required information to the best of your knowledge by filling
out the attached interview guide. The information is strictly for academic purposes only and will
be treated in the strictest confidence. A copy of the research project will be made available to
you on request. Your kind assistance will be highly appreciated.
Yours faithfully,
Pauline Kimani (Researcher)
57

APPENDIX II: Questionnaire


Please answer all questions honestly according to the given instructions
SECTION A
To what extent do you agree that the following affect the performance of your NGO? Tick
the option that best explains your view.
(1= Not at all, 2= Little extent, 3=Moderate extent, 4=Great extent, 5=Very great extent)
I.

Exchange of funds

1. The resources received from donors are relevant to


your objectives
2. The value of resources shared has been increasing
3. There is increased indirect funding through NGO
intermediaries as opposed to direct funding
4. Getting funding through other NGOs affects
performance of your NGO
5. There are strong suspicions concerning funding
between the intermediary NGOs and the local NGOs
6. Your NGO receives funding from many intermediary
NGOs
7. Intermediary NGOs has strong influence on the donor
community
8. Conditions attached to funding affect our performance

58

9. The amount of funding through intermediaries covers


your financial needs
10. Your internal financial policies strictly observe
conditions set by the donor NGO

To what extent do you agree that the following affect the performance of your NGO? Tick
the option that best explains your view.
(1= strongly disagree, 2= disagree, 3=neutral, 4=agree, 5=strongly agree)
II.

Exchange of Competencies

1. Partner NGO provides us with assistance in


management and leadership
2. Partner NGO provides us with assistance in financial
management
3. Partner NGO provides us with assistance in developing
our technical abilities
4. Partner NGO provides us with assistance in advocacy
and campaigning
5. Partner NGO provides us with assistance in long term
planning

59

To what extent do you agree that the following affect the performance of your NGO? Tick
the option that best explains your view.
(1= strongly disagree, 2= disagree, 3=neutral, 4=agree, 5=strongly agree)
III.

Long Term Interaction

1. There is always successful negotiation of partnership


agreements, reflected in MOUs and work plans, and
reflecting a common interest
2. The implementation of activities defined in work plans,
lead to concrete results
3. There is an equitable contribution of financial resources
4. There is an equitable division of tasks and a shared
responsibility for results
5. Development of flexible management procedures to
guide the partnership, respectful of the needs of both
sides;
6. There is building of confidence and trust among
partners, and recognition of respective comparative
advantages
7. A clear expression of mutual interest in continuing the
partnership relationship.
8. There are a significant number of long term interaction
plans with partner NGO
9. Your partnerships responds to your NGOs strategic
objectives

60

10. Your NGO is always willing to open itself to the


influence of a partner NGO?

Section B
Indicate by a tick (
) the extent to which you agree with the following statements
concerning the performance of your NGO.

(1= Not at all, 2= Little extent, 3=Moderate extent, 4=Great extent, 5=Very great extent)
IV.

Performance

1. Percent of deviations from cash plan is low

2. Errors reported by outside auditors are few

3. Number of complaints about inefficiencies or excessive


paper are few
4. Percent of advances outstanding is low

5. Percent of output delivered on schedule is high

6. Percent variation from budget estimates is high

7. The number of beneficiaries is growing at a rate higher


than rate at which costs are rising

61

8. Shorter time is taken to complete projects


9. Your NGO can withstand external pressures to generate
short-term results at lower costs
10. The number of formal reviews before plans are
approved based on costs is low

Other factors that contribute to the performance of your NGO(specify)


a) __________________________________________________________________
b) __________________________________________________________________
c) __________________________________________________________________

62

Appendix III: PELUM Kenya LocalMembers

Name of NGO

Short Name

Province/provinces

Agriculture & Rural Development


Program

ARDP

Rift Valley

Anglican Development
Service/ACK Doss

ADS

All provinces

Arid Land Information Network

ALIN

Nairobi, Eastern, Coastal

Africa Biodiversity Network

ABN

Central, Nairobi

Baraka Agricultural College

BAC

Rift Valley, Western


Coastal

Benevolent Institute of Development


Initiatives

BIDII

Eastern

Bio Gardening Innovations

BiOGI

Western,Nyanza

63

Busia Environmental and Resource


Management

BERMA

Western, Nyanza

CEFA Kenya

All Provinces

10

Community Mobilization Against


Desertification

CMAD

Nyanza

11

Community Initiatives for Rural


Development

CIFORD

Eastern

12

Community Sustainable
Development Empowerment
Program

COSPED

central

13

Community Rehabilitation
Environmental Programme

CREP

Nyanza

14

Grow Bio Intensive Agriculture


Centre of Kenya

GBIACK

Central, Eastern

15

Institute for Culture and Ecology

ICE

Central, Eastern

16

Inades Formation Kenya

Inades

Eastern

17

Kenya Institute of Organic Forming

KIOF

Nairobi, Central

18

Kenya Organic Agriculture Network

KOAN

Nairobi

19

Kitui Development Centre

KDC

Eastern

20

Kima Integrated Community

KICIP

Western

64

Initiative Programme
21

Manor House Agricultural Centre

Manor House

Rift Valley, Western,


Nyanza

22

Network for Eco Farming in Africa

NECOFA

Rift valley ,Central,


Nairobi

23

Neighbour Initiatives Alliance

NIA

Rift Valley, Coastal

24

Nainyoiye Community Development NCDO


Organization)

Western,Nyanza

25

Organic Agriculture Centre of


Kenya

OACK

Nairobi

26

Real Impact

RI

Nairobi Central, Eastern

27

Resources Development Initiative


Kenya

RODI

Central,Nyanza,Nairobi

28

Rural Initiative Development


Program

RIDEP

Eastern

29

Revitalization of Indigenous
Initiatives Community Development

RINCORD

Eastern, North Eastern

30

Self Help Africa

SHA

Rift Valley

31

Smart Initiatives

Rift Valley, Western

32

Sustainable Agriculture Community


Development Progam

SACDEP

Central, Coast, Eastern &


North Eastern

65

33

Sustainable Agriculture Centre for


Research andDevelopment Africa

SACREDAfrica Rift Valley, North Eastern

34

Sustainable Agriculture Rural


Initiatives

SARI

Rift Valley/North

35

Taita Taveta Wildlife Forum

TTWF

Coastal

36

Ukambani Christian Community


Services

UCCS

Eastern

37

Utooni Development Organization

UDO

Eastern& North Eastern

38

Western Region Christian


Community Centre

WRC

Western, Rift Valley

CS
39

VI Agroforestry Project Kitale

VIAFP

Rift Valley

40

Youth Action For Rural


Development

YARD

Central

(Source: PELUM Kenya Website June 2013)

66

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