Effect of Ethical Practices on Performance of Agricultural Cooperative Societies in Kenya

Abstract

This study investigated the influence of ethical practices on the performance of agricultural cooperative societies in Kenya, with a particular emphasis on the strategic role of ethical leadership in enhancing governance, accountability, and operational effectiveness. This study was guided by ethical leadership theory. A mixed-methods approach was employed, integrating descriptive and explanatory designs. The target population comprised 1,206 agricultural cooperatives across five counties, with a sample of 301 respondents selected using Yamane’s formula. Primary data were collected through structured questionnaires, while secondary data were sourced from the State Department of Cooperatives (2019–2023). Data analysis was conducted using the Statistical Package for Social Sciences (SPSS), incorporating regression analysis and moderation testing. Empirical findings reveal a statistically significant and positive correlation (r = 0.798) between ethical practices and organizational performance, with regression analysis indicating that ethical leadership accounts for 63.6% of the variance in performance outcomes. Descriptive statistics further underscore a high level of consensus among respondents regarding the salience of ethical codes, the clarity of leadership roles, and institutional accountability mechanisms. The study found that firm size moderates the relationship between ethical practices and performance of cooperatives in Kenya. The study concludes that ethical practices are not merely normative ideals but constitute strategic imperatives that underpin stakeholder trust, institutional legitimacy, and sustainable organizational growth. It recommends the institutionalization of ethics committees, integration of ethical standards into performance appraisal systems, and the embedding of ethical culture within governance frameworks.