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1Volume 12 2016

Co-operativeMalaysianJournal

of

StudiesFormerly known as Malaysian Journal of Co-operative Management (MJCM)

Volume 12Centre of Research and Consultancy

CO-OPERATIVE COLLEGE OF MALAYSIA

2 Malaysian Journal of Co-operative Studies

3Volume 12 2016

MALAYSIAN JOURNAL OF CO-OPERATIVE STUDIESEDITORIAL BOARD

AdvisorsAssoc. Prof. Dr. Abdul Rahman Abdul Razak Shaik (Co-operative College of Malaysia)Hj. Ramlan Kamsin (Co-operative College of Malaysia)

Chief EditorHjh. Rahimah Abd. Samad (Co-operative College of Malaysia)

Editorial Advisory BoardProf. Dr. Rosmimah Mohd Roslin (Universiti Teknologi MARA)Prof. Dr. Mohamad Sulaiman (International Islamic University of Malaysia)Assoc. Prof. Dr. Mohd Zainal Munshid Harun (University College of Technology Sarawak)Assoc. Prof. Dr. Ravichandran Moorthy (Universiti Kebangsaan Malaysia)Assoc. Prof. Dr. Zakiah Saleh (Universiti Malaya)Dato’ Syed Mohd Ghazali Wafa Syed Adwam Wafa (Angkasa Syariah Financing Co-operative Limited)Dr. Mohd Rafi Yaacob (Universiti Malaysia Kelantan)

Managing EditorFarahaini Mohd Hanif (Co-operative College of Malaysia)

SecretariatZaharatul Laili Zakaria (Co-operative College of Malaysia)

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The Implementation of Internal Control System Among Malaysian Credit Co-operatives AishahAriffin,FarahainiMohdHanif,SalwanaAli, NorAlyaniAbdulRazak,ZulkarnainMuhamadSori

Development and Prospect of Orang Asli Co-operatives:A Case Study of Perak and Pahang NurizahNoordin,MohdShahronAnuarSaid, ShamsulKhairiAbuHassan,JulianaMd.Yusop, AsanAliGolamHassan

Kualiti Perkhidmatan Maktab Koperasi Malaysia Cawangan Sarawak MohamadHaswardibinMorshidi

Training Needs Analysis for Malaysia Credit Co-operatives AzlifahAbas,NorAzlinaKassim,NorAslamiahAli, FarahainiMohdHanif,JuSamsuddinSafian

Measuring Control Mechanisms for Good Governance in Selected Multi-Purpose Cooperative Societies Affiliated to Robi Barga Cooperative Union, West Shoa Zone, Oromia Regional State of Ethiopia Dr.M.Karthikeyan,AtoMekonnenTolessaEdossa

Value Co-Creation Dimensions: Their Effect on Satisfaction of Cooperative Members YusmanYacob,JatiKasumaAli,HiramTing

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CONTENTS

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THE IMPLEMENTATION OF INTERNAL CONTROL SYSTEM AMONG MALAYSIAN CREDIT

CO-OPERATIVES

Aishah Ariffin, Farahaini Mohd Hanif*, Salwana Ali, Nor Alyani Abdul RazakCo-operativeCollegeofMalaysia

Zulkarnain Muhamad SoriMalaysianGraduateSchoolofEntrepreneurship&Business

UniversitiMalaysiaKelantan

ABSTRACT

Thisstudyaimstoexaminetheperceptiononinternalcontrolsystem(ICS)practicesamongMalaysiancreditco-operatives.Specifically,thisstudyprovidesinputtothosewhoareinvolvedindevelopingICSinco-operativenamely,theBoardMembers(BOARD),InternalAuditCommittee(IAC)andmanagementstaff.UsingMalaysianCo-operativeSocietiesCommission(MCSC)definitiononclassificationofco-operatives,fourgroupsofrespondentcooperativesbasedonsizeofcooperativesweredevelopedi.e.micro,small,mediumandlarge. Aftereliminatingwithincompletedata,536co-operativeswereselectedtobeincludedinthisstudy,where,twoquestionnairesweremailedtoco-operatives’BODandIAC. Afterthreefollowupprocedure,22%oftherespondentsreturnedthequestionnaire.Tocomplimentthequestionnaireanalysis,acasestudyonfourco-operativesusingunstructuredinterviewquestionswasconducted. ThedatawasanalysedbasedonthreethemesnamelyICSawareness,readinessandpractices.ItwasfoundthatthemajorityofrespondentsarehighlyawareontheimportanceofICSandtheybelievedthatICSshouldassociatewithmonitoringactivities. Consistently,thelargemajorityoftherespondentspointedoutthat,theirco-operativesarereadytoperformICSintheperspectiveofhumanresource,knowledge,andtraining.Ontheotherhand,themajorityofMalaysiancreditco-operativesarenotreadytoprovidesufficientfinancialresourcestoappointcompetentandskilledstaff. Finally,themajorityoftherespondents(>80percent)haveperformed60percentoftheICScomponentspresentedtothem. Also,56percentoftherespondentssubmittedperiodicreporttotheMCSCasrequiredbythelaw.ThesefindingsindicatethatMalaysiacreditco-operativesareawareandreadytoperformICStowardsgoodgovernanceintheinterestoftheirmembers.

Key words: Co-operative; Internal Control System; Internal Audit Committee; Awareness; Readiness; Practices.

*Corresponding author Email: [email protected]


INTRODUCTION

The co-operative movement was introduced in Malaysia by the colonial government with the aim to control debt problems among farmers and government servants. The co-operative sector were placed under the authority of the Malaysian Co-operative Society Commission (MCSC) and has become an important part of the economy and made a major impact on the lives of Malaysians. Co-operatives in Malaysia is governed by the Co-operative Societies Act 1993. Since the registration of the first thrift and loan co-operative in July 1922, co-operatives in Malaysia have undergone tremendous growth in the number of co-operatives, membership size, capital and total assets. From only 11 co-operatives in 1922, by 31 December 2011, the number has increased to 9,074 with membership of 7.04 million people, with RM 10.5 billion capitals and total asset worth RM 92.8 billion. However, in the 1980’s there has been a shift from single purpose to multipurpose co-operatives, i.e. co-operatives were involved in more than one activity. In addition, co-operatives also ventured into new sectors such as housing, transportation, investment, banking and etc.

MCSC classify credit co-operatives as a registered co-operative that runs credit function with main activity providing loans or other credit facilities to its members, as specified in the by-laws of the co-operative. As of December 2011 there are 589 credit co-operatives in Malaysia with membership of 1.9 million people, RM 4.7 billion capital and total assets worth RM 9.9 billion. The credit co-operatives were divided into clusters accordingly with the size of the co-operative: big, medium, small, and micro clusters (Table 1). This study focused on the credit co-operatives as the second main contributor after co-operative banks to the total revenue of all co-operatives in Malaysia. In terms of performance, most (39%) of the 100 best rank of co-operatives by MCSC in 2011 were credit co-operatives. Based on the above, credit co-operatives are expected to play a bigger role in co-operative movement in the future.

However, in the last few years, the number of malpractice cases involving co-operatives has come into the public attention. This shows a serious increasing trend in malpractice cases that indicates the integrity of the co-operative sector is at stake. In order to mitigate these problems, several efforts have been taken by the respective authorities. For example, MCSC had launched Co-operativeGovernanceGuidein 2007 that provides 15 general principles of good governance for the co-operative movement such as roles of the BOARD, the importance of Internal Control System (ICS) and auditing. In addition, the Co-operative College of Malaysia (CCM) provides appropriate trainings on co-operative management such as financial management, accounting and auditing, law, information and communication technology (ICT), and business management.

In spite of the above, malpractice cases still exist. Since ICS is an important component of good governance, it is important to investigate its current implementation. So far, no such study has been done, hence this study is timely. As an initial investigation, this study focuses on the awareness, readiness and practice of ICS. Credit co-operatives are selected as the subjects of the study, because as a group, they contribute 60 percent of the overall total annual turnover of the co-operative sector. The respondents are selected from among BOARD and Internal audit committee (IAC) members as they are the back bone of the co-operative.

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The main objective of this study is to examine the implementation of Internal Control System (ICS) among Malaysian Credit Co-operatives. Specifically, this research aims to:

a. Examine the level of awareness on importance of ICS in Malaysian credit co-operativeb. Examine the level of readiness on implementing ICS in Malaysian credit co-operativec. Determine the perception on level of ICS practice in Malaysian credit co-operativ

Table 1: Credit Co-operative by Cluster

Cluster Co-operativesLarge Credit Co-operatives 57MediumCredit Co-operatives 79Small Credit Co-operatives 115Micro Credit Co-operatives 285Total 536

REVIEW OF LITERATURE

Internal control is a set of system, procedure, and methods in business operation to prevent error and fraud which leads to achieving the objectives and goals of an organization. Internal control consists of five components including control environment, risk assessment, control activities, information and communication, and monitoring. All five components are often used to test the effectiveness of internal control (Gupta, 2008; Jokipii, 2010; Al-Qudah, 2011). Internal control system is also defined as a key system to firm success thus internal control system has been an increasing interest or concern after the collapse of the large firms (Michael, 1993; Fadzil et al., 2005; Kopp and O’Donnell, 2005).

Internal Control is defined differently in different countries. In the USA, the Committee of Sponsoring Organisations of the Treadway Commission (COSO) defined internal control as a process, ensured by an entity’s board of directors, management and other personnel. According to COSO, such a system was designed to provide reasonable assurance regarding the achievement of objectives such as effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations.

The main objectives of an internal control system are summarized in the Auditing Practices Board (APB) and the COSO guidelines. It is to ensure, as far as possible, (1) the orderly and efficient conduct of its business, including adherence to internal policies (2) the safeguarding of assets of the business , (3) the prevention and detection of fraud and error , (4) the accuracy and completeness of the accounting records, and (5) the timely preparation of financial information.


Implementation of Internal Control

As part of COSO’s work in identifying the factors that contributed to corporate fraud, the members also designed a model for corporations to address the lack of proper internal controls in corporate organizations (Jackson, 2006). In 1992, COSO established the internal controls integrated framework for developing an effective internal control system. This framework provides direction to any business that wishes to establish an effective internal control system (COSO, 1992). The corporate scandals of the 1980s saw many people lose their jobs (Marchetti, 2005) thus COSO was formed in 1985 to identify the various factors that can lead to fraudulent financial reporting and to develop recommendations to address these issues (Kieso, Weygandt, & Warfield, 2005). In 1987, COSO published its findings on the corporate irregularities of the 1980s. The report indicated that fraud occurred because of improper internal control that included not only financial statement controls but also certain environmental, institutional, or individual forces and opportunities (COSO, 1987). This now recognized framework consists of five interrelated components: control environment, risk assessment, control activities, information and communication, and monitoring (COSO,1992).

• Control EnvironmentControl Environment covers issues on corporate governance of an entity that sets the tone of an organization relating to control consciousness of their human resources (Takiah, Guat Hoe and Kalsom, 2012). Indeed, the wake of the Asian Financial Crisis has drawn attention of public worldwide including Malaysia on the need to carefully examine and improve corporate governance practices in general and internal control practices in specific, with the aim to restore investors’ confidence.According to COSO the control environment sets the tone for an organization (Pickett & Pickett, 2005) by influencing the control consciousness of its people. It is the foundation for all of the other components of internal control because it provides discipline, structure (Nearon, 2005), integrity, ethical values, employee competence, management’s philosophy and operating style. In its report, management should discuss how the control environment affects the achievement of entities financial reporting. It provides a guideline on how the organization should be designed so that it affects the personnel to have self-control which is necessary to detect and to prevent any error and irregularities.

• Risk AssessmentRisk Assessment is the identification and analysis of risks relevant to the achievement of objectives. This assessment determines how the risks should be managed (COSO, 1992). A precondition to risk assessment is the establishment of objectives that are linked at different levels and are internally consistent. It is because economic, industry, regulatory, and operating conditions will continue to change, mechanisms are needed to identify and deal with the special risks associated with change. Once the risks are known, appropriate procedures and their control activities are implemented to help ensure the attainment of the financial reporting objectives.

As for risk management it is about managing what should happen if these threats materialise including disaster recovery plans, crisis management and emergency procedures (Borodzicz, 2005). It is also about minimizing the probability of the threat leading to undesired effects by

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designing, implementing and operating internal controls that mitigate, avoid or transfer risk. Risk Management is increasingly recognized as being concerned with both positive and negative aspects of risk. Therefore this standard considers risk from both perspectives. Risk management is a relatively a mature research area in various operating functions such as production, logistics, information technology, and health and safety (Charette 1990; Borodzicz 2005).

• Control ActivitiesControl activities are the policies and procedures that ensure how management directives are executed (Whittington & Delaney, 2009). Control Activities include such activities as approvals, authorizations, verifications, reconciliations, reviews of operating performance, the safeguarding of assets, and the segregation of duties (Quall, 2004). These actions dissuade fraud or theft activities that could eventually lead to losses. Control activities also refers to policies, procedures and practices that assure management that objectives are achieved and risk mitigation strategies are carried out effectively. There are potentially many controls activities in the organization: including both manual and automated controls. SAS 94 and COSO suggest that control activities relate to policies and procedures pertaining to the segregation of duties, information processing, physical control and performance reviews (Arens et al., 2006, p.280).

• Information and CommunicationAccording to report of COSO, information is needed in all levels of an organization to run the business, and move towards achieve the entity’s objectives in all categories of operations, financial reporting and compliance. The quality of information includes ascertaining whether the content is appropriate, and the information is timely, current, accurate and accessible to the appropriate parties. Communication is inherent in the information system and must take place in a broader sense dealing with expectations, and responsibilities of individuals and groups. Effective communication also must occur in a broader sense by flowing down, across, and up the levels of the organization. All personnel must receive a clear message from top management that control responsibilities must be taken seriously (Quall, 2004).

In addition employees must have a means of communicating significant information upward (Jackson, 2006). Information systems deal not only with internally generated data but also information about external events, activities, and conditions necessary to informed business decision making and external reporting. Effective communication also must exist with external parties, such as customers, suppliers, regulators, and shareholders (COSO, 1992). It should consist of accounting information system to ensure that the accounting process is valid and reliable .The accounting system includes records and documents, accounting methods and the important functions. Moreover, that system should be communicated to everyone in the organization (Guy et al., 1999). In a good organisation, information system is essential to guide its operation process.

• MonitoringMonitoring is a process that assesses the quality of the internal control system’s performance over time through ongoing monitoring activities, separate evaluations, or a combination of the


two. It ensures that controls are operating as intended and that they are modified appropriately to cater for change in conditions (Arens et al. 2006). Monitoring on the financial aspect of the organization is an important part of monitoring. All components of ICS for financing will not be effective without monitoring activity (Guy et al., 1999; Meisser, 2003; Seibel, 2008). Monitoring financing system should be applied from the beginning to the end of financing process.

It has been suggested that monitoring form time to time may be useful and provides an opportunity to consider the continued effectiveness of the ongoing procedures. Henri, 2006 have also argued that high monitoring activity is more effective in situations that reflect a routine process meanwhile Fadzli et al., (2005) found that high internal control activity might lead to lower monitoring. To ensure the reasonable assurance regarding achievement of the organizations objectives, the monitoring process should be performed. It can be done directly into each activity or separated from the activity (Meisser, 2003).Monitoring activities may be ongoing or may be separate evaluations. Such activities should also be mentioned in

METHODOLOGY

The main aim of this study is to determine the level of awareness of co-operative’s management team and personnel on issues related to internal control system currently present in their establishment. Knowledge on the level of awareness of internal control procedures among co-operatives’ management team is important to ensure that they are on the right track in implementing this important aspect of co-operative management. On the other hand, readiness is to measure the co-operatives management teams’ on whether their establishment is ready for practicing internal control and also to identify issues associated with it. Finally, the variable practice is to determine the extent of internal control practice as perceived by the respondents representing the respective co-operatives. The data for this study come from a survey using a questionnaire, a case study and additional information extracted from related documents and reports published by MCSC.

Scope of Study

The respondents of this study are sampled from the Board of Directors (BOD)/management staff and Internal Audit Committee (IAC) of credit co-operatives of all sizes or clusters. For the purpose of this study, only co-operatives which are registered as credit co-operative were taken as respondents which consist of 56.4% micro, 20.5% small, 23.1% medium, and 13.4% big co-operatives except two co-operative banks namely Bank Rakyat and Bank Persatuan. Both were not included in this study due to considerable differences in their operation system, membership size, product, rules and prosedures of the operations and the total income.

Survey Study

There are 589 credit co-operatives registered with the MCSC as of 31st December 2011. However, only 536 among them have sufficient contact details, and thus form the sampling frame for this

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study. A reference was then made to the table of minimum sample sizes and statistical method suggested by Krejcie and Morgan (1970) and Zikmund (2000), and it was found that the study required a minimum sample of 230 credit co-operatives. Since the number of potential respondents was small, it was decided to distribute the questionnaire to all credit co-operatives that have complete background information i.e. 536 credit co-operatives. Those responded then form the sample of the study. The targeted respondents for the survey study are members of the IAC and BOD/management team due to their responsibility to ensure effective internal control mechanisms are being practiced within the co-operatives. The survey instrument for the co-operatives consists of two sets of questionnaires – the first set is on the profile of co-operative and the second is to measure the perception by co-operatives officials and management on the various study variables. For the survey portion of this study, two copies of the questionnaire were mailed to all co-operatives – one for a member of BOD/management and another for a member of IAC and they were given a month to return their responses. In the other hand, for the unstructured interview with the four co-operatives, a list of questions had been forwarded to the respective co-operatives and their feedbacks are further categorized in accordance to the study variables.

Study Variables

The main variables or dimensions for this study are awareness, readiness, and percieved practice. The perception of respondent to each item in the respective dimension is measured on a scale of 1 to 5, where (1)Stronglydisagree, (2)Disagree, (3)Neither, (4)Agree and (5) Stronglyagree. The mean scores and appropriate percentage scores are used to represent the respective dimensions in the analysis and discussion of results. The statistical methods considered by objective are summarised in Table 2. Test of normality is first conducted to determine the most appropriate methods of analyses.

Table 2 : Methods of Analysis by ObjectiveObjective Proposed Method

1. Examine the level of awareness of Malaysian Credit Co-operatives on the importance of ICS.

Frequency distribution and summarystatistics

2. Determine on their level of readiness for implementing ICS in their own co-operative

Frequency distribution and summary statistics

3. Determine the perception of Malaysian Credit Co-operatives on the level of ICS practise in their own co-operative

Frequency distribution and summary statistics

4. To identify factors associated with level of awareness and readiness of ICS among credit co-operatives – Co-operative cluster, category of respon-dent, etc

Comparison of mean/median between two independent samples or three or more independent samples


Reliability of The Study

Assessing the reliability of the study dimensions is important prior to any statistical analysis. In this study, the Alpha coefficient of reliability measures the reliability of a dimension in terms of its internal consistency, where the resulting coefficient ranges from 0 to 1. It is a common practice to take 0.60 as the minimum acceptable value for Alpha, and thus adopted as the criterion for this study. A pilot study was successfully conducted in September 2012 and the results of the pilot study show that all the study dimensions have high internal consistencies since the Cronbach alpha values are at least 0.9. Therefore, no further modification was made to the items in the scale for each dimension for the survey proper.

FINDINGS AND DISCUSSION

Response Rate

Respondents from 119 of the 536 co-operatives (22.2%) contacted returned a total of 238 sets of completed questionnaire to be used in the analysis of the study (Table 4-1). The response rates for large, medium and small co-operatives are considered satisfactory because generally the response rate for postal survey seldom exceeds 30 percent (Sekaran, 2000). However, the response rate for micro co-operatives is not satisfactory (12.2%) due to several factors. Among them, a few co-operatives have ceased operations, while quite a number refused to cooperate.

Table 3: Response Rate by Co-operatives Cluster

ClusterNumber of Forms

Feedback (%)Sent Returned

1. Large Co-operatives 57 20 35.12. Medium Co-operatives 79 23 29.13. Small Co-operatives 115 41 35.74. Micro Co-operatives 285 35 12.3

Overall 536 119 22.2

Background of The Study Sample

The discussion on the profile of the study sample is divided into the following three sub-sections: i. Co-operatives sample ii. Board Members (BOARD)/Management sample iii. Internal Audit Control (IAC) sample

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Co-operative Sample

Out of the 119 co-operatives represented in this study, slightly more than one-third were small co-operatives (34.5%) followed by micro co-operatives (29.4%) (Figure 1). The rest was made up of medium (19.3%) and large co-operatives (16.8%) The number of respondents from each co-operative was between one to three renpondents.

Figure 1: Distribution of Co-operatives by Cluster

Generally there are three categories of loans offered by credit co-operatives (Figure 2). All co-operatives sampled offer personal loans while about one-third (34.5%), provide loan for consumer goods such as household appliances and furniture. However, a small number also offered car loan (8.4%) and others (5.0%) such as emergency loans.

Figure 2: Type of Loan Provided by Credit Co-operative


Figure 3 shows the sources of financing for credit co-operatives in the sample. All those sampled identified internal funds such as share capital and subcription fees as their main source of financing, while slightly less than half (45.4%) received government grants/loans. A small proportion among them (7.6%) also obtained bank loans.

Figure 3: Sources of Credit Financing

Background of BOARD /Management Respondents

The demographic characteristics of the BOARD /Management respondents are mostly men (77.0%) and Malays (90.6%). The majority was above 50 years old (58.7%), particularly between 50 and 59 years old (34.20%), while less than ten percent (9.7%) was below 30 years old.

Overall, the BOARD /Management team members had reasonably good education background (Figure 4). In particular, more than half (52.8%) had at least STPM education, and in particular almost a quarter (22.0%) had at least a first degree. The rest (47.2%) among them completed Sijil Pelajaran Malaysia (SPM).

Figure 4: Education Level of BOARD Respondents

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In terms of working experience, most (46.3%) had served in co-operatives for less than five years, followed by those with 5 to 9 years of experience (22.5%) (Figure 5). Moreover, quite a large proportion (18.1%) had at least 15 years experience in managing credit co-operatives.

Figure 5: Length of Service for BOARD /Management Respondents

Background IAC Sample

Similar to the BOARD /Management sample, the majority among the IAC sample were also males (75.0%) and Malays (84.0%). However, in terms of age, this group is much older compared to the BOARD /Management group. In particular, almost two-thirds were at least 50 years old (64.0%) compared to less than sixty percent among the other group. Also, a much smaller proportion (5.3%) were below 30 years old.

Most (44.6%) of the IAC respondents have secondary education (Figure 6), while there were almost an equal proportion of STPM/Certificate/Diploma (28.4%) or at least a first degree qualification (27.0%). Meanwhile, in terms of experience shows that a very high proportion (78.7%) among the IAC respondents less than 5 years experience (78.7%). Very few have a vast experience serving credit co-operatives, with only 6.6 per cent have at most ten years experience. The above statistics imply that the BOARD /Management respondents are more educated and more experienced than their IAC counterparts.


Figure 6: Distribution of IAC Respondents by Education Level

Awareness of Internal Control System

On the average, the respondents are fully aware on the importance of internal control system in managing co-operatives as shown by the average score of 4.35 of the 20 components (Table 4). Individually, the average score ranges from a moderate 4.16 (Riskevaluationandco-operativeinternalcontrolactivitiesareperformedbasedonwrittenmissionandobjectives) to a high 4.50 (Periodicmonitoringonloaninstalmentsisimportanttoensurepromptpayment), while the median is either 5.0 (very aware) for two items (Periodicmonitoringonloaninstalmentsisimportanttoensurepromptpayment;Co-operativesboardmembers(BOARD)shouldensureinternalcontrolsystemsarefunctioningatalllevelsoftheorganization) or 4.0 (aware) for the other 18 items.

Based on the summary scores, in general, the respondents associate internal control with monitoring activities instituted by the co-operatives through their IAC and/or BOARD /management teams, proper guidelines and procedures. However, their awareness on risk assessment is slightly lower. One plausible reason could be due to lack of knowledge on risk assessment tools among them.

Table 4: Awareness of Internal Control System among Co-operatives

Awareness Average Median

1. Periodic monitoring on loan instalments is important to ensure prompt payment

4.50 5.00

2. Co-operatives board members (BOARD) should ensure internal control systems are functioning at all levels of the organization

4.45 5.00

3. Organization chart should clearly show BOARD /IAC’s power and responsibilities

4.44 4.00

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4. Co-operatives loan procedure is used as guideline for approval of loan application

4.44 4.00

5. IAC who understands their job scope is able to identify suitable audit plan to enhance monitoring of overall co-operative operation

4.44 4.00

6. Budget preparation based on co-operative main objective would enhance the overall co-operative’s achievement

4.43 4.00

7. Accurate information is necessary in making effective decision in co-operative

4.43 4.00

8. Feedback on co-operative services by members are essential in improving co-operative operation

4.42 4.00

9. Segregation of duties on every transaction process should be implemented to reduce the risk of fraud

4.38 4.00

10. Regulation on every co-operative activity is important to help identify relevant risks

4.37 4.00

11. It is important to regularly disclose significant information on co-operative activities to all members

4.34 4.00

12. Periodic reports submitted to MCSC are important to ensure co-operatives understand and conform to the relevant provision of law

4.33 4.00

13. Risk assessment done for each activity should be considered in co-operative’s short and long term planning.

4.32 4.00

14. Co-operative Key Performance Index (KPI) is important to indicate co-operative achievement in detail.

4.32 4.00

15. The results from continuous monitoring on relevant activities are important to identify follow up actions.

4.30 4.00

16. Risk analysis on relevant activities from time to time enhances co-operative’s understanding on risk implications.

4.29 4.00

17. All activities must comply with regulation to ensure a control system exist and implemented.

4.25 4.00

18. Periodic assessment on possibility of fraud could result in significant effect on co-operative operation.

4.24 4.00

19. Formations of subcommittees (e.g. Nomination Committee, Loan Committee) are essential in monitoring co-operative activities.

4.20 4.00

20. Risk evaluation and co-operative internal control activities are performed based on written mission and objectives

4.16 4.00

Overall 4.35 4.10


Readiness for Internal Control System

A total of 12 items were used to measure the level of readiness of co-operatives. The results ((Table 5) show that the majority of the respondents felt their co-operatives were ready to implement internal control system based on eleven of the twelve components (average scores exceed 4.00 and median = 4.0). In particular they are most positive in their IAC/ BOARD /management team members’ capability for implementing internal control activities acquired through training as well as experience. Necessary knowledge include accounting, auditing and finance and these are acquired through appropriate trainings identified by the co-operatives.

However, on the average they were less confident on the financial aspect of internal control system implementation. In particular, they were not very confident on the Co-operatives’ willingness to allocate enough money to get the services of skilled and competent people for internal control (average = 3.94) as they doubted that they would be willing to approve the financial allocation for that purpose (average = 4.06) due to insufficient funds (average = 4.10).

Table 5: Level of Readiness for Implementing Internal Control System in Co-operatives

Readiness Mean Median

1. IAC will be more efficient and effective when at least one person appointed is knowledgeable in the field of accounts and audit.

4.45 4.00

2. The training attended by BOARD /IAC will increase their efficiency in performing their duties.

4.41 4.00

3. Co-operatives BOARD /IAC consists of those who have basic knowledge of finance and accounting.

4.33 4.00

4. Co-operative sent BOARD /IAC for training to acquire knowledge on internal control system.

4.33 4.00

5. An internal audit unit should be set up to perform the internal audit function .

4.28 4.00

6. Co-operatives provide adequate training opportunities to BOARD /IAC to enhance their knowledge in performing their tasks.

4.22 4.00

7. Co-operatives allocate sufficient fund in the annual budget to implement or improve ICS activities.

4.19 4.00

8. Co-operatives have adequate and well trained staff to perform their tasks.

4.10 4.00

9. BOARD /IAC have a thorough knowledge of the underlying business related to co-operatives.

4.10 4.00

10. Co-operatives have sufficient funds for internal control purposes.

4.10 4.00

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11. The majority of co-operatives are willing to approve the financial allocation for the purpose of internal control.

4.06 4.00

12. Co-operative is willing to allocate sufficient fund to obtain services from skilled and competent people.

3.94 4.00

Overall 4.21 4.00

Perceived Level of Practice of Internal Control System

The perceived level of practice based on 17 components of internal control system is determined by the proportion of respondents who perceived that these components are already practiced by their respective co-operatives (Table 6). More than 80 percent claimed that their co-operatives already practiced ten out of the 17 components listed. The highest proportions among them (94.1%) said their co-operatives had written mission and objectives while three small co-operatives did not have them. A large proportion also claimed that loan approval is in accordance to the co-operative Loan Procedure (91.5%).

The perceived level of practice for the next eight components is considered moderate with rate of implementation between 89.8 percent (DecisionsmadebyBOARDfortheco-operativeisbasedonaccurateinformation) to 80.5 percent (Riskanalysisandinternalcontrolactivitiesarecarriedoutbasedonco-operative’svision,missionandobjectives). A large proportion also claimed that the DecisionsmadebyBOARDfortheco-operativeisbasedonaccurateinformation (89.8%), Budgetsarepreparedbasedonco-operative’smainobjectives,Internalcontrolisimplementedtoidentify,avoidandstopfraudulentactivitiesandInternalcontrolsystemintheco-operativeisfunctioningwell (each 88.1%).

However, less than 56 percent claimed that periodic reports are submitted to MCSC as required by law (55.9%). This is quite unexpected as it implies that quite a large proportion of co-operatives (44.1%) does not comply with the requirement as dictated by law.

Table 6: Co-operatives Implementation of the Respondent’s View

Implementation Yes (%)

1. Co-operative has written mission and objective in performing activities. 94.12.Approval of loan application is done according to the co-operative loan procedure.

91.5

3.Decisions made by BOARD for the co-operative is based on accurate information.

89.8

4.Budgets are prepared based on co-operative’s main objectives. 88.15.Internal control is implemented to identify, avoid and stop fraudulent activities.

88.1

6.Internal control system in the co-operative is functioning well. 88.1


7. Monitoring of loan instalment is carried out continuously to ensure payments are received as scheduled.

89.0

8. BOARD updates co-operative’s policy and guidelines regularly to help identify risks and appropriate course of actions.

86.4

9. Management of co-operative is informed regularly on activities and monitoring results for follow-up actions.

83.1

10.Risk analysis and internal control activities are carried out based on co-operative’s vision, mission and objectives.

80.5

11. The co-operative has an organization chart that shows the authority and responsibility of the BOARD /IAC clearly.

78.0

12. Significant information related to co-operative activities is disseminated to all members regularly.

77.1

13. Segregation of duties on every transaction process is implemented to reduce the risk of fraud.

76.3

14. Comprehensive monitoring by IAC for both financial and non-financial management is carried out based on its prepared audit plan.

76.3

15. Formations of subcommittees (e.g. Investment Committee, Loan Committee) are essential in monitoring co-operative activities.

75.4

16. Co-operative provides communication channels for members to give suggestions and complaints related to co-operative’s operation.

72.0

17. IAC submit periodic reports as required by MCSC. 55.9

CONCLUSIONS AND RECOMMENDATIONS

The study examines the level of awareness, readiness and also perception on the level of ICS practices among Malaysian credit co-operatives. The results from this study provide evidence that the level of awareness and readiness of the ICS component is very high. Based on the findings gathered in the study, it can be concluded that the respondents are fully aware associate internal control with monitoring activities. However, their awareness on risk assessment is slightly lower. It is further concluded that the respondents agreed their co-operative are ready to implement ICS. Among the factors identified are human resource, knowledge and training. However, they are less ready to allocate sufficient fund to obtain services from skilled and competent people. This study clearly implies that the practice of ICS in credit co-operatives is not fully implemented. The finding of this research provides significant feedback for the Co-operative College of Malaysia (CCM), the Malaysian Co-operative Societies Commission (MCSC) as well as the Ministry of Trade, Co-operative and Consumerism (MDTCC) to act upon to make the ICS an effective mechanism to enhance governance in co-operatives. The following actions are recommended:

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Co-operative College of Malaysia (CCM)

a) To increase the level of awareness on ICS, CCM should increase the number of convention, seminar and other academic – based program for co-operative BOARD and IAC.

b) CCM should increase the number of generic courses related to audit, risk assessment and ICS to increase from time to time.

c) CCM should publish more reading materials such as books, journals, articles and research on of co-operative for references.

d) CCM should revise the syllabus for courses related to ICS regularly to meet the current needs of co-operatives and to improve internal expertise on ICS.

Malaysian Co-operative Societies Commission (MCSC)

a) To motivate co-operative to implement ICS, MCSC should revise and update the guideline related to ICS “Pekeliling KP 16/2005: Garis Panduan Kawalan Dalaman bagi Koperasi” to suit current needs.

b) MCSC in collaboration with related bodies develop a rating system to evaluate the implementation of ICS among co-operatives especially for credit co-operatives.

c) The appointment period for IAC be extended from one year to at least two years to enable them understand the nature of co-operative operations and ICS in depth, thus increasing their management skill.

Credit Co-operative

a) Co-operative should disseminate internal information to their members through various media such as website, facebook, twitter and monthly buletin.

b) Co-operative should allocate funds to get consultation to develop their own customized ICS.c) Board members should increase the frequency of monitoring activities on ICS by ensuring

the IAC submit related reports as scheduled.

Recommendation for Future Research

The study proposed that future research use focus group interview method to enhance the research findings. Besides, future research can use a large scale of sampling that represents all co-operative in Malaysia. Future research could also need support from all relevant is necessary to ensure participation from all co-operatives selected.


REFERENCES

Adams, M. (1993). A systems theory approach to the internal audit. ManagerialAuditingJournal, 8(2), 3-8.

Al-Qudah, C. M. A. (2011). The impact of accounting information systems on effectiveness of internal control in Jordanian commercial banks “field study”. JournalofContemporary ResearchinBusiness, 2(9), 365-377.

Abdullah, A. (2000). Scienceofauditing–Theoreticalandscientificaspects. Amman: Dar Wael Printing and Publishing.

ANGKASA. (2005). Jika kawalan dalaman lemah. Pelancar.

Borodzicz, E. P. (2005). Risk,crisisandmanagement. New York: John Wiley and Sons.

Charette, R. (1990). Applicationstrategiesforriskmanagement. New York: McGraw-Hill.

Criteria of Control Board (CoCo). (1995). Guidanceoncontrol, Toronto: The Canadian Institute of Chartered Accountants.

Committee of Sponsoring Organizations (COSO). (1992). InternalControl-IntegratedFramework. New York: American Institute of Certified Public Accountants.

Committee of Sponsoring Organizations (COSO). (2011). InternalControl-IntegratedFramework. New York : American Institute of Certified Public Accountants.

Duncan, J.B., Flesher, D.L., & Stocks, M.H. (1999). Internal control systems in US churches. An examination of the effects of church size and denomination on systems of internal control.Accounting,Auditing&AccountabilityJournal,12(2), 142-163.

Fadzil, F. H., Haron, H., & Jantan, M. (2005). Internal auditing practice and internal control system. ManagerialAuditingJournal, 20(8), 844-866.

Gupta, P. P. (2008). Management’s evaluation of internal controls under Section 404 (a) using the COSO 1992 control framework: Evidence from practice. InternationalJournalofDisclosureand Governance, 5(1), 48-68.

Ibrahim Hashim. (2002). Auditing Principles for Co-operative Societies.

Information paper. (2006). Internalcontrols-Areviewofcurrentdevelopments. New York: International Federation of Accountants (IFAC).

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Jackson, M. P. (2006). Sarbanes-Oxleyforsmallbusinessleveragingcomplianceformaximumadvantage.Hoboken: John Wiley and Sons.

Jaafari, A. (2001). Management of risks, uncertainties and opportunities on projects: Time for a fundamental shift. InternationalJournalofProjectsManagement, 19(2), 89-101.

Jokipii, A. (2010). Determinants and consequences of internal control in firms: A contingency theory based analysis. JournalofManagementGovernance, 14(2), 115-144.

Khaled, A. A. (2004). Auditingfromtheoreticalandpracticalaspects (2nd ed). Amman: Wael Publishing & Distribution House.

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2005). IntermediateAccounting. New York: John Wiley and Sons.

Kopp, L. S., & O’Donnell, E. (2005). The influence of business-process focus on category knowledge and internal control evaluation. Accounting,OrganizationsandSociety, 30(5), 423-434.

Malaysia Co-operative Societies Commission.(2011).Corporate data. Retrieved from http://www.skm.gov.my/en/data-korporat-skm.

Marchetti, M.A. (2005). BeyondSarbanex-Oxleycomplianceeffectiveenterpriseriskmanagement. Hoboken: John Wiley and Sons.

March, J. G., & Shapira, Z. (1987). Managerial perspectives on risk and risk taking.ManagementScience,33(11), 1404-1418.

Mills, P. A. (1995). Milinaw University: An instructional case in internal control and ethics. IssuesinAccountingEducation, 10(2), 384.

Nearon, H.B. (2005). Information technology security engagement on evolving specialty. PA Journal, 77(10), 51.

National Commission on Fraudulent Reporting. (1987). Report of the National Commissions on Fraudulent Reporting, New York: NationalCommissiononFraudulentReporting.

Oprean, I. (2002). Controlandfinancialaudit. Deva: Intelcredo Publishing.

Palfi, C., & Muresan, M. (2009). Survey on weaknesses of banks internal control systems. JournalofInternationalFinanceandEconomics, 9(1), 106.

Pickett, S., & Pickett, J. (2005). Auditingformanagers:Theultimateriskmanagementtool. Chichester: John Wiley and Sons.


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Rutteman Report. (1994). InternalControlandFinancialReporting:GuidanceforDirectorsofListedCompaniesregisteredintheUK. London: The Institute of Chartered Accountants in England and Wales.

Shon, J. J., & Weiss, R. (2009). SOX 404 Effective internal control systems and executive compensation. JournalofAppliedBusinessandEconomics, 10, pp.79-90.

Turnbull. (1999). InternalControl:GuidanceforDirectorsofListedCompaniesIncorporatedintheUnitedKingdom. London: Institute of Chartered Accountants in England and Wales.

Whittington, R. O., & Delaney, R. D. (2009). Wiley CPA exam review (36th Ed). Hoboken: John Wiley and Sons.

Zhang, Y., Zhou, J., & Zhou, N. (2007). Audit committee quality, auditor independence, and internal control weaknesses. JournalofAccountingandPublicPolicy, 26(3), pp.300-327.

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DEVELOPMENT AND PROSPECT OF ORANG ASLI CO-OPERATIVES: A CASE STUDY OF PERAK AND PAHANG

Nurizah Noordin, Mohd Shahron Anuar Said, Shamsul Khairi Abu Hassan, Juliana Md. Yusop*

Co-operativeCollegeofMalaysia

Asan Ali Golam HassanSchoolofEconomics,FinanceandBanking

UniversitiUtaraMalaysia

ABSTRACT

Thisresearchwasundertakento identify thestatusandprogressof the indigenouspeopleorso called theOrangAsli co-operatives, their participation in economic and entrepreneurialactivities,governancepractices,andpotentialgrowth.Theindividualhouseholdeconomicandentrepreneurial activitiesamongst theOrangAsli communitywerealso examined toprovidefurtherinsightstotheresearch. Atotalof33OrangAslico-operativesinPerakandPahangand655headsofhouseholds(HOHs),ofwhom241ofthemwereco-operativememberswereselected as the sample for the study. Data were collected through surveys using structuredquestionnaires and interviewswith various stakeholders, conducted by the researcher and agroup of trained enumerators from amongst theOrangAsli community. The study observedthatthedevelopmentoftheOrangAslico-operativeswaslargelylaggingbehindparticularlyin terms of financial performance, business capacity, leadership,management expertise andeconomicparticipation bymembers. Mostoftheco-operativeshavenotbeenabletoaccumulateadequatecapitalandestablishanyformofsustainableeconomicactivitiestogeneratefundforthe co-operatives.Management of the co-operatives and its business are entirely run by theBoardwholacksbusinessexpertiseandexperience. TheOrangAslico-operatives alsofacedpoorparticipationbymembers,consumers,employeesand suppliers,pooraccessibilitytofundsandinsufficientsupportfromrelatedagencies.Thestudyfoundthatonlyasmallpercentageofindividualsare involvedinproducingandmarketingproductsandservicesat thecommunityandlocallevel.Besidespoorinfrastructurewhichlimitsmobility,inaccessibilitytofundsandunavailabilityofbusinesspremise tospureconomicactivities,OrangAslientrepreneursalsoencounterbureaucraticproblemsinobtainingpermits,licenses,andapprovalofworkingpaper.Toimprovetheperformanceof theOrangAslico-operatives, thestudyproposeda“businessdevelopment model”thatputsemphasisonthecollaborationandstrategic alliancebetweentheco-operatives,theprivatesector, governmentagencies,governmentlinkcompanies(GLC)and non-government institutions. Adequate incentives and policies must also be in place inorderfortheco-operativestoachieveitsroleasaneffectiveplatformtoenhanceeconomicandentrepreneurialactivitiesanddeveloptheircommunitieseconomicallyandsocially.

Key words: Indigenous co-operatives, Orang Asli, business and management



INTRODUCTION

Orang Asli are indigenous people who first inhabit Peninsular Malaysia around 8th Century B.C, or about 10,000 years ago (Fauzi, 2006). The Orang Asli community in Peninsular Malayis is made up of three main groups, namely, the Senoi (54.9%), Proto-Malays (42.3%) and Negrito (2.8%). There are 178,197 Orang Asli in Peninsular Malaysia comprising of 36,658 families residing in 852 Orang Asli settlements (JAKOA, 2011). In terms of geographical distribution, most Orang Asli settlements are located in Pahang and Perak, accounting for more than two-thirds of the total Orang Asli population.

The socio-economy and living standard of the Orang Asli community are lagging behind in comparison with the population of Malaysia as a whole. The community faces a number of problems including high incidence of poverty, limited job opportunities, large school dropouts, low health status, limited social infrastructure, and problems associated with land settlement and ownership. Thus to strengthen the community, various educational, skill building, infrastructure and social programmes was carried out by the government. In addition, entrepreneurial activities and the formation of co-operatives among the Orang Asli communities were encouraged to help them market their produce, widen their business activities, increase their income, and enhance their entrepreneurial skills. Despite an increasing number of Orang Asli co-operatives being formed since 2009, membership remains small (8.2%) and performance in terms of economic participation questionable. Therefore, the objective of this research is to evaluate the development of the Orang Asli’s co-operatives from the perspective of economic performance, members’ involvement and co-operative practices, management, and social responsibility. Further, the general profile of the community under study is examined to shed more lights. The study also seek to identify the success factors associated with the co-operatives and constraints faced that could hinder its progress.


The term Orang Asli as defined in the relevant act can only be used to describe the pribumi (literally ‘the sons of the land’) status in Peninsular Malaysia. In Sabah and Sarawak, the pribumi people are defined as Bumiputra (Khairul Hisyam et. Al, 2007; Hasan Mat Nor, 1998).

According to the PelanStrategikKemajuanOrangAsli(2011), and from the study by Khairul Hisham etal. (2007), the sole dependence on traditional economic resources such as collecting jungle produce, fishing and hunting makes it difficult for the Orang Asli to move out of poverty. Zahid etal. (1996) had a similar view that the economic activities of Orang Asli that are based on traditional resources are incapable of generating a permanent and stable income. Therefore. to take the Orang Asli out of their traditional livelihood, the government gave them land planted with rubber and oil palm and encouraged them to plant cash crops such as bamboo, rattan and rear fish, and commercialise their economic activities. This would make them competitive

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economically, consistent with the aim of making agriculture a business and a source of family income to the Orang Asli community (JAKOA, 2011).

In the year 2010, a total of 31.16% of the Orang Asli community has household income below the poverty line. The government plans to reduce the proportion of Orang Asli under poverty to below 25 per cent by 2015 (JAKOA, 2011). Through the Orang Asli Development Department (JAKOA) a number of initiatives was taken to transform the Orang Asli community at large. One of the strategies and plan of action to develop the economy of Orang Asli (PelanStrategikKemajuanOrangAsli, 2011-2015) is to empower the Orang Asli’s co-operatives by establishing close cooperation between the co-operative and agencies as well as with other co-operative bodies (JAKOA, 2011).

According to the study, Tunisan Seman 2002, the involvement of Orang Asli in economic activities is greatly influenced by their local environment, attitude towards development and changes, relationship with the surrounding communities and awareness about the importance of monetising their daily activities. The study also revealed that JAKOA’s role in providing job opportunities and development projects had a great influence in changing the mindset of Orang Asli on economy. In any case, the above study is of the opinion that changing the mindset of Orang Asli is foremost in developing and improving their community.

There are several factors that influence the involvement of Orang Asli in business. These are the desire to be seen as wanting to be successful and an actual deep interest in business (Sokyen Man, 1998). Even with these factors, Orang Asli still face many problems such as the inability to plan and manage business, limited capital, lack of communication skill to deal with customers, and lack of business experience. Azlizan Talib and Hamzah Jusoh (2012) have a similar opinion that limited capital, little exposure and low business skill, little entrepreneurship training, lack of assistance and support from outside and lack of awareness about the need to change their livelihood inhibit the involvement of Orang Asli in business. In any case, the above study shows that having connections with politicians would enable Orang Asli to venture into business, carry out economic activities and develop entrepreneurship.

In other countries, the involvement of the aborigines in economic activities and their success in business is influenced by a number of internal and external factors. The study about aboriginal businesses in desert regions of Australia by MF Rola-Rubzen and J Ferguson (2009) found that internal factors such as ideas, objectives, individual commitment, entrepreneurial capability and skills, supporting staff and resource readiness were critical factors that influenced the success of a business or economic project. External factors such as mechanism of external support, economic and market conditions, government policies and socio-culture determine the extent to which the aborigines venture successfully into business or economic projects. A study carried out on several co-operatives of aboriginal people in Canada by Ketilson dan Mac Pherson (2001) revealed that the organisations had been successful in raising the standard of living of the former and added value to their activities. The co-operatives run by aboriginal


people in Canada had not only been successful in enhancing entrepreneurship, but had also been successful in venturing into several sectors such as finance, fishery, housing and consumerism. Moreover, these co-operatives had been successful in providing for the needs of their local communities such as health, education and old folk homes.

SCOPE AND METHODOLOGY OF STUDY

The study focuses only on several selected Orang Asli settlements, covering four districts in Perak (Batang Padang, Kinta, Kuala Kangsar and Hulu Perak) and three districts in Pahang (Bentong, Kuala Lipis & Rompin). The sample of Orang Asli co-operatives was obtained using the purposive sampling technique. The sample population comprises 16 co-operatives in Perak and 28 co-operatives in Pahang. However, the sampling requirement dictated that all the 16 co-operatives in Perak were included, whereas only 17 from the initial 28 in Pahang were selected, hence the final sample size of 33 co-operatives. In selecting the sample of heads of families (HOHs), the convenience sampling technique was used. The respondents must be permanent settlers in the mukim (sub-district), post (a prefix on the name of an Orang Asli settlement that is in reference to a postal address), or a village where the sample co-operatives are located. A total of 375 HOHs, comprising 234 from Perak and 141 from Pahang, were selected following Sekaran U (1999)’s “sample size for a given population size” table and using the proportionate stratified random sampling technique.

The primary data were obtained from survey conducted using three sets of structured questionnaires based on the objective of the study and literature review and unstructured face-to-face interview of respondents. The computer programme used for processing and analysing the data is SPSS Version 20. Information on co-operatives, members of co-operatives and HOHs are produced in the form of percentages, frequency tables and cross-tabulation.

RESULTS AND DISCUSSION

This section presents and discuses the results of data analysis on the background of the co-operatives, its management, involvement of members, economic activities and the progress of the Orang Asli co-operatives.

Background and Management of Co-operatives

Of the 33 co-operatives in the sample, two-thirds (66.7%) were only registered in the last two years, the period when the establishment of co-operatives was being pursued aggressively. Four co-operatives were registered more than five years before. Only 21 of the co-operatives have more than 100 members each, and as a whole each co-operative is small in terms of membership size relative to the population of Orang Asli in the area the co-operative is located.

Further, none of the co-operatives has its own office and staff, and none has any stable economic activities as yet. This situation arises because of lack of fund and that the co-operatives have not

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been able to identify and plan any suitable economic projects. On a good note, these co-operatives do have plans to go into growing of plantation crops, livestock rearing, retailing, operating rest houses, doing contract works, logging, running petrol stations, running bus service and operating bulk selling centres. Alas, these economic projects would not be able to take off without JAKOA, SKM and other agencies giving financial support, opportunities and supervision. The results support study conducted by Tunisan Seman (2002) and MF Rola-Rubzen and J Ferguson (2009).

From the perspective of the management of co-operatives, the board members are below 50 years in age, with most of the chairmen, secretaries and treasurers having little experience as co-operative board members and with only primary or secondary education. Slightly more than half of the board members (51.5%) are self-employed as traders, contractors, rubber smallholders, hunters and collectors of jungle produce.

Management of Co-operatives and Members Involvement

As a whole, the co-operative boards do not convene meetings as regularly as that dictated by the rule. As many as 28 co-operative boards (84.9%) meet less than six times a year, implying that the board members do not discuss problems and plan their activities frequently enough. However, the attendance of board members in any meeting, if held, is high, exceeding 80 per cent. This suggests that as a whole, the board members are supportive of their co-operatives. What is needed is someone among them who is able to convince that they should hold meetings more regularly and have the annual general meetings as scheduled.

The study reveals that participation by members in any activity of the co-operatives is very low, unless the activities give economic benefit directly to the families such as being appointed as contractors, plantation supervisors and suppliers of jungle produce and handicrafts. That the majority of the co-operative members do not attend annual general meetings may have to do with the fact that they live in settlements far from the co-operatives and that their awareness on the importance of co-operatives is low.

Economic and Social Activities of Co-operatives

Although at the moment majority of Orang Asli co-operatives under study have not been carrying out any activities, a small number have successfully organize some economic activities for their members. Several of the latter have more than one activity which include plantation works, agricultural projects, fish rearing, contract work, transportation, tourism, petrol station and retailing.

A small number of co-operatives was also involved in organizing social activities such as providing courses, trainings, credit, funeral expenses and agricultural advisory services to members. As most Orang Asli co-operatives do not have stable income generating activities, it is difficult to provide social amenities for their members due to lack of fund. Despite this outlook, study conducted by Ketilson dan Mac Pherson (2001) shows aboriginal co-operatives has the capacity to increase the standard of living.


Performance of Co-operatives

As a whole, the financial situation of the co-operatives is in a dire state. The main problem is that members could only come up with very little capital contribution. A number of co-operatives do not even have share capital although they have long been registered. This situation arises because members are not aware of the importance of putting in their contribution or are not confident about investing in the co-operatives, apart from the fact that they have small income to part with. This issue is confirmed through the findings of Zahid etal. (1996), Sokyen Man (1998) and Khairul Hisham etal. (2007) that some Orang Asli are incapable of generating permanent and stable income, hence they are unable to fulfill minimum amount of share capital. Most of the co-operatives do not have any asset and do not generate revenue, let alone make profit. Features and Success Factors of Active Co-operatives

The study has identified four co-operatives that are active and have the potential to be successful. The ability of a co-operative to run well, overcome the various challenges and be successful depends a lot on many internal and external factors. Among the factors that have been identified to be associated with the success of the four co-operatives above are listed in Table 1.

Table 1: Success Factors of Active Co-operatives

Success Factor Description

1. Awareness on and understanding of co-operatives

- Early engagement with the Orang Asli to make them understand and accept the concept of co-operatives

2. Relationship with the Orang Asli community

- Long-term relationship with co-operatives (including related government agencies and NGOs) to establish the confidence and trust of the Orang Asli community towards co-operatives

3. Commitment and leadership - Commitment and leadership abilities of the board members in capitalizing on the Orang Asli culture of being respectful to their leaders.

4. Competency of the co-operative board members and the staff

- Knowledge and skill in management and the business venture

- Combination of board members’ experience and external expertise

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5. Capacity of the Orang Asli community - Readiness from the point of mental and work culture

- Active involvement of members and the community at large in co-operatives’ activities

- Knowledge and the skills to build their ability, particularly among the younger generation

6. Support and cooperation from external entities

- Opportunities given by external entities- Good relationship with community and

political leaders - Assistance in the form of financial,

materials and know-how.

Involvement of Members and Co-operative Practices

Although the formation of Orang Asli co-operatives is largely accomplished through the assistance of outside organisations (JAKOA and SKM), most members joined the co-operatives on account of their own awareness and interest. The heads of the Orang Asli communities (TokBatin), families and friends also have an influence on members joining the co-operatives, apart from the desire to increase their income from economic activities of the co-operatives. It must be emphasised, however, that the participation of members in the activities of the co-operatives whether they serve as suppliers or workers or just being customers is very small. In retrospect, the co-operatives itself contribute to this situation because they are not active and there is a lack of social activities for members.

A total of 115 members (48.2%) have attended the co-operatives’ AGM, while 97 members (41%) have attended talks and courses on co-operatives organised by ANGKASA, Co-operative College of Malaysia (MKM) or Malaysia Cooperative Society Commission (SKM). It is noted that co-operative members in Perak have been paid dividend for being members, provided with various assistance and discounts on goods purchased. They have also enjoyed community-based functions.

Profile of Heads of Household

The study sample of 665 heads of households (HOHs) from Pahang and Perak are mostly from the Semai tribe, followed by the Temiar and Jakun tribes. The majority (85%) are males and between 40 to 50 years old. More than half do not profess any religion or belief, while the rest are either Muslims or Christians. The majority of the HOHs in the study completed only a primary education, while 131 among them (20%) have had no formal education. However, a few among them (18 or 1.4%) have had the opportunity to go for higher education, either in academic or in skills training.


More than half among the household heads are married, with one to three children living with them. In addition to their own children, there are also between one to three relatives staying with them, implying that the HOHs are supporting larger households. Almost three-quarters of the HOHs are self-employed as farmers, smallholders or traders in their own villages or settlements. Only a few (14.7%) are employed in the public or private sectors.

Many of the HOHs in this study do not depend on jungle produce such as rattan, damar, agarwood (gaharu), fishing and hunting as their main source of income. The study shows that only a small proportion (14.5%) is still in this vocation. The decline on the dependence on jungle produce is due to the fact that it is incapable of providing a strong base for a continuous economic development, jungle resources are becoming scarce due to excessive exploitation, which logging and land clearing have impacted adversely on the natural environment. In addition to the above, the middlemen’s control on price brought damaging consequences to the Orang Asli, such as being paid below the market price for their produce and even cheated.

The majority of the HOHs earn an average monthly income of at most RM700 from their main economic activity. To supplement their meagre income, they do other work such as trading, gathering jungle produce, farming, livestock rearing, and planting rubber and oil palm, earning an additional income of between RM100 and RM400 a month. However, there are those who earn an additional income of RM700-RM1000 from their supplementary work. The breakdown of their monthly expenditure is as follows: RM200-RM300 for food; RM200 for transportation; RM200-RM400 for children’s education; and less than RM200 for recreation and entertainment. A few among them (44 respondents) set aside a portion of their income for saving and investment.

Involvement in Business

There are 71 respondents involved in a small-scale business of marketing and services in their own villages. Among them, 26 are marketing their own products at the district level, while two others at the state level. The business capital of most of these business operators are small – between RM1000 and RM3000, and invariably from their own savings and that they only employ family members. More than half among them have the experience and skills in running a business, and have received a formal training in their chosen business venture.

Although there is avenue for expanding their business, they face problems related to business capital and premise to run their business. Their operating centres are far from the supply points and marketplace, and this adversely affects their cost and selling prices. There are also competitions from Chinese companies, Kampuchea traders and others and these affect their expansion potential. They also encounter problem of customers buying on credit and supplier’s inability to deliver goods, apart from the difficulty in getting business licence/permits and securing business grants from government agencies.

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The findings from this study indicate that Orang Asli co-operatives are faced with many constrains that affect their performance and competitive position and is in great need of assistance from government and various related agencies. Some of the reason identified are summarised in Table 2.

Table 2: Constraints Faced by Orang Asli Co-operatives

Constraints Details

1. Location - Being far away from town centres makes it difficult for them to communicate and obtain supply, thus adversely affecting cost.

2. Limited resources - Difficulty in obtaining land and supply- Difficulty in obtaining financial assistance/funding

for economic activities- The unavailability of appropriate business premises

to enhance entrepreneurship3. Low competency - Low education, skills and expertise among members

of the community and co-operatives- Low creativity and innovativeness

4. Dependence on the government and JAKOA

- Dependence on opportunities and assistance from the government, JAKOA and other agencies (Top-bottom)

- Difficulty in establishing strategic alliances with the private sector

5. Sub-optimal infrastructure - Unmetalled roads, lack of water and electricity supply, non-existent telephone and internet facilities rendering it difficult to communicate with outsiders.

6. Little knowledge on co-operatives

- Little understanding on the principle, foundations and practices of co-operatives

- Low participation in and support for the business activities of co-operatives

7. Values and culture - Most of the Orang Asli are comfortable with the status quo and not inclined towards materialism.

In order to improve the ability of the Orang Asli co-operatives, the following short and long term development plans and a development model are recommended. The model proposed is suitable as a reference to develop the Orang Asli co-operatives.


Short-Term Development Plans

Increasing Awareness about Co-operative through TrainingEducation and skills training on business planning, business management, marketing and other specific areas should be made available for the younger generation, entrepreneurs with potential, and co-operative members. Skills development programme should focus on business management and business areas identified to have a potential to grow in the locality. Once the Orang Asli are aware about the importance of being involved in co-operatives, MKM can organize special programmes on the preparation of working papers and provide the grant to form co-operatives.

Instilling Excellent Work Culture through Recruitment and Orientation ProgrammesThere is a need for recruitment and orientation programmes for Orang Asli entering the job market to make them more disciplined and dedicated to their jobs. The orientation programmes should also be extended to those about to venture into business so that the risk of business failure is minimised and that they would not be saddled with ineffectiveness. On the other hand, the agencies responsible for co-operatives and the development of the Orang Asli should provide exposure, supervision and monitor the co-operatives’s programmes closely. There is also a need to improve the infrastructure and amenities in Orang Asli settlements.

Long-Term Development Plan

Increasing the Active Involvement of Public and Private SectorsThe responsibility of improving the economy of the Orang Asli and their co-operatives should not be placed solely on the government, government agencies and NGOs, but should also be shouldered by the private sector and government-linked companies (GLCs) through contract farming. The involvement of the private sector is not just to support the drive to empower the Orang Asli co-operatives to be more active in economic activities, but more importantly to enhance entrepreneurship and develop the community economically and socially. The involvement of the private sector can be in the form of providing employment opportunities, becoming investors, shareholders and business partners in their traditional business as well as in new knowledge-based business ventures. Public organisations and agencies should work hand-in-hand with the private sector in formulating policies, planning and implementing economic programmes. The government could assist to widen the activities of co-operatives by introducing KedaiRakyat1Malaysia (One Malaysia People’s Shop/Mart, KRIM), KedaiKoperasi1Malaysia (One Malaysia Co-operative Shop/Mart), TransformasiKedaiRuncit (Grocery Store Transformation Programme, TUKAR) and various other programmes targeted specifically for the Orang Asli community.

Boosting the Growth of Entrepreneurship through Cottage IndustryThe various organisations (agencies, Orang Asli communities, co-operatives, investors, corporate bodies and private sector) must be focused and formulate strategies through cooperation and partnership to encourage entrepreneurship activities and establish cottage industry within the

31Volume 12 2016

Orang Asli communities, emphasizing on small groups participation and through co-operatives. Among the cottage industry products that are feasible for Orang Asli are handicrafts, honey bee, tongkatali (a medicinal plant), sculpture, homestay and agro-tourism. The decision to embark on any industry should be based on the local demand and availability of resources and skills. In addition, they must be provided with training and know-how to start a business, provided with access to funding, assistance in getting supplies and marketing the products. In addition, continuous mentoring programme should be designed to ensure that entrepreneurs and co-operatives are successful and resilient.

Orang Asli Co-operative Development ModelBased on the findings of this study, a business model for Orang Asli community where it involves the co-operatives, government agencies and the private sector is proposed. The business model is formulated following the approach adopted by the New Economic Model in transforming the country’s economy and encompassing the following components:

a. High income - Projects/products that generate high incomeb. Sustainability -Projects/products that can sustain over a long period of timec. Inclusiveness - Projects/projects that are beneficial to everyone in the local community

In the initial stage, the relevant government agencies and the co-operatives involved (if the co-operatives have indeed been formed) will identify products/activities available around the Orang Asli settlements that could be commercialised. If the project evaluation deems such product/activity commercially viable, a MoU/MoA is prepared together by the government agencies, the co-operatives involved and the public sector/GLC, covering policies, incentives and project financing. While this is on-going, courses on awareness on co-operatives, leadership and other relevant courses are conducted with the participation of designated Orang Asli communities, including especially the youth.

After the signing of the agreement, the government agency concerned will conduct training for co-operative staff, while other agencies provide technical trainings and equipment appropriate for the business selected. The private sector/GLC will be responsible to monitor the quality of goods produced by the co-operatives so that these meet the standard they set and are thus marketable. These products are then sold to the private sector/GLC under the contract farming arrangement or any other form of joint-venture as agreed in the MoU/MoA.

Figure 1 summarises the proposed development model for the Orang Asli co-operatives encompassing the functions of the government and implementing agencies, the activities, both production and marketing, and entrepreneurship development. Central in the model is the role of co-operatives in the economic development of the of the Orang Asli community.


Figure 1: Development Model for Orang Asli Co-operatives

15

Figure 1: Development Model for Orang Asli Co-operatives

Government Implementing Agencies

Products and Services perkhidmatan

Employment

Co-‐operative

Investment

� Education and skill building

� Paradigm Shift and leadership

� Policy � Incentive � Funding

NEM (Inclusiveness, Sustainability, High

Income and Quality of life)

MoU/MoA

Business Activities

Marketing Marketing

Non Co-‐operative (competitor)

Co-‐operative

Private Sector

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REFERENCES

Bachir Belhadji, Socio-EconomicProfileofAboriginalCo-operativesinCanada, Government of Canada, Jan 2001.

Dewan Bahasa Pustaka. (1964). KamusInggeris-MelayuDewan.Kuala Lumpur: Dewan Bahasa dan Pustaka.

Harun, M., & Fauzi, M. (2006). Kemiskinan bandar: kajian kes masyarakat Orang Asli di Negeri Perak.

Hasan Mat Nor. (1998). Wargapribumimenghadapicabaranpembangunan. Kertas Kadangkala Bil. 8. Jabatan Antropologi & Sosiologi: Universiti Kebangsaan Malaysia.

Hayati Md. Salleh et al. (2008). GerakankoperasidiMalaysia. Selangor: Maktab Kerjasama Malaysia.

Indigenous Economic Development Scheme. (2007). Gunya Discussion paper.

Ismail, M., Yaacob, M., Rahman, H., Harun, M., & Fauzi, M. (2011). Sejarah dakwah danpengislamanOrangAslidiNegeriPerak.

Jabatan Kemajuan Orang Asli. (2011). PelanstrategikkemajuanOrangAsli2011–2015.Kuala Lumpur: Bahagian Perancangan dan Penyelidikan Jabatan Kemajuan Orang Asli.

Kamarudin, K. H. (2005). Merangkastrategipembangunanmapankomunitiorangasli:suatupenilaiantahapkemapanankomunitiTemiardiRancanganPengumpulanSemula(RPS)Legap&PosKualaMu,DaerahKualaKangsar,Perak (Doctoral dissertation, Universiti Teknologi Malaysia, Faculty of Built Environment).

Ketilson, L. H., & MacPherson, I. (2001). A report onAboriginal co-operatives inCanada:Current situation and potential for growth. Centre for the Study of Co-operatives, University of Saskatchewan.

Khairul Hisyam Kamarudin, & Ibrahim Ngah. (2007).PembangunanmapanOrangAsli.Skudai, Johor: Penerbit Universiti Teknologi Malaysia.

Kementerian Pembangunan Wanita, Keluarga dan Masyarakat. Retrieved from http://www.kpwkm.gov.my/nkra/definisi.

Suruhanjaya Koperasi Malaysia. Retrieved from http://www.skm.gov.my/statistik.


Malaysia. (1974). Undang-undangMalaysiaAkta134. (Akta Orang Asli 1954 disemak 1974).

Nicholas, C. (2000). The Orang Asli And The Contest For Resources. Indigenous Politics,DevelopmentAndIdentityInPeninsularMalaysia.Copenhagen, Denmark: International Work Group For Indigenous Affairs.

Perak, K. L. K. J., Ismail, M. B., & Harun, D. M. F. B. M. (2011). Tahap kefahaman Islam di kalangan masyarakat Orang Asli.

Radzi, H., Sultan, M., Mohamed, F., Jalaluddin, N. H., & Ahmad, Z. (2012). Analisis bahasa komunikasi bangsa minoriti negrito menerusi pengimbuhan dan peminjaman kata.

GEMAOnlineJournalofLanguageStudies,12(3).

Rola-Rubzen, M.F., & Ferguson, J. (2009). Criticalsuccessfactorsforaboriginalbusinessesinthedesert, DKCRC Working Paper 38, Desert Knowledge CRC.

Sakaran, U. (1984). Research methods for busines. Southern illionis, University of Carbondle.

Strengthening Aboriginal Participation in The Economy, Report of The Working Group on Aboriginal Participation in The Economy to Federal Provincial, May 2001.

Suki Mee. (2009). OrangAsliPerak:PerayaanJisPaidanadatperkahwinan. Perak: YOAP Bhd.

Tunisan Seman. (2002). Kajian sosio-ekonomimasyarakatOrangAsli:Kajian kes terhadapmasyarakatOrangAslidipenempatanBatu12,Gombak,Selangor.

Unit Perancang Ekonomi. (2013). Rancangan Malaysia ke-10, pp.142.

Unit Perancang Ekonomi. (2013). Rancangan Malaysia ke-10, pp.165-166

Wesley-Esquimaux, C., & Calliou, B. (2010). Best practices in aboriginal communitydevelopment:Aliteraturereviewandwisepracticesapproach.

35Volume 12 2016

KUALITI PERKHIDMATAN MAKTAB KOPERASI MALAYSIA CAWANGAN SARAWAK

Mohamad Haswardi bin Morshidi*MaktabKoperasiMalaysia

ABSTRAK

Kajian ini secara umumnya bertujuan untuk mengenal pasti sejauhmana tahap kualitiperkhidmatan Maktab Koperasi Malaysia Cawangan Sarawak berdasarkan elemen-elemendimensi kualiti perkhidmatan. Objektif khusus bagi kajian ini adalah untuk mengenalpastitahappersepsipesertakursusterhadapelemendimensikualitiperkhidmatanMaktabKoperasiMalaysia Cawangan Sarawak berbanding dengan perkhidmatan yang diperolehi mereka. Dimensi-dimensi kualiti perkhidmatan telah dibentuk berdasarkan model Parasuraman,Zeithaml dan Berry (1988) untuk mengukur dimensi Jelas/Nyata dan Fizikal (tangibles),dimensikebolehpercayaan(reliability),dimensitindakbalas(responsiveness),dimensijaminan(assurance),dandimensiprihatin(emphaty).KaedahpengumpulandataadalahberdasarkanjawapansoalselidikdaripadarespondenyanghadirberkursusdiMKMCS. Analisadeskriptifstatistik menggunakan ukuran peratusan dan min. Secara keseluruhannya, dimensi yangmempunyaiminyangpalingtinggiialahdimensiprihatindenganmin6.925manakaladimensiyang mempunyai min yang paling rendah ialah dimensi Jelas/Nyata dan Fizikal (tangible)denganmin6.032. Bagiujian-tbagimelihatperbezaanpersepsipesertakursusterhadapkualitiperkhidmatanberbandingperkhidmatanyangdiperolehiyangdilihatmengikutjantina,umur,jawatan di koperasi dan latarbelakang akademik peserta kursus, didapati tiada perbezaandiperolehi. KesimpulanyangbolehdibuatdalamkajianiniialahtahapkualitiperkhidmatandiMKMCSbolehdikatakanmencapaitahapyangsederhana tinggiberbandingtahapjangkaanawalresponden.

Kata kunci: Dimensikualiti,KualitiPerkhidmatan,MaktabKoperasiMalaysia,SERVQUAL

*E-mel penulis: [email protected]


PENGENALAN

Kualiti perkhidmatan merupakan keperluan sesebuah organisasi untuk mewujudkan kepuasan pelanggan dan kualiti perkhidmatan yang berkaitan dengan persepsi pelanggan dan jangkaan pelanggan. Oliver (1997) berpendapat bahawa kualiti perkhidmatan boleh digambarkan sebagai satu hasil daripada perbandingan antara jangkaan pelanggan mereka tentang perkhidmatan yang mereka akan menggunakan dan persepsi mereka tentang syarikat perkhidmatan. Maktab Koperasi Malaysia yang nama asalnya Maktab Kerjasama Malaysia (MKM) merupakan institusi pengajian dalam bidang koperasi tunggal di Malaysia.

PERNYATAAN MASALAH

Dalam Dasar Koperasi Negara 2010 - 2020, kerajaan juga menyasarkan penubuhan koperasi dengan 10,000 unit pada tahun 2013 dan 16,000 pada tahun 2020 koperasi. Sebagai institusi pendidikan yang memberikan latihan dan pendidikan kepada anggota-anggota koperasi dalam gerakan koperasi di Sarawak khasnya, MKMCS menyasarkan untuk memberikan latihan dan pendidikan yang terbaik yang boleh mengembangkan dan memajukan koperasi-koperasi yang sedia ada tadi. Perkara yang membimbangkan adalah kehadiran kebanyakkan peserta adalah terdiri daripada anggota-anggota biasa koperasi. Situasi ini dilihat amat serius kerana pendidikan dan latihan ini sepatutnya dihadiri oleh lebih ramai Anggota Lembaga Koperasi yang merupakan badan pelaksana dan pentadbiran koperasi. Satu kajian kualiti perkhidmatan haruslah dilakukan untuk meningkatkan pandangan serta persepsi masyarakat dan gerakan koperasi terhadap pendidikan dan latihan koperasi yang dianjurkan oleh MKMCS. Ini kerana ramai penyelidik berpendapat, perkhidmatan yang berkualiti sangat penting dalam organisasi terutamanya dalam sektor pendidikan.

OBJEKTIF KAJIAN

Kajian ini dijalankan untuk meneroka bagi mencari hasil terhadap beberapa objektif seperti yang dinyatakan di bawah:

i) Untuk mengenalpasti profil peserta kursus yang hadir di MKMCS.ii) Untuk mengetahui persepsi peserta kursus terhadap kualiti perkhidmatan MKMCS

berbanding tahap kualiti perkhidmatan yang diperolehi.iii) Untuk melihat perbezaan persepsi peserta kursus terhadap dimensi kualiti perkhidmatan

mengikut jantina, umur, latarbelakang akademik dan jawatan di koperasi.iv) Untuk mengenalpasi antara dimensi yang terbaik kualiti perkhidmatan MKMCS secara

keseluruhan.

KEPENTINGAN KAJIAN

Kajian ini cuba mendapatkan dimensi terbaik dalam kualiti perkhidmatan yang diberikan kepada pelanggan MKMCS iaitu peserta kursus yang menghadiri kursus jangka pendek berdasarkan kepada persepsi peserta kursus terhadap kualiti perkhidmatan berbanding dengan perkhidmatan

37Volume 12 2016

yang diperolehi. Hasil kajian ini diharap dapat membantu ke arah usaha-usaha penambahbaikan kualiti perkhidmatan MKM amnya dan MKMCS khas dalam memberikan latihan dan pendidikan kepada gerakan koperasi di Malaysia. Selain itu, kajian ini juga akan memberikan maklumat yang berguna kepada pihak MKM untuk menilai semula kandungan latihan dan pendidikan yang dapat memenuhi kepuasan pelanggan MKM. Secara tak langsung ini akan mengubah dan meningkatkan pandangan masyarakat amnya dan gerakan koperasi terhadap latihan dan pendidikan yang disediakan oleh MKM. Seterusnya latihan dan pendidikan yang diaplikasi dengan baik oleh peserta yang hadir ke kursus di MKM boleh memajukan dan membangunkan lagi koperasi mereka lebih baik lagi.

SOROTAN KAJIAN

Kualiti merupakan satu topik yang banyak dibincangkan terutamanya dalam sector awam (Abdul Kadir, 1993a). Menurut Joan W. (1994), Maksud kualiti terlalu banyak dan boleh dibahagi kepada dua komponen iaitu maksud secara objektif dan maksud secara subjektif. Kualiti memberi makna “bersesuaian bagi tujuan kegunaan” bagi sesuatu produk dikeluarkan ataupun perkhidmatan yang diberikan sama ada ianya memenuhi keperluan dan kehendak pelanggan. Dua pakar kualiti iaitu Juran, J.M Gryna, F.M Jr. Dan Bingham, R.S. Jr. (1962); dan Deming W.E. (1986) dalam Othman, M. K. (2006) memberikan definisi yang sering digunapakai sehingga hari ini. Definisi kualiti menurut Juran, J.M Gryna, F.M Jr. Dan Bingham, R.S. Jr. (1962) adalah “bersesuaian bagi tujuan kegunaan”. Manakala menurut Deming W.E. (1986) adalah “darjah yang boleh diramalkan bagi keseragaman dan bergantung kepada harga rendah dan sesuai dengan pasaran”. Selain definisi daripada pakar kualiti daripada penyelidik luar Negara, Abdullah (1990) dalam Othman, M. K. (2006) menerangkan istilah dan pengertian kualiti dalam buku Perkhidmatan Awam.

Organisasi yang berkualiti adalah organisasi yang menitiberatkan mutu dalam menyediakan perkhidmatan dimana peningkatan dan penambahbaikan dilakukan dari masa ke semasa seperti meningkatkan mutu komunikasi dengan pihak luar atas kesedaran terhadap isu kualiti, meningkatkan produktiviti dan seterusnya memenuhi kepuasan pelanggan serta mengekalkan kepercayaan pelanggan (Gotzami dan Tsiotras, 2002; Singels etal., 2001). Persepsi pelanggan terhadap kualiti perkhidmatan adalah tanggapan pelanggan untuk menerima kualiti yang dikehendaki dan diharapkan. Persepsi ini adalah penilaian pelanggan dengan membandingkan dengan apa yang telah diperolehi (Alias dan Abdul Rahman, 2001).

Rajah 1 : Model Kualiti Perkhidmatan (Boone dan Kurtz, 1996)

Komunikasi Mulut ke Mulut

Keperluan Peribadi

Pengalaman Lepas PERSEPSI Perkhidmatan

Dijangka/Dikehendaki

Perkhidmatan Diperolehi

JURANG


Model SERVQUAL telah digunakan dengan meluas dalam pelbagai jenis organisasi yang memberikan perkhidmatan. SERVQUAL adalah diperkenalkan oleh Parasuraman, A., Valerie A. Ziethaml dan Leonard D. Berry pada tahun 1995. Banyak kajian dan penyelidikan yang dijalankan menggunakan model SERVQUAL dalam Badri, M. A (2005) seperti industri perbankan (Mels et al., 1997), perkhidmatan awam (Brysland dan Curry, 2001; Juhary, 2001), perhotelan (Dean dan White, 1999), hospital (Lam, 1997), telekomunikasi (Leisen dan Vance, 2001) dan pendidikan tinggi (Cuthbert, 1996; Dawes dan Rowley, 1999; Joseph dan Joseph, 1997; Oldfield dan Baron, 2000). Tidak kurang juga kajian kualiti dalam pendidikan tinggi telah dijalankan oleh penyelidik tempatan (Romle, A. R., & Shamsudin, A. S. , 2008; Khalifah, Z., Arif, S., & Sirin, R. , 2004; Boon, Y., Nasir, K. A., & Azizan, N. A. K., 2011) SERVQUAL dibentuk berasaskan kepada penilaian ataupun persepsi daripada pelanggan. SERVQUAL berfungsi sebagai alat bagi mengenalpasti jurang antara persepsi dan jangkaan terhadap apa yang diperolehi dalam penyampaian perkhidmatan oleh organisasi kepada pelanggan. Penilaian menurut SERVQUAL akan menilai kualiti perkhidmatan berdasarkan kepada lima dimensi yang akan dinilaikan oleh pelanggan iaitu Kebolehpercayaan (Reliability), Jaminan (Assurrance), Tindakbalas (Responsiveness), Jelas/Nyata dan Fizikal (Tangibles) dan Empati (Empathy). Setiap dimensi SERVQUAL tadi memberikan penilaian yang tersendiri (Johari, 2007). Ini kerana istilah “kualiti” dan “kepuasan” kadang-kadang digunakan silih berganti. Zeithaml dan Bitner (2003) bersepakat bahawa kepuasan pelanggan menjadi penyumbang utama bagi meningkatkan keuntungan sebuah syarikat perkhidmatan dalam jangka panjang selain kesetiaan pelanggan. Ini bermakna adalah penting untuk memberikan penekanan dan menggalakkan kakitangan untuk menyampaikan perkhidmatan yang tepat kepada pelanggan pada masa yang tepat dan pada cara yang baik yang munasabah. Pelanggan yang berpuas hati akan memberi hebahan melalui mulut ke mulut dan ini akan menarik pelanggan baru dan seterusnya membuat keuntungan perniagaan jangka panjang. Kepuasan pelanggan merupakan penilaian pelanggan iaitu persepsi terhadap produk-produk atau perkhidmatan yang akan diperolehi. Apabila sesuatu perkhidmatan yang diperolehi itu melebihi jangkaan ataupun persepsi pelanggan maka pelanggan akan berpuas hati. Sebaliknya, apabila persepsi pelanggan melebihi perkhidmatan yang telah diperolehi, pelanggan akan tidak berpuas hati.

Pariseau dan McDaniel (1997) telah menjalankan kajian terhadap dua universiti di Amerika Syarikat. Kajian ini menggunakan lima dimensi SERVQUAL iaitu jaminan, tindakbalas, empati, kebolehpercayaan dan ketaraan. Hasil kajian ini, keutamaan persepsi pelajar berbanding dengan persepsi pihak pengurusan Universiti terhadap elemen kualiti perkhidmatan seperti urutan dibawah:

39Volume 12 2016

Jadual 1: Keutaman Dimensi SERVQUAL : Kajian oleh Pariseau dan McDaniel (1997)Keutamaan

DimensiPelajar Pihak Universiti

1. Jaminan Jaminan2. Tindakbalas Ketaraan3. Empati Kebolehpercayaan4. Kebolehpercayaan Empati5. Ketaraan Tindakbalas

KERANGKA KONSEPTUAL KAJIAN

Tujuan kajian ini adalah untuk mengkaji tahap dan faktor daripada dimensi SERVQUAL yang menyumbang kepada persepsi kualiti perkhidmatan berbanding tahap kualiti perkhidmatan yang diperolehi oleh peserta yang menghadiri kursus jangka pendek dan latihan MKMCS. Kerangka konseptual bagi kajian ini adalah seperti dalam Rajah 2.

Rajah 2 : Kerangka konseptual kajian

METODOLOGI KAJIAN

Penyelidikan menurut Mouly (1970) dalam Mohamad Ibrahim (1995) dianggap sebagai proses bagi menyelesaikan sesuatu masalah melalui perancangan, pengumpulan, penganalisisan dan penafsiran data yang sistematik. Pengumpulan data sangat penting dalam penyelidikan kerana tanpa disokong dari data penyelesaian masalah menjadi tidak lengkap. Kajian yang dijalankan hanya dibuat di Maktab Koperasi Malaysia Cawangan Sarawak yang terletak di Bangunan Rugayah di Jalan Song Thian Cheok, Kuching. Borang kaji selidik hanya diedarkan di dalam bilik kuliah Kenyalang dan makmal komputer Nuri terletak di tingkat 2, Bangunan Rugayah. Populasi yang dipilih adalah terdiri daripada peserta yang menghadiri kursus jangka pendek di MKMCS. Peserta ini terdiri daripada dikalangan anggota-angota koperasi, ALK, Jawatankuasa Audit Dalaman (JAD) dan tenaga kerja koperasi di Sarawak yang menghadiri kursus jangka pendek yang dianjurkan di MKMCS.

KUALITI PERKHIDMATAN MAKTAB KOPERASI MALAYSIA CAWANGAN

SARAWAK

1. KEBOLEHPERCAYAAN

2. JAMINAN

3. TINDAKBALAS

4. JELAS/NYATA DAN FIZIKAL

5. EMPATI


Menurut Majid Konting (1998), penyelidik digalakkan menggunakan saiz sampel melebihi 30 unit kerana andaian taburan normal biasanya dipenuhi apabila saiz sampel melebihi 30 unit. Fraenkel dan Wallen (1990) memberikan sedikit garis panduan dalam penentuan saiz sampel ini mengenai tentang bilangan minimum yang diperlukan dalam sesuatu kajian. Sampel yang digunakan dalam kajian ini adalah seramai 200 orang responden daripada pelbagai koperasi. 87 orang terdiri daripada responden lelaki dan 103 orang responden perempuan. Pemilihan sampel kajian dilakukan menggunakan kaedah persampelan mudah dan rawak. Persampelan rawak membolehkan penyelidik memilih suatu sampel yang amat mirip dengan populasi terpilih. Setiap unsur dalam populasi mempunyai peluang yang sama untuk dipilih dalam sampel.

Instrumen kajian penting bagi menentukan sesuatu objektif penyelidikan dapat dicapai. Instrumen kajian yang digunakan untuk mengumpul maklumat bagi kajian ini adalah melalui borang soal selidik. Instrumen kajian seperti soal selidik digunakan untuk mendapatkan maklumat berkenaan fakta-fakta, kepercayaan, kehendak dan sebagainya. Selain itu, borang soal selidik boleh meningkatkan ketepatan dan kebenaran gerakbalas atau jawapan yang diberikan oleh responden dan tidak dipengaruhi oleh personaliti atau tingkah laku penyelidik. Responden akan merasakan dirinya selamat untuk memberi jawapan yang tepat dan benar tanpa dipengaruhi. Soal selidik bagi bahagian A dan Bahagian B ini telah diadaptasi dan diubahsuai mengikut kesesuaian konteks yang dikaji daripada soal selidik penyelidik lepas, Mohd Majid Konting (1998).

Bahagian A dalam borang soal selidik terdiri daripada latarbelakang responden seperti jantina, umur, keturunan, latarbelakang akademik dan jawatan di koperasi. Selain itu, pertanyaan tambahan berkaitan bilangan kursus yang pernah dihadiri di MKM, tempoh telah mengenali MKMCS dan bilangan menghadiri kursus yang dianjur oleh SKM ataupun ANGKASA. Bahagian B pula mengandungi 22 soalan-soalan berkaitan kualiti perkhidmatan berdasarkan kepada 5 Dimensi SERVQUAL iaitu Jelas/Nyata dan Fizikal (Tangible), Kebolehpercayaan (Realibility), Tindakbalas (Responsiveness), Jaminan (Assurance) dan Prihatin (Empathy). Jenis dimensi SERVQUAL tidak diletak di dalam borang soal selidik.

Jumlah soalan-soalan pernyataan terhadap 5 dimensi tadi adalah seperti berikut:

Jadual 2 : Soalan-soalan pernyataan terhadap Dimensi SERVQUALBil Dimensi SERVQUAL Jumlah Soalan No. Soalan1. Jelas/Nyata dan Fizikal 4 1, 2, 3, 42. Kebolehpercayaan 5 5, 6, 7, 8, 93. Tindakbalas 4 10, 11, 12, 134. Jaminan 4 14, 15, 16, 175. Prihatin 5 18, 19, 20, 21, 22

41Volume 12 2016

Untuk mengukur persepsi peserta kursus untuk item-item dalam Bahagian B, skala Likert 9 mata digunakan. Bagi tujuan menganalisa bagi objektif yang kedua Skala Likert dalam Bahagia B dibahagikan kepada 3 bahagian. Skala Likert 9 yang dibahagikan kepada 3 bahagian seperti jadual di bawah:-

Jadual 3 : 3 Bahagian bagi Skala Likert 9

Skala Likert Persepsi Responden1 - 3 Lebih rendah daripada tahap perkhidmatan saya kehendaki4 - 5 Sama dengan tahap perkhidmatan saya kehendaki5 - 6 Lebih Tinggi daripada tahap perkhidmatan saya kehendaki

ANALISIS DAN DAPATAN KAJIAN

Profil Responden

Kajian ini melibatkan 200 responden namun hanya 178 borang soal-selidik yang boleh digunapakai untuk dianalisis. Borang sebanyak 178 ini terdiri daripada 81 orang adalah lelaki dan selebihnya sejumlah 97 orang atau adalah perempuan. Dalam kajian ini seramai 60 orang responden berumur 18-30 tahun. Ini diikuti dengan responden yang berumur antara 31-40 tahun sebanyak 31 orang. Seterusnya, responden yang berumur 41-50 tahun terdiri daripada 33 orang. Bagi responden yang berumur 51-60 tahun adalah seramai 46 orang. Manakala responden yang berumur 61-70 tahun menunjukkan bilangan sebanyak 7 orang dan hanya seorang yang berumur yang lebih daripada 71 tahun. Ini menunjukkan responden yang berumur 18 hingga 30 tahun menunjukkan bilangan yang paling tinggi manakala 71 tahun dan ke atas adalah bilangan yang paling rendah. Terdapat 110 orang responden adalah keturunan Melayu. Keturunan Cina dan Iban masing-masingnya seramai 14 orang. Seterusnya, responden yang terdiri daripada keturunan Bidayuh adalah sebanyak 23 orang. Sejumlah 17 orang adalah keturunan lain-lain seperti orang ulu ataupun orang India. Bilangan yang paling tinggi responden adalah dari keturunan Melayu manakala keturunan Cina dan Iban adalah yang paling tak ramai. Dalam kajian ini 16 orang mempunyai kelulusan LCE/SRP/PMR. Ini diikuti dengan 86 orang yang mempunyai kelulusan MCE/SPM. Manakala bagi responden yang mempunyai diploma adalah sebanyak 27 orang diikuti dengan ijazah sebanyak 42. Seterusnya, responden yang mempunyai lain-lain tahap akademik adalah tujuh orang. Bilangan tertinggi responden dalam kajian adalah terdiri daripada mereka yang berkelulusan MCE/SPM manakala yang paling rendah adalah dari lain-lain latarbelakang akademik. Responden yang menjawat jawatan Pengerusi adalah seramai 9 orang dalam kajian Ini diikuti dengan Timbalan Pengerusi yang terdiri daripada 4 orang. Manakala bagi responden yang berjawatan bendahari adalah 8 orang diikuti dengan jawatan setiausaha iaitu 12 orang. Responden juga terdiri daripada Anggota Lembaga Koperasi sebanyak 44 orang dan anggota biasa adalah 84 orang. Seterusnya, responden yang merupakan kakitangan di Koperasi adalah 17 orang. Kajian ini juga menunjukkan bilangan tertinggi responden adalah terdiri daripada


anggota biasa dan bilangan yang paling rendah adalah bendahari. Namun, bilangan keseluruhan anggota lembaga koperasi yang hadir ke kursus jangka pendek MKMCS iaitu termasuk Pengerusi, Timbalan Pengerusi, Bendahari, Setiausaha dan Anggota Lembaga Koperasi adalah seramai 77 orang mewakili 43.3% daripada keseluruhan responden. Daripada hasil analisis kajian yang dibuat, seramai 128 orang responden hanya mengenali MKMCS kurang daripada 3 tahun. Seramai 22 orang telah mengenali MKMCS dengan 3 hingga 5 tahun. Manakala 18 orang telah mengenali MKMCS selama 6 hingga 10 tahun. Ini menunjukkan bahawa ramai responden yang mengenali MKMCS kurang daripada 3 tahun manakala telah mengenali MKMCS lebih daripada 10 tahun mencatatkan bilangan yang terendah. Dalam kajian yang dijalankan, seramai 86 orang responden hanya pernah menghadiri sekali sahaja yang dianjurkan oleh MKMCS. Ini diikuti dengan 59 orang yang menghadiri sebanyak 2 hingga 5 kali. Manakala 17 responden pernah menghadiri sebanyak 6 hingga 10 kali. Seterusnya, responden yang menghadiri kursus lebih dari 10 kali adalah seramai 16 orang. Ini menunjukkan bahawa responden yang pertama kali menghadiri kursus adalah bilangan yang tertinggi manakala bilangan yang terendah adalah responden yang menghadiri lebih daripada 10 kali. Jadual 4 di bawah menunjukkan ringkasan profil responden berdasarkan kekerapan dan peratusan responden untuk semua item.

Jadual 4 : Profil Respoden

Item Kekerapan Peratus (%)

JantinaLelaki 81 45.5Perempuan 97 54.5

Umur

18-30 60 33.731-40 31 17.441-50 33 18.551-60 46 25.861-70 7 3.9>71 1 0.6

Keturunan

Melayu 110 61.8Cina 14 7.9Iban 14 7.9Bidayuh 23 12.9Lain-lain 17 9.6

Akademik

LCE/SRP/PMR 16 9MCE/SPM 86 48.3Diploma 27 15.2Ijazah 42 23.6

Lain-lain 7 3.9

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Jawatan

Pengerusi 9 5.1Timbalan Pengerusi 4 2.2Bendahari 8 4.5Setiausaha 12 6.7Anggota Lembaga 44 24.7Anggota Biasa 84 47.2Kakitangan 17 9.6

Kursus di MKMCS

1 kali 86 48.32-5 kali 59 33.16-10 kali 17 9.6

Lebih daripada 10 kali 169

Mengenali MKMCS

Kurang daripada 3 tahun 128 71.93-5 tahun 22 12.46-10 tahun 18 10.1Lebih daripada 10 tahun 10 5.6

Kursus selain di MKMCS

1-3 kali 79 44.44-6 kali 19 10.7Lebih daripada 6 kali 13 7.3Tak Pernah 67 37.6

Persepsi Peserta Kursus Terhadap Kualiti Perkhidmatan MKMCS Berbanding dengan Tahap Kualiti Perkhidmatan yang Diperoleh

Secara umumnya, objektif kedua adalah untuk mengenalpasti persepsi peserta kursus terhadap kualiti perkhidmatan MKMCS berbanding dengan tahap kualiti perkhidmatan yang diperolehi dan ianya dicapai melalui analisis yang telah dijalankan. Menurut Sureshchandar et. al. (2002), tahap kepuasan pelanggan bergantung kepada pengalamannya terhadap perkhidmatan yang pernah diterima sebelum ini. Jika seseorang pelanggan pernah menerima perkhidmatan yang jauh lebih baik dari apa yang mereka terima sekarang, kualiti perkhidmatan yang diterimanya sekarang akan lebih rendah yang menyebabkan tahap kepuasan yang rendah dan begitu sebaliknya. Situasi inilah boleh berlaku dalam kajian ini kerana boleh dikatakan ramai responden iaitu seramai 86 orang yang baru pertama kali menghadiri kursus di MKMCS. Responden berkemungkinan juga tidak pernah menghadiri latihan dan pendidikan koperasi di mana-mana sebelum ini. Secara tak langsung perkara ini akan memberikan sedikit memberikan kesan kepada keputusan terhadap persepsi mereka terhadap kualiti perkhidmatan yang diberikan.


Dimensi Jelas/Nyata dan Fizikal

Dalam kajian ini, majoriti responden memperolehi kualiti perkhidmatan sama dengan tahap perkhidmatan yang mereka jangkakan iaitu susun atur pejabat, bilik kelas dan makmal komputer adalah menarik dan diikuti dengan bangunan MKMCS dilengkapi dengan kemudahan yang moden. Namun tidak ramai responden yang merasakan kualiti perkhidmatan adalah rendah daripada yang dijangka terhadap dua perkara iaitu kakitangan MKMCS mempunyai penampilan dan berpakaian elok, kemas serta bersesuaian dengan jawatan mereka dan bahan berkaitan dengan perkhidmatan yang disediakan seperti jurnal, artikel, buku mempunyai penampilan visual yang baik dan kemaskini.

Jadual 5 : Kekerapan dan Peratusan Dimensi Jelas dan Fizikal bagi Persepsi Responden Mengenai Kualiti Perkhidmatan MKMCS Berbanding

Tahap Kualiti Perkhidmatan yang Diperoleh

BIL PERNYATAAN 1 2 3 MIN SP

1 Bangunan MKMCS dilengkapi dengan kemudahan yang moden

18 (10.1%)

111 (62.4%)

49 (27.5%) 2.17 0.59

2Susun atur pejabat, bilik kelas dan makmal komputer adalah menarik

9 (5.1%)

113 (63.5%)

56 (31.5%) 2.26 0.545

3

Kakitangan MKMCS mempunyai penampilan dan berpakaian elok, kemas serta bersesuaian dengan jawatan mereka

3 (1.7%)

82 (46.1%)

93 (52.2%) 2.51 0.534

4

Bahan berkaitan dengan perkhidmatan yang disediakan seperti jurnal, artikel, buku mempunyai penampilan visual yang baik dan kemaskini

5 (2.8%)

98 (55.1%)

75 (42.1%) 2.39 0.544

Dimensi Kebolehpercayaan

Bagi dimensi kebolehpercayaan, majoriti responden merasakan kualiti perkhidmatan MKMCS yang diperolehi lebih tinggi daripada jangkaan awal mereka iaitu MKMCS menyediakan perkhidmatan dalam masa yang dijanjikan selain menunjukkan keperihatinan dalam menyelesaikan masalah peserta yang hadir ke kursus yang dianjurkan MKMCS. Manakala tiada langsung responden merasakan kualiti perkhidmatan MKMCS bagi menyediakan perkhidmatan pada masa yang dijanjikan dan kaedah penyimpanan rekod MKMCS di bawah tahap jangkaan awal mereka.

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Jadual 6 :Kekerapan dan Peratusan Dimensi Kebolehpercayaan bagi Persepsi Responden Mengenai Kualiti Perkhidmatan MKMCS Berbanding Tahap Kualiti Perkhidmatan yang Diperoleh


1

Apabila berjanji untuk melakukan sesuatu dalam masa tertentu, pihak MKMCS akan berbuat demikian

6 (3.4%)

96 (53.9%)

76 (42.7%) 2.39 0.555

2

Apabila peserta kursus mempunyai masalah, Kakitangan MKMCS akan menunjukkan keperihatinan dalam menyelesaikan masalah tersebut.

4 (2.2%)

73 (41%)

101 (56.7%) 2.54 0.543

3

MKMCS akan melakukan sesuatu pekerjaan dengan betul pada kali pertama dijalankan

2 (1.1%)

93 (52.2%)

83 (46.6%) 2.46 0.522

4MKMCS menyediakan perkhidmatan dalam masa yang dijanjikan.

0 (0%)

76 (42.7%)

102 (57.3%) 2.57 0.496

5 MKMCS menyimpan rekod dengan betul

0 (0%)

84 (47.2%)

94 (52.8%) 2.53 0.501

Dimensi Tindakbalas

Bagi dimensi tindakbalas ini pula, majoriti responden juga merasakan kualiti perkhidmatan yang diperolehi adalah lebih tinggi daripada persepsi awal terhadap kualiti perkhidmatan yang diharapkan iaitu kakitangan MKMCS sedia menerangkan sebarang kemusykilan/keraguan dan kakitangan MKMCS sedia membantu. Tiada responden merasakan memperolehi kualiti perkhidmatan yang lebih rendah daripada jangkaan terhadap kakitangan MKMCS menunaikan janji terhadap sesuatu perkhidmatan. Responden merasakan kakitangan MKMCS akan cuba menunaikan janji sebaik mungkin. Berdasarkan dimensi ini, kakitangan MKMCS sedia menerangkan sebarang kemusykilan /keraguan merupakan tahap kualiti perkhidmatan terbaik yang diberikan hasil daripada pandangan responden.


Jadual 7 :Kekerapan dan Peratusan Dimensi Tindakbalas bagi Persepsi Responden Mengenai Kualiti

Perkhidmatan MKMCS Berbanding Tahap Kualiti Perkhidmatan yang Diperoleh


1Kakitangan MKMCS menunaikan janji terhadap perkhidmatan yang akan dibuat

0 (0%)

78 (43.8%)

100 (56.2%) 2.56 0.498

2 Kakitangan MKMCS sentiasa ada pada masa diperlukan

3 (1.7%)

83 (46.6%)

92 (51.7%) 2.5 0.534

3 Kakitangan MKMCS sedia membantu

2 (1.1%)

74 (41.6%)

102 (1.1%) 2.56 0.52

4Kakitangan MKMCS sedia menerangkan sebarang kemusykilan /keraguan

2 (1.1%)

72 (40.4%)

104 (58.4%) 2.57 0.518

Dimensi Jaminan

Ini merupakan dimensi yang ketiga majoriti responden merasakan tahap kualiti perkhidmatan MKMCS diperoleh adalah lebih tinggi daripada jangkaan tahap perkhidmatan yang dikehendaki. Dibawah dimensi ini, responden merasakan kakitangan MKMCS mempunyai pengetahuan yang diperlukan untuk menjawab sebarang pertanyaan daripada peserta kursus dan tingkahlaku kakitangan MKMCS memberikan keyakinan kepada peserta. Tiada responden merasakan kakitangan MKMCS mempunyai pengetahuan yang diperlukan untuk menjawab sebarang pertanyaan daripada peserta kursus di bawah tahap kualiti perkhidmatan yang dijangkakan awal.

Jadual 8 :Kekerapan dan Peratusan Dimensi Jaminan bagi Persepsi Responden Mengenai Kualiti

Perkhidmatan MKMCS Berbanding Tahap Kualiti Perkhidmatan Diperoleh


1 Kakitangan MKMCS berinformasi

1 (0.6%)

67 (37.6%)

110 (61.8%) 2.61 0.5

2Tingkahlaku Kakitangan MKMCS memberikan keyakinan kepada peserta kursus

1 (0.6%)

65 (36.5%)

112 (62.9%) 2.62 0.497

3

Kakitangan MKMCS mempunyai pengetahuan yang diperlukan untuk menjawab sebarang pertanyaan daripada peserta kursus

0 (0%)

63 (35.4%)

115 (64.6%) 2.65 0.48

4Peserta kursus merasa selamat dalam bangunan dan kawasan sekitar MKMCS

2 (1.1%)

67 (37.6%)

109 (61.2%) 2.6 0.514

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Dimensi Prihatin

Untuk dimensi yang terakhir dalam kajian ini, majoriti responden telah memperoleh tahap perkhidmatan lebih tinggi daripada jangkaan tahap perkhidmatan yang dikehendaki. Ini termasuklah MKMCS telah memberikan perkhidmatan terbaik kepada peserta kursus dan waktu operasi MKMCS adalah memudahkan peserta kursus. Tiada responden merasakan kualiti perkhidmatan yang diberikan oleh MCMCS terhadap tiga pernyataan iaitu waktu operasi MKMCS adalah memudahkan, kakitangan MKMCS sopan dalam setiap perkhidmatan yang diberikan dan MKMCS memberikan perkhidmatan terbaik kepada peserta kursus.

Jadual 9 :Kekerapan dan Peratusan Dimensi Jaminan bagi Persepsi Responden Mengenai Kualiti

Perkhidmatan MKMCS Berbanding Tahap Kualiti Perkhidmatan DiperolehBIL PERNYATAAN 1 2 3 MIN SP

1 Waktu operasi MKMCS adalah memudahkan

0 (0%)

64 (36%)

114 (64%) 2.64 0.481

2Kakitangan MKMCS sopan dalam setiap perkhidmatan yang diberikan

0 (0%)

69 (38.8%)

109 (61.2%) 2.61 0.489

3MKMCS mempunyai kakitangan yang memberikan perhatian indi-vidu kepada peserta kursus

2 (1.1%)

73 (41%)

103 (57.9%) 2.57 0.519

4MKMCS memberikan perkh-idmatan terbaik kepada peserta kursus

0 (0%)

58 (32.6%)

120 (67.4%) 2.67 0.47

5 MKMCS memahami keperluan khusus peserta kursus.

1 (0.6%)

69 (38.8%)

108 (60.7%) 2.6 0.502

Perbezaan Persepsi Peserta Kursus Terhadap Dimensi Kualiti Perkhidmatan Mengikut Jantina, Umur, Latar Belakang Akademik dan Jawatan di Koperasi

Objektif ketiga pula untuk melihat perbezaan persepsi peserta kursus terhadap dimensi kualiti perkhidmatan mengikut jantina, umur, latarbelakang akademik dan jawatan di koperasi. Satu kajian juga telah dijalankan bagi menentukan hubungan di antara keseluruhan kualiti hidup dan sumbangan faktor demografi dan pelbagai penentu kehidupan bagi pelajar di universiti ke atas kepuasan (Hendershot, Wright and Henderson, 1992). Penentu yang digunakan adalah kehidupan akademik, kehidupan sosial, perumahan, perkhidmatan pelajar dan persahabatan. Menurut Groth dan Dye (1999) pula kriteria penentuan pelanggan terhadap definisi kualiti dan pembolehubah yang digunakan mempengaruhi pandangan mereka terhadap kualiti yang diberikan. Pembolehubah-pembolehubah ini mungkin berubah mengikut keadaan, pengalaman dan masa. Penyedia perkhidmatan juga mempunyai pengaruh yang cukup signifikan dalam


mengubah persepsi sebenar tentang sesuatu perkhidmatan yang diberi. Namun, dalam kajian ini hasil kajian didapati tiada sebarang perbezaan bagi persepsi peserta kursus terhadap dimensi kualiti perkhidmatan jika dilihat berdasarkan kepada jantina, umur, latarbelakang akademik dan jawatan peserta kursus di koperasi masing-masing.

Dimensi Kualiti Perkhidmatan Terbaik MKMCS

Secara kesimpulannya dimensi prihatin adalah dimensi yang terbaik terhadap kualiti perkhidmatan MKMCS yang menyediakan perkhidmatan pendidikan dan latihan kepada gerakan koperasi di Sarawak khasnya.

Jadual 10 : Keutamaan Dimensi SERVQUAL MKMCS

Dimensi Min Keutamaan Dimensi Kualiti Perkhidmatan MKMCS

Jelas 6.032 5

Kebolehpercayaan 6.5449 4

Tindak balas 6.709 3

Jaminan 6.912 2

Prihatin 6.9247 1

KESIMPULAN

Secara keseluruhannya, ramai responden merasakan bahawa MKMCS telah memberikan kualiti perkhidmatan lebih baik berbanding persepsi awal mereka terhadap perkhidmatan yang akan diterima sepanjang menghadiri kursus jangka pendek di MKMCS. Daripada lima dimensi kualiti perkhidmatan berdasarkan SERVQUAL, kelima-lima dimensi mendapat tempat yang cukup baik dan memuaskan hati responden. Oleh yang demikian, MKMCS haruslah memperbaiki kelemahan-kelemahan yang telah dirasai oleh responden terhadap kajian kualiti perkhidmatan yang dijalankan terutamanya dimensi Jelas/NyatadanFizikal. Namun MKMCS tidak harus memandang ringan terhadap dimensi yang lain walaupun majoriti responden telah merasakan tahap kualiti perkhidmatan yang diperolehi sama dan tinggi daripada persepsi awal mereka.

Koperasi merupakan satu-satunya organisasi yang amat menitikberatkan keperluan dan kehendak sosio dan ekonomi anggota koperasi. Untuk terus bergerak maju, sesebuah koperasi haruslah mementingkan pendidikan dan latihan koperasi sepertimana prinsip koperasi kelima iaitu Pendidikan, Latihan dan Maklumat disertakan dengan menerapkan nilai dan falsafah berkoperasi dalam diri anggota-anggota sesebuah koperasi itu. MKMCS sebagai satu-satunya institusi pendidikan koperasi juga telah menampakkan menerapkan nilai dan falsafah berkoperasi ini dalam penyampaian latihan dan pendidikan. Ini juga secara tak langsung telah memberikan dimensi kualiti perkhidmatan berkaitan Prihatin mendapat tempat tertinggi dirasai oleh responden terhadap kualiti perkhidmatan telah diberikan oleh MKMCS pada tahap yang melebihi daripada

49Volume 12 2016

persepsi awal mereka. MKM seharusnya terus memastikan tahap kualiti perkhidmatan terus dinikmati dan dirasai oleh peserta ditahap yang memuaskan memandang MKM telah diiktiraf sebagai institusi pendidikan dan latihan koperasi dalam Deklarasi Putrajaya iaitu Persepakatan dan Penyelarasan Fungsi dan Peranan SKM-MKM-Angkasa yang telah berlangsung pada 13 Julai 2012. Bagi terus untuk mendapatkan sokongan daripada peserta kursus untuk menghadiri kursus-kursus yang dianjurkan oleh MKMCS, kualiti perkhidmatan dalam penyampaian latihan dan pendidikan koperasi haruslah sentiasa diambil perhatian. MKM seharusnya perlu mengambil pendekatan menyediakan latihan dan pendidikan mengikut keperluan semasa yang dikehendaki oleh koperator dalam gerakan koperasi.


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Wu, C. H. J., & Liang, R. D. (2009). Effect of experiential value on customer satisfaction with service encounters in luxury-hotel restaurants. InternationalJournalofHospitalityManagement, 28(4), pp.586-593.

Zeithaml, V. A., & Marry Jo Bitner. (2003). Servicesmarketing: Integrating customer focusacrossthefirm.

Zikmund, W.G. (2003). Businessresearchmethods (7th Ed.). USA: South-Western Publising.

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TRAINING NEEDS ANALYSIS FOR MALAYSIA CREDIT CO-OPERATIVES

Azlifah Abas* , Nor Azlina Kassim, Nor Aslamiah Ali, Farahaini Mohd Hanif, Ju Samsuddin Safian

CooperativeCollegeofMalaysia

ABSTRACT

Education is important for developing human capital and intellectual strength, enhancingbusinessknowledgeandinculcatingpositivevalues. Themainobjectiveofthisstudyistoidentifytraining programmes that are appropriate formembers of credit co-operatives. The findingsfromthisstudyare important forCo-operativeCollegeofMalaysia(CCM)asaguideline informulatingtrainingprogrammessuitableforallco-operativesinMalaysia.Therespondentsinthisstudycomprisestaffof136creditco-operativesfromthemediumandlargeclusters,selectedrandomly.Questionnaire formsweresent to theseco-operativesbutonly72of them(52.9%)returnedatotalof196completedforms. Thedatawereanalysedusingfrequencytables,thechi-squaretestofassociationstudyandgapanalysisoftherespectivemeanscores. Theresultsofthestudyshowthatthesupervisorsaresatisfiedwiththeskillsoftheirstaffinperformingfivetasks. However,theformerareoftheviewthattheskillsexhibitedbythestaffin12othermorechallengingtasksareonlyatthemoderatelevel. Basedonthestaff’sself-evaluation,theyarefoundtobehighlycommittedtotheirorganisationsandabletoworkinateam,buthavesomeproblemsinfulfillingpromisesandlackthespiritofgiveandtake. Thestudyalsoexaminestherelationshipbetweenlevelofknowledgeontheonehand,andthebackgroundofrespondentsontheother,vis-à-vis,lengthofservice,age,gender,educationlevelandclusteroftheco-operatives. Itwasfoundthatonlytwofactorsaresignificantlyrelatedtothelevelofknowledge,namely,educationlevelandtheco-operativecluster.Thefindingsaresuitableforusebythoseinvolvedin the development of co-operatives such as theMinistry ofDomestic Trade, Co-operativesandConsumerism (MDTCC), theMalaysiaCooperative SocietiesCommission ofMalaysian(MCSC),CCMandtheco-operativemovementitself. Inparticular, thefindingsof thisstudyshouldbeusedasaguidelineinidentifyingandformulatingsuitabletrainingprogrammesforthestaffofcreditco-operativestoenhancetheirmanagementperformance.

Key Words : Credit Co-operatives, Training Needs Analysis , Training Programme



INTRODUCTION

In NCP 2011-2020, one of the five core strategies for implementation is “Establishing andenhancing thecapabilityof theco-operativemovement’shumancapital”. This core strategy is aimed at raising the capability of members, board members, internal audit committee and staff of co-operatives who are responsible for the success of the organisations. The above is to be achieved by developing human capital’s intellectual strength, increasing their knowledge in business and instilling positive attitudes, all of which are realised mainly through education.

As an institution of co-operative education in Malaysia, Co-operative College of Malaysia (CCM) plays an important role under the NCP 2011-2020 to help transform co-operatives to be more creative, innovative and competitive. This is in line with CCM’s mission of raising the competency of the co-operative movement’s human capital through education and knowledge-based services that take into cognizance the interest of customers and the principles of co-operatives.

Credit Co-operatives

The Malaysia Cooperative Societies Commission (MCSC) defines a credit co-operative as the one registered under the credit function and its main activity consists of lending, taking deposits and giving other credit facilities to members as provided by the co-operative by-laws.

As of December 2011, there were 589 credit co-operatives (DataKorporatSKM, 2011) grouped into four clusters based on size with the distribution of co-operatives by cluster as follows: 57 large, 79 median, 121 small and 332 micro. According to MCSC, as of June 2012, the credit co-operatives altogether had 1.8 million members with a share capital of RM4.7 million, total asset of RM9.4 billion and total revenue of RM1.1 billion. This study focuses on credit co-operatives as they account for the largest proportion of the overall co-operative income in Malaysia. In terms of performance, credit co-operatives were ranked as the top three co-operatives among the 100 best co-operatives in 2011.

However, for this study, two co-operative banks (BankRakyat and BankPersatuan) were omitted because of the vast differences between these banks and other credit co-operatives with respect to operation system, membership size, products, modus operandi and regulations, as well as total income.

PROBLEM STATEMENT

As of today, there has been no standard operating procedure that can be used to formulate and monitor CCM’s training programmes. Any form of training has to be preceded by training needs analysis (TNA) (Goldstein and Ford, 2002; Salas and Canon-Bowers, 2001). TNA examines the returns on training investment and it is the initial step in the cycle of training. It helps one to minimise the risk of making mistakes in training programme development and ensure the effectiveness of the training programme concerned (Elbadri, 2001) Tung-Chun, 2001)

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OBJECTIVES OF STUDY

The objectives of this study are to evaluate the attitudes and knowledge of staff in credit co-operatives and determine the gap in skills between the former and their supervisors with the aim of identifying the courses they require. Other factors related to competencies are also examined.

IMPORTANCE OF STUDY

The findings from this study are important to CCM in particular, and to other relevant parties in general as a guideline in formulating training programmes suitable for the staff of all co-operatives in Malaysia. Specifically, the findings of the study are useful for the following purposes:

i) Formulating strategies in developing training programme for the co-operative movement in the future

ii) Developing training programmes that are more focused and with clearly defined directions

iii) Identifying the required training programmes by priorityiv) Identifying the training method that is systematic and meeting the needs of participantsv) Ensuring that the training programmes designed have a positive bearing on the growth

and success of co-operatives


Most definitions on training pertain to the training needs of individuals, whether from the perspective of behaviour or knowledge. In the context of an organisation or workplace, Dessler (1997) states that training is a process of teaching basic skills to perform their tasks. Through training, one can provide the needs of individuals and new employees .

Training is a process closely associated with the effort to raise the working skill of an individual. Ab. Aziz (2001) viewed training as a process relating to changes in knowledge, skills and attitude of an individual. Rozhan (1997) on the other hand, described training as the effort by an organisation or institution to enhance the capability of a person to carry out his/her task and fulfil the role given by his/her organisation. It is thus noted that a training that is based on current need is preferred.

Moreover, training entails the important function of development and management of human resource (De Simone etal., 2002; Tannembaum & Yuki, 1992) It is invariably linked to planned learning process which is designed to raise the capability of workers to solve current and future problems, ensure the effectiveness of workers and competitiveness of organisations (De Simone etal., 2002)

On the basis of the various definitions above, it is concluded that training is an activity in which organisations seek to raise the skills, knowledge and ability of their employees with the aim of


enhancing the quality of work. It is also an investment by organisations. Despite the myriad of trainings, the objective is similar, that is, to enhance worker capability and performance.

Training Needs Analysis

Before embarking on the development of a training programme, one needs to conduct a training needs analysis (TNA). This is to determine the venue, what to teach and who should attend such training (Goldstein, 1993).

TNA is a systematic process to identify the type of training needed and the targeted participants. The analysis looks at the needs from the perspective of the organisation concerned, the jobs and individuals. There are two types of needs, namely, training needs and non-training needs which include workflow, intake, policy and type of work.

Kaufman etal. (1993) defined TNA as a process of identifying and determining the acceptable gap between current and desired needs. Molenda, Pershing and Reigeluth (1996) had a similar view that TNA was to determine the type and extent of problems related to performance and the method of overcoming it. Meanwhile, Noe etal. (2009) described TNA as a process of evaluating an organisation and the function of its employees in order to determine the type of training needed.

Thus, the purpose of TNA is to identify performance needs, knowledge, skills and capabilities that workers must have to help an organisation achieve its needs. Evaluation must be made on the resources required to achieve the organisational mission, increase productivity and provide quality products and services. TNA examines the gap between expected performance and current performance and identifies the causes of gaps, if they exist. This will help organisation to find ways to reduce or remove performance gap completely.

Based on the various definitions of TNA by several authors, it is generally accepted that such evaluation is made so that the training developed for an organisation helps to achieve its strategic objectives. In conclusion, TNA is deemed a prerequisite to the development of an effective training programme. Goldstein (1993) felt that a sub-optimal training programme would not help an organisation achieve its performance objectives, but instead was a waste of money and other resources of the organisation. Sub-optimal training programme is also not effective in helping an organisation solve its problem (Abu Doleh, 1996; Branine, 1996). In conclusion, TNA must be carried out systematically and follow specific steps. The analysis is done at three levels, namely, organisation, operation and individuals.

Analysis of Staff Competency on Tasks And Operation

Analysis on the competency of a task is carried out based on its importance or priority within a specific job function. The analysis focuses on three elements for an organisation to perform well, and employers must be in control of the three elements.

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According to Hoffman (1999), competency referred to features such as knowledge and skills or ability possessed by an individual to perform well. By analysing the level of competency of its employees, with respect to knowledge, skills and attitude, an organisation would be able to design and develop the appropriate training programmes needed. The analysis begins with the evaluation of attitude, followed by knowledge and skills.

METHODOLOGY OF STUDY

Figure 1 depicts the study framework. It shows the relationship between job functions, current competency and training programme required using the method suggested by McGehee and Thayer (1961). It looks at three aspects, namely, attitude, knowledge and skills.

Figure 3-1: Study Framework

An analysis on attitude is important in determining whether an organisation is on the right track, while an analysis on knowledge determines whether tasks performed follow the correct procedure to ensure good results. Meanwhile, an analysis on skills looks at both knowledge and experience. From these analyses, one would be able to identify any weaknesses and determine the best way to address it.

Scope of Study

As at 31 December 2011 there are a total of 589 active credit co-operative in Malaysia. This study involves a sample of 136 credit co-operatives under the large and medium clusters. A total of 72 large and medium cooperative with 196 in total of questionnaires were answered and returned. The respondents comprise staff of these co-operatives in particular those managing the credit division.

TNA

Job Task

Current Competency:

i) Attitude ii) Knowledge iii) Skills

Training Required


The study examines the level of competency of the staff in knowledge, skills and attitude according to the staff themselves (self-evaluation) as well as according to their supervisors. Face-to-face interviews of respondents could not be carried out because of the wide geographical area in which co-operatives selected were located and also due to a time constraint of only 4 months to complete the study. The credit co-operatives included in the study must have at least one office staff. Information about these co-operatives as of 31 December 2011 was sourced from MCC.

Data Analysis Techniques

The analytical techniques used to achieve the study objectives are listed in Table 3.4. A test of reliability was carried out using Cronbach alpha to determine the internal consistency of skills and attitude dimensions.

Table 3.4: Method of Analysis by Objective

Objective Analysis

1. Evaluate the attitude and skill of staff in the credit division of co-operative

Summary statistics of the mean scores

2. Determine the gap in the evaluation by staff themselves and that of their supervisors Gap analysis

3. Identify factors related to competencies Chi-square test of association

RESULTS AND DISCUSSION

Data for the study were obtained from 196 completed survey forms received from 72 of the 136 co-operatives (52.9%) selected. This response rate is considered satisfactory as in general data collection by post seldom achieves more than 30 per cent return rate (Sekaran, 2000).

Background of Study Sample

The study sample is divided into three groups as follows:

i) Co-operativesii) Supervisory staff of co-operativesiii) Staff of co-operatives

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Background of Co-operatives

More than half (58.0%) of the co-operatives in the study sample are medium-cluster co-operatives, while the remainder (42.0%) are large cluster ones. The number of respondents (both supervisory and non-supervisory) selected per co-operative ranges from one to three people. Credit co-operatives have multiple financial sources. All of the co-operatives use members’ fees as their capital, while about two-thirds (64.2%) also have access to share capital. Meanwhile, 22.9 per cent have bank loans, whereas the remainder (17.1%) have other financial sources such as government grant and ‘Tabarru’ Fund.

The majority (80.0%) have civil servants as members, while quite a large proportion (35.0%) have pensioners as members. A small proportion has members from the military, police and other individuals linked with religious institutions, as in the case of co-operatives for mosque congregations.

Profile of Supervisor Respondents

Female supervisors made up slightly more than half (55.1%) of the sample and that the majority (87.8%) are Malays. The largest proportion are 50 years and older (36.2%), followed by those in the 41-50 years age group (35.7%). However, not many among them belong to the younger age-group of 18-30 years old (12.2%).

More than half of the supervisors (57.7%) have SijilPelajaranMalaysia (SPM) qualification while quite a large proportion (34.1%) have tertiary education of a bachelor’s degree or higher. The rest (23.5%) have STPM/Certificate/Diploma. Many (63.8%) have been in the co-operative service for more than 10 years, and are likely to be experienced in their jobs. Those with 5-10 years service account for 17.3 per cent.

In the last two years, about three-quarters (74.5%) of the supervisors have attended at least one course, with the largest proportion (39.3%) having attended one to three courses. On the other hand, as many as a quarter (25.5%) among them has never attended any courses.

Background of Cooperative Staff Respondents

The staff sub-sample comprises mostly females (75.0%) and Malays (90.3%). About two-thirds (67.3%) are below 40 years of age followed by those in the 40-50 age group (26.0) , while only a small proportion (6.7%) are more than 50 years old. Further, more than half (55.1%) have SPM qualification while one-third have STPM/Diploma (34.2%). In contrast to the supervisor sub-sample, only a small number (1.0%) have bachelor degree or higher.

In terms of working experience, slightly more than half (54.5%) have been working with co-operatives for more than five years, while quite a large proportion (37.2%) has more than 10


years experience. However, a substantial proportion (35.2%) has never attended any courses, while slightly less than half (45.9%) has attended one to three courses while in service.

Attitude of Staff

The staff sub-sample generally has positive values based on the median score of at least 4.0 for most of the actions evaluated. However, their commitment for fulfilling promises and their personal conviction is rather low as indicated by the median score ranging from 3.0 to 3.5 only. That is, cooperative staffs generally have positive values, are highly committed to their organisations and can work as a team, but are less committed in fulfilling promises and less positive in situations where they need to have a spirit of give and take.

Level of Skills of Credit Co-operative Staff

The results show that supervisors in credit co-operatives are less convinced in the ability of their subordinates staff to manage meetings (3.54), make effective presentation (3.54) and market the co-operatives’ products (3.49). This is not surprising as the three tasks require good communication skills usually achieved through higher level education and experience, whereas they are more familiar with the daily clerical work routine.

However, there is not much difference in the ranking of the perception scores between the groups of respondents. The staff acknowledged that they can perform well in eight of the 20 tasks, whereas the supervisors believe that the former can perform well only in five tasks. However, statistical tests results indicate that the evaluation of supervisors and staff’s self-evaluation are similar in 18 of the 20 skills investigated. Their evaluation only differs in two skills, namely, recording borrowers’ details correctly and preparing payment vouchers for borrowers.

Further analysis focuses on the identification of skills that need to be improved based on the evaluation of the staff themselves and that of their supervisors. In Quadrant III of Figure 4.3, it is clear that both supervisors and staff are satisfied with five tasks performed by the latter. However, in Quadrant I, it is evident that both supervisors and other staff are of the opinion that 12 job tasks have not been performed satisfactorily. Quadrant IV indicates that superiors and staff differ in perception on the latter’s performance in two tasks. Specifically, supervisors give lower scores than the staff on skills related to the computerised loan system. The results in Figure 4.3 concur with the results of the gap analysis discussed earlier.

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Figure 4.3: Comparison of Evaluation of Skills of Staff between supervisors and Staff

I II

III IV

I. Both Supervisors and Staff are not Satisfied IV. Both Supervisors and Staff are Satisfied

S4: Preparing loan report for the higher-up S1: Checking application form against prevailing condition on loan

S5: Making decision on approval or rejection of application based on prevailing condition S2: Recording borrower’s information accurately

S7: Collecting loan repayment as scheduled S3: Explaining loan application procedure to borrowers accurately

S8: Scrutinising list of non-payment of more than 6 months (Non-performing loan) S6: Communicating with clients

S9: Obtaining information from loan applicants S15: Using office facilities

S10: Setting up meetings IV. Supervisor’s Evaluation is Higher than that of Staff’

S11: Preparing documents such as notices and the like to be sent to borrowers and guarantors S12: Using the co-operative’s computerised loan system

S13: Preparing payment vouchers for borrowers S16: Keeping data on borrowers manually or using computer system

S14: Updating and keeping data on borrowers

S17: Reporting problems related to credit

S18: Making presentation effectively

S19: Managing working hours effectively

S20: Expediting the marketing of credit products


Level of Knowledge of Credit Co-operative Staff

Further analysis focuses on staff’s knowledge based on their responses to a set of ten questions on general procedures. Generally, their level of knowledge is fairly high with 63.5 per cent answering eight of the questions correctly. However, only a small proportion (9.2%) could answer all questions correctly. Meanwhile, 11.7 per cent could only answer 6 questions correctly.

Level of Knowledge by Question

The analysis here is to identify job functions that are less understood by respondents. The level of understanding on the essence of the first five questions is high with more than 90 per cent of them answering correctly. Nevertheless, their understanding of the next three items is only moderate, while it is very low for the last two questions.

It is noted that the above two questions require one to have a basic knowledge of balance sheet and general accounting principles. This could have contributed to the fact more than two-thirds (67.3%) could not provide correct answers to the questions concerned. For the question “The Islamic method of financing allows interest to be incurred on loan”, as many as 33 respondents, 24 of whom are Malays, answered wrongly. This is surprising because being Malays, they should be aware that interest is forbidden in Islam.

Factor Related to Level of Knowledge

Based on the percentage of those having good knowledge, it is noted that male staff have a slightly higher knowledge than their female counterparts. In general, there is no clear-cut relationship between length of service and level of knowledge. Nevertheless those who had been in service for at least five years are slightly more knowledgeable than those who have been with the co-operative for less than five years.

Further, staff members who have not attended any courses tend to have the least knowledge, accounting for 15.9 per cent of the sub-sample. Also, level of knowledge seems to increase in tandem with the number of courses attended, even though not supported statistically.

It is noted that staff’s knowledge and educational level are positively related. Specifically, more than half (56.3%) of the staff with at least a bachelor’s degree were found to be more knowledgeable. However, there is significant association between age and level of knowledge. The Chi-square test of association was used to identify factors that may have an impact on the level of knowledge defined earlier. The five factors considered are length of service, age, gender, educational level and cluster of the co-operatives.

Although there is an indication that those who have been in service longer have a slightly better knowledge than their counterparts, however, there is no evidence that length of service is a significant factor of knowledge. Also, there is no gender difference in knowledge even

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though males are nominally more knowledgeable (40.8%) than females (34.0%). Also, staff’s knowledge is not associated with educational level or age.

In retrospective, level of education has a clear cut bearing on the level of understanding of job functions. Specifically, more than half (56.2%) of those who have at least a bachelor’s degree have a good knowledge compared with only about one-third of those with diploma or lower qualifications. Level of knowledge also differs between clusters, with staff of medium cluster co-operatives (43.4%) being more knowledgeable than their counterparts from the large cluster (27.8%).


This study has come up with findings that could be used as a guideline in determining the training needs of credit co-operatives. The supervisors of credit co-operatives perceive their staff to be capable of performing their clerical function and serving clients well. However, they think that the ability of their staff in 13 other tasks which are more challenging is only moderate and this needs to be improved. Among these functions, are preparing report, writing letters and checking on delays in loan repayment. The supervisors are also less convinced of the staff’s ability to set up meetings, make presentation effectively and market the co-operative’s products. These tasks require one to be able to communicate well, apart from the need to have a much higher qualification and experience unlike clerical and other lesser job functions.

In general, the supervisors’ evaluation on staff’s skills in performing 20 tasks related to loan management is consistent with that made by the staff themselves, except in two functions, namely, accurate record keeping of data on borrowers and preparing payment vouchers for borrowers. Specifically, supervisors are less convinced of their staff’s ability in these two functions.

Overall, the level of knowledge of the staff respondents about their job-related tasks is fairly good with more than half (63.5%) of them answered correctly eight questions. However, their understanding of questions related to accounting principles and balance sheets, in particular the concept of liability and non-performing loan is very low.

It is noted that knowledge is related to educational level, with those having degree qualification have a better knowledge than those with lower qualification. Level of knowledge also differs between medium cluster and large cluster co-operatives, with those from medium cluster being more knowledgeable. This situation may arise due to the fact that staff of medium cluster co-operatives has to perform most of the job tasks, whereas those in the large cluster ones are presumably assigned more specific jobs as there are more staff available.

From the perspective of the co-operative staff, they are positive about themselves and are highly committed towards their organisations as well as able to work as a team, but are less positive in fulfilling promises and tend to have the tendency to rescind.


Factors that are related to knowledge are length of service, age, gender, education and cluster. However, the results indicate that only education and size of the co-operative as indicated by the cluster type are related to knowledge. In particular, knowledge increases in tandem with education level, while those from the medium cluster co-operative are slightly more knowledgeable than their counterparts from the large cluster.

The findings of the study are important to those with interest in the cooperative movement, such as the Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC), MCSC CCM and the co-operative movement itself. The following recommendations are made to identify and formulate suitable training programmes for the credit co-operative staff and are expected to help make the management of a co-operative more effective.

CCM as a co-operative educational institution needs to increase the number of short courses it is currently providing to include loan management, basic accounting co-operative financial management, preparation of manual on work procedure, and management of records and files. Courses on marketing of products and services, preparation of reports, related credit activities and managing meetings should be widely promoted.

Courses on finance in the form of practical sessions should be formulated and carried out according to the current needs. New courses in self advancement and spiritualism such as motivation, positive thinking and other related courses are also important. To ensure that the courses offered are effective, there is a need to have a benchmark to be used for identifying and courses that are pertinent to all the functions of co-operatives. In addition, CCM needs to carry out a TNA based on function in phases and focus on specific function each year.

The co-operative movement must provide incentives to co-operatives staff who attend courses that are recommended by CCM. This is to encourage all board members and staff to attend these courses. There is a need to have a co-operative training policy that would specify the number of courses to be attended by staff and management team of co-operatives each year. It is also imperative that evaluation be made before and after the courses on the participants. Moreover, each co-operative must conduct TNA on its staff to determine the training that would enhance their competency. To encourage participation on such courses, in particular e-learning, co-operatives may recommend the award of incentives in the form of scholarships.

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REFERENCES

Abdul- Aziz, A.R. (2001). Construction in the eye of the workforce, In the construction industry in the twenty-first century: Its image, employment prospects and skills requirements. (Ed) International Labour Office, p. 1- 67.

Abu-Doleh, J. (1996). Human resource management: Management training developmentin the jordanianprivate sector-attitudes,policiesandpractices in the1990s (Doctoral dissertation, Ph. D. Thesis, Management Centre, University of Bradford, UK, 1996).

Arthur Jr, W., Bennett Jr, W., Edens, P. S., & Bell, S. T. (2003). Effectiveness of training in organizations: A meta-analysis of design and evaluation features. Journal of appliedpsychology, 88(2),pp.234.

Cannon-Bowers, J. A., & Salas, E. (2001). Reflections on shared cognition. J. Organiz. Behav., 22: 195–202. doi: 10.1002/job.82

De Simone, R.L., Werner, J.M., & Harris, D.W. (2002). Human resourcedevelopment. (3rd. Ed.). Fort Worth: Harcourt.

Dessler. (1997). àDessler, G. (1999). How to earn your employees’ commitment. TheAcademyofManagementExecutive, 13(2),pp. 58-67.

Elbadri, A N A (2001) Training practices of polish companies: An appraisal and agenda for improvement, JournalofEuropeanIndustrialTraining,25(2), pp.69-79.

Goldstein, I. L. (1993). Training in organizations: Needs assessment, development, andevaluation(3rd). Belmont, CA, US:Thomson Brooks/Cole Publishing Co.

Goldstein, I. L., & Ford, J. K. (2002). TraininginorganizationsBelmont. CA: Wadsworth.

Hoffman, T. (1999). Themeaningofcompetency. JournalofEuropeanIndustrialTraining, 23 (6), pp. 275-286

Kaufman et al. (1993) “Needs Assessment : A user’s guide. Englewood Cliffs, NJ EducationalTechnology.

Maktab Koperasi Malaysia. (2011). Laporan tahunan dan penyata kewangan 2011. Petaling Jaya: Maktab Koperasi Malaysia.

McGehee, W., & Thayer, P. W. (1961). Traininginbusinessandindustry. New York: Wiley.


Mohamed Branine. (1996).Observations on training and management development in the People’s Republic of China. PersonnelReview, 25 (1), pp.25 – 39.

Molenda, M., Pershing, J. A., & Reigeluth, C. M. (1996). Designing instructional systems. In R. L. Craig (Ed.). TheASTDtraininganddevelopmenthandbook. (4th Ed.) pp. 266-293. New York: McGraw-Hill.

Noe RA, Hollenbeck JR, Gerhart B, Wright PM. (2009). Fundamentals of Human Resource, (3rd. Eds). New York: McGraw-Hill.

Rozhan, Othman. (1998). Human resource management practice of service organizations. JournalofAsia-PacificBusiness.2(3), pp.65 - 80.

Tannenbaum, S.L., & Yuki, G. (1992). Training & development in work organizations. AnnualReviewofPsychology,43, pp.399-441.

Tung-Chun Huang, (2001). The relation of training practices and organizational performance in small and medium size enterprises. Education+ Training, 43 (8/9), pp.437 – 444. Accessed from http://www.emeraldinsight.com/journals.htm?issn=0040-912&volume=43&issue=8&articleid=837700&show=pdf

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MEASURING CONTROL MECHANISMS FOR GOOD GOVERNANCE IN SELECTED MULTI-PURPOSE

COOPERATIVE SOCIETIES AFFILIATED TO ROBI BARGA COOPERATIVE UNION, WEST SHOA ZONE,

OROMIA REGIONAL STATE OF ETHIOPIA

Dr.M.Karthikeyan* AssociateProfessor,DepartmentofCooperatives,InstituteofCooperatives&Development

Studies,AmboUniversity,Ethiopia

Ato Mekonnen Tolessa EdossaPromotionExpert,OromiaRegionalCooperativeAgency,Ethiopia

ABSTRACT

Cooperative societies employ a variety of governance controlmechanism choices (GCMCs)those are the outcomes of control mechanisms which leads to good governance to protectthemselvesagainstvarioushazardsofchangesandreduceconflictsamongstthestakeholderspursuingthemaximizationoftheirwelfare.Inthisstudyanattemptwasmadetomeasurecontrolmechanisms for goodgovernance in selectedmultipurpose cooperative societies affiliated toRobiBargaFarmers’CooperativeUnion.Thispapertherefore,aimsatexploringgovernancepractices, assessing the relationship between internal and external control mechanisms andanalyzingvariablesinfluencingGCMCs.Toaddresstheseobjectives,150respondentsfrom15cooperativesocietiesoftwoDistrictswereselectedandcollectedprimarydatabyadministeringsemistructuredinterviewschedule.ThecollecteddatawereanalyzedusingSPSS(version20)andsimplestatisticssuchas;frequencyandpercentagestodescribetheresult,correlationwereusedtodeterminethedegreetowhichthevariableswereinterrelated.Inaddition,Multinomiallogistic regression model was employed to determine factors that influence GCMCs. Thefindingsshowthatpoorapplicationofgoodgovernancemechanisms,insufficientstakeholders’participationingoverningcooperatives,inefficientcommitteemembersandlackofautonomyandindependencewerefoundtobethereasonsforcommitteeturnoverwhichledtoabsenceofgoodgovernanceandresultedtoincreaseintherateofstateintervention.Thecorrelationanalysisresultshowsthatinternalandexternalcontrolmechanismhavesignificantrelationshipanditimpliestheextenttowhichtheexternalcontrolsysteminfluencestheactivitiesofcooperativespositively.Finally, themultinomial logisticregressionmodelresultsshowthat,GCMCswereinfluencedbybusinessfactors,constitutionalfactorsandmanagementfactors. Allgapsfoundwouldbeaddressedthroughcollaborationofmembers,cooperativestakeholders,governmentandcooperativesocietiestobringethicalandgoodgovernanceforsustainabledevelopmentofcooperatives.

Key words: CooperativeGovernance, Cooperative Society, Governance ControlMechanismChoices,GoodGovernance.

*CorrespondingAuthorE-mail:[email protected]


INTRODUCTION

While globalization has provided new opportunities for economic and social development to countries around the world, it has left behind millions of people who live in countries where governments have not adjusted their priorities and actions to the emerging demands. Developing countries like Africa in general, face key challenges in various aspects of governance particularly that of cooperatives. Cooperatives across Africa were introduced by the colonial powers and typically ignored existing social and economic structures, many of which were based on informal cooperative organizations especially at the village level, and some cooperative traditions have been ‘home-grown’ within countries such as Ethiopia, with only a limited experience of colonization (Karthikeyan, and Nakkiran, 2011).

Cooperation is an age-old tradition that runs through the fabric of Ethiopian society, for centuries, the spirit of self-help has been an integral part of farming communities. Today we live in corporate power and globalization era that tends individual persons helpless. The most readily available opportunity by which the masses can enjoy and exercise corporate power is through vibrant cooperatives that are well managed. It is therefore, of paramount importance that cooperatives have governance and management structures together with a certain level of business ability for them to satisfy their shareholders (Dayanandan., 2013).

Cooperative governance represents a democratic system of direction, management, and control when the exercise of authority is delivered from its membership. Over a period of time after the cooperatives were created, a need for some law was felt to regulate the working of these cooperatives. Thus in Europe, the cooperative law was the creation of the cooperatives. Contrary to this, in most of the developing countries, the cooperatives were the creation of the cooperative law. This is because cooperatives in most developing countries especially African countries were established and promoted by the government as an agent of community development; the governments became active partners in the management and governance of cooperatives (Karthikeyan , 2008).

Good cooperative governance is governance that achieves the maximum level of economic performance compatible with the preservation or development of the cooperative identity, particularly maintaining democratic decision making principles (Rafael, et al., 2008). Strengthening the importance of participation, feeling of belongingness of members towards their cooperatives is essential for building good governance in cooperatives. An effective member participation and loyalty towards their cooperatives depends on good governance which involves linking with Members, Enacting Policies, Assuring Performance, and Dreaming the Future of the cooperatives by using best control mechanisms in order to achieve good performance. In Ethiopian case many cooperative societies including cooperative societies which are affiliated to Robi Barga Farmers’ Cooperative Union faced the problem of governance control mechanisms and are also challenged with the pressure of internal control mechanisms as the same time the ability to manage their external system of governance with regards to their dependence on government support.

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PROBLEM STATEMENT

The success of cooperative societies depend on the way that cooperative organization structured, apply good governance practice and have the best control mechanism in order to bring good governance. Good governance in cooperative is merely different and have unique character from that of other organizations where good cooperative governance will ensure that board and management pursue objectives that are in the interests of cooperatives and members, lead to effective monitoring of activities of societies, ensure efficient and effective use of available resources, reduce conflicts and increase accountability and transparency in cooperatives (Paula, 2013).

The sustainability of growth and development within cooperative societies are debatable in Ethiopia especially in sample cooperative societies. Out of 35 multipurpose cooperative societies which are affiliated to Robi Barga Farmers’ Cooperative Union and serve their members in many directions most of them have been considered as dormant and almost non-operational. The problems arising in the governance of cooperative societies can be attributed to: managerial inefficiency of committee members, lack of commitment of committees, governance intervention within the cooperatives’ business operation, absence of participation of stakeholders in three dimensions to govern cooperatives (Karthikeyan, et.al, 2014) and also it may be due to poor application of governance pillars as well as inability to use governance control mechanisms within their cooperatives.

There is a research gap, and in Ethiopian context this is a unique attempt. Therefore, this study tries to analyze governance control mechanism choices which bring good governance in cooperative societies as well as identify what factors determine those choices.

OBJECTIVES OF THE STUDY

The general objective of this study is to measure control mechanisms for good governance in selected multi-purpose cooperative societies. Meawhile the specific objectives are as follows :-

a) To explore governance practices in the sample cooperatives;b) To assess the relationship between internal and external governance mechanisms of

the cooperatives; and c) To analyze the determinants of governance control mechanisms in cooperatives.


Cooperative GovernanceCooperative governance is a pure democratic self-governance system of managing a cooperative entity based on and in complying with the principles, values and philosophy of cooperation through the appropriate and effective organizational structure with conducive culture and ethical


climate, machinery that includes management and administrative professionals at various levels /layers of functioning within the parameters of legal provisions and policy framework of the government, keeping in view the prevailing socio-economic environment to change the administrative culture, management and control systems, and the mind-set and work culture of the members and work force of cooperative enterprises (Karthikeyan, 2008). Cooperatives provide a set of principles upon which new self-help cooperatives can emerge to autonomously and indirectly implement government policies. Such cooperatives, operating according to the principles of democracy and autonomy, can enable poor people to take control and ownership of the process to fight poverty and its causes (Cracogna, 2003).

The Four Pillars of Cooperative Governance

Cooperative governance framework encompasses the four pillars as key components of governance which are universally acceptable and applicable regardless of the economic orientation, strategic priorities, or policy choice of the government in question. These are: participation, transparency, predictability and accountability (Karthikeyan., 2006). Though, participation is needed to obtain reliable information and to serve as a reality check and watchdog for government action, transparency entails low-cost access to relevant information; predictability results primarily from laws and regulations that are clearly known in advance and uniformly and effectively enforced and accountability is state intervention that encourage the formation of social capital i.e., the stock of trust and information exchange at the base of civil society.

Governance Control Mechanisms

The governance system of an organization consists of a set of mechanism that enables the organization to achieve the common goals of its members/owners. Since organizations vary in terms of structure and the institutional environment in which they operate, the set of governance mechanisms available and the intensity of their use may differ from one organization to another (William, 2007).

According to Weimer and Pape, (1999) generally governance mechanisms fall into one of three categories; regulatory, external, and internal governance mechanisms that, when combined, provide a system of checks and balances. Organization control mechanisms are used to govern economic transactions between actors and alternative mechanisms for allocating resources and to determine the broad uses to which organizational resources will be deployed and the resolution of conflicts among the myriad of participants in organizations (Daily et al., 2003). In addition, these mechanisms are used to identify who is responsible for specific decisions, how the organization is to be managed, how objectives are identified and met, and how performance and the general oversight are managed.

However, in this paper the researcher takes governance control mechanism choices (GCMCs) those cooperative societies used to control over the system of governance with which their cooperatives attempt to bring good governance within the cooperative societies. These control

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mechanism choices encompasses situations like; No Intervention, Chairman Change, Cashier Replacement and Management Committee Replacement by Cooperative Promotion Agencies those which are the outcomes of governance mechanisms that leads cooperatives to good governance. As per the cooperatives legislation, a cooperative society shall have an internal as well as external controller.

Internal Governance Mechanisms in Cooperatives

Internal control includes controlling by general assembly, Board of Directors /chairman/, management committees, internal auditors and internal controller which aims to achieve reasonable assurance of members’ purpose, laws and regulations (Paula, 2013). The Board of Directors or Chairman and other Management bodies of the cooperative societies shall establish an internal control system to ensure efficiency and effectiveness of operations, reliability of financial reporting and compliance with appropriate laws and regulations.

While, General Assembly is the supreme body of cooperatives reflecting its democratic character and the guardian role of the cooperative identity it is composed of all the cooperative members who make decisions regarding election and remuneration of the members of the management and supervision governing bodies, as well as on major issues like closure of the cooperative, merging and changing the bylaws, and also the right to approve the annual financial report and getting to meet annual meeting, to appreciate the report, and for approve the next year plan of the activities. Internal auditor is the one who is responsible for: watching over the management of the company, ensuring that the law is upheld and the bylaws are observed, verifying the regularity of the books, accounting records and supporting documents and the accuracy of the financial statements, furnishing statements of opinion on the management report and accounts for the financial year (Anne Siayor, 2010).

External Governance Mechanisms in Cooperatives

External control includes external auditors, supervisors and evaluators or those who take the responsibility to organize and support to make cooperatives efficient. Formal legal and regulatory obligations are part of the external incentive structure designed to ensure that competing companies abide by common standards of fairness, transparency, accountability, and responsibility to protect shareholders, consumers, workers, the environment, and even competitors from abusive practices (Olawoye. et al., 2009). Cooperative governance regulates the relationship between members of cooperatives and the Board of representatives of members that manage on behalf of members. To the extent that formal institutions of the state and internal control mechanisms used by the organization do not entice management to act in a value-maximizing manner, the market for corporate control provides an additional means by which to reduce the costs associated with separation of ownership and control (William, 2007).


Good Governance

Good cooperative governance is defined as governance that achieves the maximum level of economic performance compatible with the preservation or development of the cooperative identity, particularly maintaining democratic decision-making principles (Rafael, et al., 2008). From that perspective, the great challenge for cooperative governance resides in making the following compatible: the democratic decision-making model economic performance, especially when the cooperative is experiencing economic growth and managerial development.

By democratic decision-making model it means the decisions that emanate directly from the General Assembly of Members, the fundamental meeting in cooperative governance, and indirectly through the members’ representatives on the Board. Economic performance means that the level of fulfillment of the society’s objectives, especially those of providing services to members, compatible with the economic stability of the society. Economic balance means that a society is both financially profitable and serves the interests of the members. Finally, Cooperative Balance, and therefore good cooperative governance, means a situation where both democratic balance and economic balance exist.

Good governance is a normative conception of the values according to which the act of governance is realized, and the method by which groups of social actors interact in a certain social context. The lack of a generally accepted definition of the concept is compensated by the identification of principles that strengthen good governance in any society. The most often enlisted principles include: participation, rule of law, transparency of decision making or openness, accountability, predictability or coherence, and effectiveness. The international donor community generally shares the view that these principles stand at the foundation of sustainable development (Debiel and Terlinden, 2004).

Good governance does not occur by chance. It must be demanded by citizens and nourished explicitly and consciously by the nation state. It is, therefore, necessary that the citizens are allowed to participate freely, openly and fully in the political process. The citizens must have the right to compete for office, form political party and enjoy fundamental rights and civil liberty. Good governance is accordingly associated with accountable political leadership, enlightened policy-making and a civil service imbued with a professional ethos. The presence of a strong civil society including a free press and independent judiciary are pre-conditions for good governance (Balmiki, 2006).

Many authors define the term good governance as different aspects; some define it by its effectiveness, efficiency, accountability, exchange and free flow of information (transparency), and its legal framework, and others define as participative manner of governing that functions in a responsible, accountable and transparent manner based on the principles of efficiency, legitimacy and consensus for the purpose of promoting the rights of individual citizens and the public interest, thus indicating the exercise of political will for ensuring the material welfare of society and sustainable development with social justice.

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Generally good governance can create an effective political framework conducive to private economic action those stable regimes, the rule of law, efficient State administration adapted to the roles that Governments can actually perform and a strong civil society independent of the State. The governance in cooperatives has to ensure that they effectively respond to the needs of various stakeholders, especially the members-owners who are the most important stakeholder group in cooperatives (Prathap, et al., 2004).

Determinants of Governance Control Mechanisms

Many scholars try to show factors that hinder the quality of good governance by explaining and defining in detail how economic, political, social factors as well as governance pillars can influence governance control mechanisms. Especially Paula (2013) tries to identify factors that hinders governance control mechanism choices by computing business transactions of the cooperatives and show how the outcomes demonstrate that external governance mechanisms that present greater efficiency in disciplining Cooperatives Governance Model management than internal control mechanisms.

The governance system of an organization, therefore, consists of a set of mechanisms that enable the organization to achieve the common goals of its members/owners. Since organizations vary in terms of structure and the institutional environment in which they operate, the set of governance mechanisms available and the intensity of their use may differ from one organization to another. Generally, governance mechanisms fall into one of three categories regulatory, external, and internal governance mechanisms that, when combined, provide a system of checks and balances (Weimer et al., 1999).

For the purpose of this study determinant factors of governance control mechanism choices are constitutional factors, business factors and management factors. Constitutional factors (government policy, adherence to coop principles and values, coop proclamation, members loyalty, bylaw and member trust) are those factors that consists of the legal system in which government regulate the cooperatives. Business factors (service mix, business viability, profitability, sustainability, customer care, member business participation and business prediction) are those factors that determine the governance control mechanism choices in such a way that indicate inefficient committees in business operation of the cooperatives. Management factors (managerial efficiency, democracy, professionalism, commitment by management, decision making, participation in management, accountability and transparency of committees) are those factors that show committees play pivotal role in their progress.


Conceptual Framework

Source: Authors’sketchbasedonliteraturereview,2015

Figure: 1 Conceptual Framework of Governance Control Mechanisms

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8

2.2 Conceptual Framework

Figure: 1 Conceptual Framework of Governance Control Mechanisms

Source: Authors’ sketch basedonliteraturereview,2015

Constitutional Factors

Governance Policy Adherence to Coop

Principle & Values Coop Proclamation Bylaws Member Trust Member Loyalty

Business Factors

Service Mix Viability Profitability Sustainability Customer Care Member Participation

in business Predictability

Management Factors

Managerial Efficiency Democracy Professionalism Commitment by

ManagementCommittee

Decision Making Participation in

Management Accountability

Governance Control

Mechanism

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Table:1 Definitions of the variables used for control mechanismsVariables Definitions Measurements

GCM Dependent Variable used in Multinomial logit

0 = No intervention1 = Chairman Change2 = Cashier Replacement 3 = Management Committee Replacement by CPA

Independent Variables

GPO Government policy Binary, 1= if conducive 0= otherwise

ADHER Adherence to coop Principles and Values

Three distinct , 2= if more adherence to coop principles and values , 1= adherence 0= otherwise

CPRO Cooperative proclamation Binary, 1= if Supportive 0= otherwise

BYL Bylaw Binary, 1= if Supportive o= otherwise

MT Member trust Binary, 1= if trust 0= otherwise

MLOY Member loyalty Binary, 1=if loyal 0=otherwise

SMX Service mix Binary, 1=if Satisfied 0= otherwise

VIABL Viability of coop business Binary, 1= if viable 0= otherwise

PRFT Profitability of the cooperatives Binary, 1= if profitable 0= otherwise

SASTN Sustainability of the business Binary, 1= if sustainable 0= otherwise

MPRT Member participation in business activities

Three Discrete, 2= more participation, 1= participation and 0= no participation

CC Customer Care Binary, 1= if customer care 0= otherwise

PRDCT Predictability of business Binary, 1= if prediction in business 0= otherwise

MGREF Managerial efficiency related with conceptual / technical skill

Three, 2= more efficient, 1= efficient and 0= not efficient

DEMO Democracy of management bodies

Three, 2= more democratic, 1= democratic and 0= otherwise

PROF Professionalism of mgt bodies Binary, 1= if Professionalism 0= otherwise


COMIT Commitment by management committee Binary, 1= if committed 0= otherwise

DM Decision making of mgt committee Binary, 1= if timely a decision 0= otherwise

PART Participation in management

Three, 2= Active participation, 1= Moderate and 0= no participation

ACCT Accountability of management Binary, 1= if accountable 0= otherwise

TRNSP Transparency of management Binary, 1= if transparent 0= otherwise


Description of the Study Area

West Shoa is one of the zones of the Oromia Regional State that is located at the central part of the state. Neighboring zones of West shoa are: Amhara Region in the North; East Wollega and Horo Guduru zones in the West and North West; Jimma zone in South West; South West Shoa zone in South East; and North Shoa zone in South East. Walmera and Ejere Woredas are districts in West Shoa Zone Oromia Regional state of Ethiopia. The districts are bordered on the North Meta Robi and Ada Berga, on the South by South West Shoa Zone Woredas, at West by Jeldu and Dandi and at East by Addis Ababa.

Agro Ecology: the altitude of West Shoa zone ranges from 1166 to 3238 meters above sea level (masl), where the largest area lies between 2300 and 2630 masl. The topography of the zone, which is mainly leveled field, makes it an ideal place for agriculture. Temperature ranges from 11-21oC and rainfall from 880-1200mm. There are three main drainage basins in West shoa zone: Abay, Ghibe and Awash. In addition, there is high potential for ground water and smaller rivers like Barga.

Population of the study was based on data obtained from Robi Barga Farmers Cooperative Union profile. The Union was established in 1995 E.C. by 10(ten) Primary Cooperatives of four Districts (Adda Barga, Walmara, Meta Robi and Ejere) with the members of Male 8,586 Female 997 Total 9,483 and the initial capital of 90,000 ETB. At this time the Union has 55 Primary Cooperative Societies with the members of Male 23,102 Female 3,415 Total 26,517 and the current total capital is 5.1million ETB. The Union runs different business operations relative with other cooperative Unions in West Shoa Zone which serves four districts (WSZAO, 2014).

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Figure: 2 Map of the study area

Source: Zonaldiagnosisandinterventionplan(LIVES)WestShoa,Oromia,2014

Sampling Design and Sample Technique

Survey method was adopted. The study was conducted in West Shoa Zone particularly two Woredas (Walmera and Ejere) which was selected purposively due to accessibility of data and practicing governance control mechanism choices. Robi Barga Farmers’ Cooperative Union which covered Four Woredas (Ada Barga, Meta Robi, Ejere and Walmera) with 55 cooperative societies. For the study purpose from two Woredas (Ejere and Walmera) 15 sample cooperative societies were selected randomly. From these 15 cooperative societies all management committees (seven of them) and all three control committees totaling 10 (ten) committee members were selected as sample respondents since they are closer to the governance control mechanism practice. The respondents of the study were 150. Key Informant Interview (KIIs) was conducted with five informants; from two Districts and one official from the Union was also included as key informant for this research.

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12

Figure: 2 Map of the study area

Source: Zonaldiagnosisand interventionplan(LIVES)WestShoa,Oromia,2014

3.2 Sampling Design and Sample Technique

Survey method was adopted. The study was conducted in West Shoa Zone particularly two Woredas (Walmera and Ejere) which was selected purposively due to accessibility of data

Ejere&

WalmeraDistricts

West Shoa

Ethiopia Oromia


Types and Sources of Data

To meet the objectives of the study both primary and secondary data were required and it comprises both qualitative and quantitative approaches. The primary data required for this study was collected from sample respondents using a semi-structured interview schedule and through check list for key informants. Secondary data was collected from published and unpublished documents of the cooperative societies as well as Cooperative Promotion Agencies.

Method of Data Collection

Interview schedule was employed to obtain; how governance is practiced, what control mechanism choices did apply and how it tends to bring good governance, what is the relationship between internal and external control mechanism as well as what factors influence governance control mechanism choices by contacting their committee members in selected cooperative societies. In addition key-informant interview was employed among experts to get supplement information at hand and to make sure that they have deep knowledge about governance system as well as the critical problems that determine governance control mechanism choices. Training was given to the enumerators about method of data collection and the contents of semi structured interview schedule. Data collection started after the approval of proposal from sample cooperatives, Woredas Cooperative Promotion Office as well as from the Union.

Method of data Analysis

The collected data were analyzed by Statistical Package for Social Science (SPSS version 20) qualitatively as well as quantitatively. Thus, descriptive statistics such as frequency and percentages were used to describe governance practices in sample cooperatives for the first objective. For the second objective, correlation was used to determine the degree to which two variables were related. Multinomial logit (MNL) model was employed to determine the factors that influence governance control mechanisms choices.

The generalized linear modeling technique of Multinomial logistic regression could be used to model unordered categorical response variables. This model could be understood as a simple extension of logistic regression that allows each category of an unordered response variable to be compared to an arbitrary reference category providing a number of logit regression models. This approach has been applied in sample cooperative societies in line of other studies especially on Agriculture and Rural Development and Agricultural Credit Cooperatives (Joshi and Bauer, 2006, Paula, 2013).

The Multinomial logit is used since the dependent variable takes on more than two discrete outcomes. In this study it assumed values of 0, 1, 2, and 3 which reflecting four different situations, respectively: (0) No intervention; (1) Chairman change; (2) Cashier Replacement and (3) Management Committee Replacement by the Cooperative Promotion Agency. The value of each event in the ’t’ period was determined according to the behavior of the cooperative societies

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affiliated to Robi Barga Farmers’ Cooperative Unions in the ‘t+1’ period. To address determinant factors of governance control mechanisms the study used the following empirical model formula. And the model was used to analyze the factors influencing the choices of governance control mechanisms. The MNL is based on random utility model which used by (Joshi and Bauer, 2006 ). The utility U to committee members’ for choosing a particular alternatives was specified as a linear function of the cooperatives and governance characteristics (β) and the attributes of that alternative (X) as well as a stochastic error component (e):

Suppose the observed outcome (DV) is choices j.This implicates for a given members. Ualternativej>Ualternativek ∀ k=j,or

The probability of choosing an alternative is equal to the probability that the utility of that particular alternative is greater than or equal to the utilities of all other alternatives in the choice set. Let the probability that the ithcooperative chooses thejthcontrol mechanisms be Pij and denote the choice of the ithcooperative by Y’i= (Yi1, Yi2…Yij)where Yij = 1 if jth control mechanism choice was selected and all other elements of Y’i are zero. If each committee members was observed only a single time, the likelihood function of the sample of values Yi1…Yij is;

Assuming that the errors across the control mechanisms choices (eij)are independent and identically distributed leads to the following multinomial model.

The multinomial logit model is used to predict the probability that cooperatives go to a certain preferences of control mechanisms choices and how that choices are conditioned by different cooperatives societies and management bodies characteristics and attributes of the control mechanisms valued by the management committee members’. To find the marginal effects of the individual management committees characteristics the probability was used the formula as;

The MNL model is general enough to be useful as a tool for studying circumstances faced by management bodies and different problems encountered in the context of choice among multiple control choices.


FINDINGS

Governance Practices in Cooperative Societies

From the analysis made the following findings were drawn:

The existence of governance practice in sample cooperative societies from the finding, the application of good governance was poor (low and moderate) and the rate of practices of the four pillars such as; accountability, participation, transparency and predictability also was low and moderate practiced in cooperative management.

The rate of stakeholders’ participation in governing cooperatives was poor. Poor participation of stakeholders as well as poor practices of the four pillars in cooperative management leads to increase committees’ turnover rate within their cooperatives.

The necessary situations make committees go to choices in sample cooperative societies were due to committees’ inefficiency, natural replacement, force replacement and promotion accordingly.

Rate of governance or external controllers intervention while turnover takes place were high and make cooperatives could not enjoy autonomy and independence as per the cooperative principles by considering last five years committees` turnover assessment.

Relationship between Internal and External Control Mechanisms

The researcher observed the relationship between Internal and External Control Mechanisms of sample cooperative societies by bivariate correlation analysis to determine the degree to which two variables are interrelated. This relationship illustrate how do cooperatives societies and state have linkage in order to promote cooperatives as well as make cooperatives a base for the country’s development and to bring sustainable development within the cooperatives. The following table presents the correlation analysis of internal and external control mechanisms of sample cooperative societies.

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Table 2: Correlation analysis of Internal and External Control Mechanism

Source:Computedfromfieldsurveydata,2015Note: *. Correlationissignificantatthe0.1level(2-tailed). **. Correlationissignificantatthe0.05level(2-tailed). ***.Correlationissignificantatthe0.01level(2-tailed).

Results for Correlation analysis of Internal and External Control Mechanisms

When to compute the result from correlation analysis of internal and external control mechanism; members’ control over their cooperative societies and assigning external auditors by external body have positive relationship at 10% significant level. This implies that when the internal control mechanisms of the cooperatives increases as the same time the members have access to control over their cooperatives the state support became increase.

Qualification and the independence review of internal auditors by committee members have positive relationship with state control over the activities of the cooperative societies at 5% significant level. This indicates when the strength of committee members’ internal auditors qualification and independency assessment increase the government control over the activities of cooperatives became increase, i.e. the government increase its support for cooperatives in order to bring self-reliance within cooperatives.

Committee members’ decision making in cooperative society and assigning of external auditors in cooperatives have positive relationship at 1% significant level. This shows when the ability and responsibility of committees’ decision making to assign internal auditor increase the assigning of external auditors within the cooperatives by agreement with committees became increase as

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Table 2: Correlation analysis of Internal and External Control Mechanism

Internal Control Mechanism External Control MechanismAssigning of

external auditorsGovernance control over the activities of the coop society

Members' control over their coop society

Pearson Correlation .149* .033Sig. (2-tailed) .069 .687

N 150 150

Qualification and the independence review of internal auditors by committee members

Pearson Correlation .012 .162**

Sig. (2-tailed) .882 .048N 150 150

Committee members' decision making

Pearson Correlation .249*** .088Sig. (2-tailed) .002 .282N 150 150

Internal control mechanism as a measure of how coops stakeholders work together

Pearson Correlation .087 .060Sig. (2-tailed) .289 .466N 150 150

Source: Computedfromfieldsurveydata,2015Note: *. Correlationissignificantatthe0.1 level(2-tailed).

**. Correlationissignificantatthe0.05level(2-tailed).***. Correlationissignificantatthe0.01level(2-tailed).

Results for Correlation analysis of Internal and External Control Mechanisms

When to compute the result from correlation analysis of internal and external control mechanism; members' control over their cooperative societies and assigning external auditors by external body have positive relationship at 10% significant level. This implies that when the internal control mechanisms of the cooperatives increases as the same time the members have access to control over their cooperatives the state support became increase.

Qualification and the independence review of internal auditors by committee members have positive relationship with state control over the activities of the cooperative societies at 5% significant level. This indicates when the strength of committee members' internal auditors qualification and independency assessment increase the government control over the activities of cooperatives became increase, i.e. the government increase its support for cooperatives in order to bring self-reliance within cooperatives.

Committee members' decision making in cooperative society and assigning of external auditors in cooperatives have positive relationship at 1% significant level. This shows when the ability and responsibility of committees' decision making to assign internal auditor


well as external auditors report to committee members became increase and the external bodies do not force committees to do so.

Therefore, as observed from the correlation analysis, internal control mechanisms and external control mechanisms have statistical significant relationship and it implies that how much external control system or governance control system influence the activities of cooperatives positively.

Factors that Determine Governance Control Mechanism Choices (GCMCs)

Cooperative societies employ a variety of governance control mechanism choices (those are the outcomes of control mechanisms which leads to good governance) to protect themselves against various hazards of change, and governance control mechanisms are also the organizational controls that reduce conflicts amongst the stakeholders pursuing the maximization of their welfare. However, for this research determinant factors that influence governance control mechanism choices could be factors such as; constitutional factors, managerial factors and business factors.

Governance Control Mechanism Choices (GCMCs)

The governance system of an organization consists of a set of mechanisms that enable the organization to achieve the common goals of its members/owners. Since organizations vary in terms of structure and the institutional environment in which they operate, the set of governance mechanisms available and the intensity of their use may differ from one organization to another (William, 2007). The following table presents the responses given by the respondents on governance control mechanism choices exercised by cooperatives.

Table 3: Governance Control Mechanism Choices (GCMCs)

Governance Control Mechanism Choices Frequency Percent

No Intervention 34 22.7

Chairman Change 36 24.0

Cashier Replacement 54 36.0

Mgt Committee Replacement by CPA 26 17.3

Total 150 100.0Source:Computedfromfieldsurveydata,2015

The survey result shows that majority 54 (36.0%) respondents reported that Cashier Replacement took place in their cooperative societies, followed by 36 (24.0%) as Chairman Change took place, 34 (22.7%) reported there was No Intervention while committees turnover takes place in their cooperatives, and 26 (17.3%) reported that management committee replacement took place by Cooperative Promotion Agency.

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As it was observed from the result the frequency of the cashier replacement and chairman change is higher than the others, due to the nature of responsibility assigning to them.

Determinant Factors Influencing Governance Control Mechanism Choices: Multinomial Logit (MNL) Model Results

Multinomial logit (MNL) model was employed to determine the factors that influence governance control mechanism choices of sample cooperative societies in line with other studies especially on Agriculture and Rural Development and Agricultural Credit Cooperatives (G. Joshi and S. Bauer, 2006 and Paulla C, 2013).The MNL model is used, reflecting the values of dependent variable, four different situations with its value (0=No Intervention, 1=Chairman Change, 2=Cashier Replacement and 3=Management Committee Replacement by CPA). In regression analysis the fourth choice (Mgt committee replacement by CPA) take as reference category. The results out of MNL model is presented in the following table 4.20.

Table 4: Determinant Factors of Governance Control Mechanism Choices: Multinomial logit (MNL) Model

Parameter EstimatesGovernance Control Mechanism

Choices a B Std. Error Wald Df Sig. Exp(B)

No

Inte

rven

tion

Intercept -23.802 723.251 .001 1 .974Membrloyl 6.606 1.928 11.746 1 .001*** 739.610Busnsviab 6.289 2.344 7.198 1 .007** 538.556Busnsproft 4.439 2.559 3.010 1 .083* 84.723Busnssustn -4.967 1.579 9.894 1 .002*** .007Custcare 10.568 4.480 5.564 1 .018** 38886.212Demomgt -6.810 2.136 10.167 1 .001*** .001Comitmgt -5.768 3.163 3.327 1 .068* .003[Adhertocooprinc=.00] 3.677 1.905 3.725 1 .054* 39.534[Adhertocooprinc=1.00] .285 1.808 .025 1 .875 1.330[Adhertocooprinc=2.00] 0b . . 0 . .

Cha

irm

an c

hang

e Intercept 10.855 5.244 4.285 1 .038Coopbylw 3.711 2.249 2.721 1 .099* 40.883Membrsatsfy -5.987 2.647 5.115 1 .024** .003Busnsviab 5.266 2.462 4.575 1 .032** 193.645Busnsproft -3.833 2.067 3.438 1 .064* .022Busnssustn -4.190 1.442 8.442 1 .004** .015Custcare 10.074 4.367 5.321 1 .021** 23714.664Busnsprdct -3.935 1.793 4.816 1 .028** .020Trnsp -2.761 1.632 2.864 1 .091* .063

Cas

hier

R

epla

cem

ent

Intercept 25.496 1538.052 .000 1 .987Membrloyl 4.019 1.720 5.461 1 .019** 55.623Membrsatsfy -6.366 2.559 6.189 1 .013** .002Busnsviab 5.453 2.278 5.728 1 .017** 233.426Busnssustn -5.125 1.473 12.113 1 .001*** .006Custcare 14.006 4.587 9.322 1 .002*** 1209585.981Busnsprdct -3.458 1.694 4.168 1 .041** .032Demomgt -3.233 1.730 3.490 1 .062* .039Comitmgt -8.174 3.725 4.815 1 .028** .000

Source:Computedfromfieldsurveydata,2015


Note: a.Thereferencecategoryis:MgtcommitteereplacementbyCPA. b.Thisparameterissettozerobecauseitisredundant. c.Floatingpointoverflowoccurredwhilecomputingthisstatistic.Itsvalueistherefore settosystemmissing. *: issignificantatthe0.1,**: issignificantatthe0.05leveland***: issignificantat the0.01level.

Twenty one independent variables were entered in to MNL model and the results out of MNL regression implies that the likelihood ratio chi-square of 182.216 at df 69 with p-value < 0.0001 tells that the model as a whole fits significantly better than an empty model.

Results for No Intervention as a choice Governance Control Mechanism

One unit increase in the variable members’ loyalty to their cooperatives is associated with a 6.606 increase in the relative log odds of being in No Intervention choice. One unit increase in the variable cooperatives’ business viability is associated with a 6.289 increase in relative log odds of being in No Intervention choice. One unit increase in the variable cooperatives’ business sustainability is associated with a -4.968 decrease in the relative log odds of no intervention choice. One unit increase in the variable customer care is associated with a 10.568 increase in the relative log odds of being in No Intervention choice. One unit increase in the variable democratic management of committees’ is associated with a -6.810 decrease in relative log odds of being in No Intervention choice. One unit increase in the variable commitment by management committee is associated with a -5.768 decrease in relative log odds of being in No Intervention choice. One unit increase in the variable committee’s adherence to cooperative principles and values is associated with a 3.677 increase in relative log odds of being in No Intervention choice. One unit increase in the variable committee’s adherence to cooperative principles and values is associated with a 0.285 increase in relative log odds of being in No Intervention choice. The relative log odds of being in No Intervention choice versus in committee’s adherence to cooperative principles and values will increase by 3.677 if moving from the highest level of adherence to lowest level of no adherence.

Results for Chairman Change as a choice of Governance Control Mechanism

One unit increase in the variable cooperatives’ bylaw supportive to cooperative societies is associated with a 3.711 increase in relative log odds of being in Chairman Change as a choice. One unit increase in the variable member satisfaction that provided by cooperatives is associated with -5.987 decrease in relative log odds of being in Chairman Change choice. One unit increase in the variable cooperatives’ business viability is associated with a 5.266 increase in relative log odds of being in Chairman Change choice. One unit increase in the variable cooperatives’ business profitability is associated with a -3.935 decrease in relative log odds of being in Chairman Change choice. One unit increase in the variable cooperatives’ business sustainability is associated with a -4.190 decrease in relative log odds of being in Chairman Change choice. One unit increase in the variable customer care is associated with a 10.074 increase in relative

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log odds of being in Chairman Change choice. One unit increase in the variable committees’ business predictability is associated with a -3.935 decrease in relative log odds of being in Chairman Change choice. and also One unit increase in the variable committees’ transparency is associated with a -2.761 increase in relative log odds of being in Chairman Change choice.One unit increase in the variable members’ loyalty towards their cooperatives is associated with a 4.019 increase in relative log odds of being in Cashier Replacement choice. One unit increase in the variable members’ mix or members’ satisfaction with services that provide by their cooperatives is associated with a -6.366 decrease in relative log odds of being in Cashier Replacement choice. One unit increase in the variable cooperatives’ business viability is associated with a 5.453 increase in relative log odds of being in Cashier Replacement choice. One unit increase in the variable cooperatives’ business sustainability is associated with a -5.125 decrease in relative log odds of being in Cashier Replacement choice. One unit increase in the variable customer care is associated with a 14.006 increase in relative log odds of being in Cashier Replacement choice. One unit increase in the variable cooperatives’ business predictability is associated with a -3.458 decrease in relative log odds of being in Cashier Replacement choice. One unit increase in the variable democracy of management committee is associated with a -3.233 decrease in relative log odds of being in Cashier Replacement choice. One unit increase in the variable commitment by management committee is associated with a -8.174 decrease in relative log odds of being in Cashier Replacement choice.

Results for Choices Vs Reference category

The relative log odds of being in No Intervention and Cashier Replacement versus in Management Committee Replacement by Cooperative Promotion Agency will increase by 6.606 if moving from more members’ loyalty to less members’ loyalty. The relative log odds of being in No Intervention and Cashier Replacement versus in Management Committee Replacement by Cooperative Promotion Agency will decrease by -6.810 if moving from more democratic management of committees to less democratic management of committees. The relative log odds of being in No Intervention and Cashier Replacement versus in Management Committee Replacement by Cooperative Promotion Agency will decrease by -8.174 if moving from more commitment by management committees to less commitment by management committees. The relative log odds of being in Chairman Change and Cashier Replacement versus in Management Committee Replacement by Cooperative Promotion Agency will decrease by -3.935 if moving from the presence of business predictability to absence of business predictability. The relative log odds of being in No Intervention, in Chairman Change and Cashier Replacement versus in Management Committee Replacement by Cooperative Promotion Agency will increase by 14.006 if moving from the presence of customer care to absence of customer care. The relative log odds of being in Chairman Change and Cashier Replacement versus in Management Committee Replacement by Cooperative Promotion Agency will decrease by -6.366 if moving from more member satisfaction to less member satisfaction.

The relative log odds of being in No Intervention, in Chairman Change and Cashier Replacement


versus in Management Committee Replacement by Cooperative Promotion Agency will increase by 6.289 if moving from the presence of business viability to absence of business viability. The relative log odds of being in No Intervention, in Chairman Change and Cashier Replacement versus in Management Committee Replacement by Cooperative Promotion Agency will decrease by -5.125 if moving from the presence of business sustainability to absence of business sustainability.

The result of MNL regression analysis denotes that there are different variables influencing governance control mechanism choices of Walmera and Ejere districts cooperative societies and these variables have the effects in ensuring control mechanism within the cooperatives in order to bring good governance. The association between variables is described as very strong to weak depending on the type of variables under consideration.

To sum up, the result of the data analysis shows that governance practices in sample cooperatives was low and it results poor application of good governance, insufficiency stakeholders’ participation in governing cooperatives, inefficiency committee members and lack of autonomy and independence were found to be the reasons for committees turnover which lead to absence of good governance and resulted to increase the rate of state intervention. The internal and external control mechanisms have significant relationship and it implies the extent to which the external control system influences the activities of cooperatives positively. The MNL model analysis result shows that governance control mechanism choices were influenced by business factors (service mix, business viability, business profitability, business sustainability, business predictability and customer care), constitutional factors (committees’ adherence to cooperative principles and values, cooperative bylaw, member loyalty) and also by management factors (democratic management of committees and commitment by management committee). Finally the result of multinomial regression analysis model indicates the above variables are statistically significant and influence governance control mechanism choices positively as well as negatively.


The result of the data analysis shows that existence of governance practices in sample cooperatives was low and it results poor application of good governance mechanisms, insufficiency stakeholders’ participation in governing cooperatives, inefficiency of committee members and lack of autonomy and independence were found to be the reasons for committees turnover which lead to absence of good governance which resulted to an increase in the rate of state intervention. Internal and external control mechanisms have significant relationship and it implies the extent to which external control system influences the activities of cooperatives positively. The result of this study shows that governance control mechanism choices were more influenced by business factors such as; service mix, business viability, business profitability, business sustainability, business predictability and customer care, by constitutional factors such as; committees’ adherence to cooperative principles and values, cooperative bylaw, member loyalty. And also it was influenced by management factors such as; democratic management of committees and commitment by management committee. The result of multinomial regression analysis model

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indicates the above variables are statistically significant and influence governance control mechanism choices negatively as well as positively. This result shows among those three factors Business Factors were the highest determinant than Management Factors and Constitutional Factors; on the other hand Business Factors is the main and crucial factors that make committee members goes to choices. To conclude, there are four different governance control mechanism choices practiced by the sample cooperatives, which are influenced by certain factors. The cooperatives should consider those factors in order to reduce the turnover of committees to enhance good governance.

Based on the findings the following recommendations are forwarded to enhance good governance in cooperatives. Cooperative societies have low and moderate practices of governance pillars and all

stakeholders do not participate well in three dimensions in governing cooperatives. So there is a need to capacitate cooperatives and stakeholders to play their role and responsibilities through facilitating cooperative training and cooperative education.

Necessary situations that make committees’ choices were due to committees’ inefficiency, natural replacement, force replacement and promotion cases while committees’ turnover took place. The rate of government intervention while committees’ turnover took place was high. It is therefore necessary to shape all cooperatives in order to overcome unnecessary government intervention and strengthen cooperatives to have efficient committee members.

It was also found that the internal and external control mechanisms have significant relationship positively to each other. It should be maintained to achieve good governance in cooperatives.

It was realized that constitutional variables next to business variables could influence the governance control mechanism choices more than that of management variables. As such, it is important to stress on those factors to overcome the problems. These committee members should participate more on constitutional and management dimensions of cooperatives.

Poor transparency, commitment by management and democracy of committee members while making decision in cooperatives influence the choices. It warrants improving awareness of committees to be transparent for all stakeholders, committed by management and also should be transparent in decision making process.

Low level of adherence to cooperative principles and values and low member loyalty in cooperative results in decrease No Intervention choice. So it is necessary to shape these conditions while they are very important to govern cooperative societies according to bylaws, cooperative principles and values.

Chairman Change as a governance control mechanism choice takes place when cooperatives had poor service mix, lack of business viability, lack of business profitability, absence of business sustainability, and lack of customer care and absence of business predictability within cooperatives. Thus, it is better to create business awareness for cooperative stakeholders to make the cooperatives sustainable.

All gaps indicated above would be addressed through collaboration of members, cooperative stakeholders, and government. From the members’ side: high involvement in all activities of their cooperative business as well as managing their cooperatives; from committees’


commitment by management, timely decision making, playing their roles, play their role and responsibilities as per the bylaws; and cooperative principles and values; from the government side: building a sense of ownership among members, maintain conducive environment by supporting cooperatives are recommended for cooperatives to bring ethical and good governance for sustainable development.

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93Volume 12 2016

VALUE CO-CREATION DIMENSIONS: THEIR EFFECT ON SATISFACTION OF COOPERATIVE

MEMBERS

Yusman Yacob*, Jati Kasuma AliFacultyofBusinessManagement,UniversitiTeknologiMARA(UiTM)

Kota Samarahan, Malaysia

Hiram TingInstituteofBorneoStudies,UniversitiMalaysiaSarawak

Kota Samarahan, Malaysia

ABSTRACT

Valueco-creationisacrucialcomponentintheserviceindustryandpivotaltothegrowthandsurvival of organizations. The rationale is based on the belief that value is created by boththe organizations and the customers. Notwithstanding its magnitude, little is done to delveintothesubjectmatterincooperativesinthecontextofdevelopingmarkets.Thepresentstudyattemptstoinvestigatetherelationshipbetweenvalueco-creationdimensionsandsatisfactionofcooperativemembersinSarawak.Aquantitativeapproachusingself-administeredsurveywasadopted.Atotalof300copiesofthequestionnaireweredistributedtocooperativemembersinSarawakand274usablecopiesweresubsequentlycollected.Multipleregressionsanalysiswasconducted toassess theeffectofvalueco-creationdimensionsonmembers’satisfaction.Thefindingsindicatethatrelating,ethical,developmentalandconcertedjointactionshavepositiveeffectonmembers’satisfaction,wheredevelopmentaljointactionsisfoundtobethestrongestinfluence dimension. The study thus highlights the practical importance of learning cultureamongserviceprovidersandcooperativemembers,andlaysthefoundationforfuturestudies.

Keywords: Value Co-creation Dimensions, Members’ Satisfaction, Cooperative



INTRODUCTION

Creating value for customers is a crucial element today. According to Gronroos (2008), value creation is a process the customers go through when obtaining the products or services. According to Vargo, Maglio & Akaka (2008), since value creation may increase customers’ wellbeing, it has become a key ingredient in strategic marketing. It has been increasingly adopted and studied in the field of Service Dominance (S-D) logic, which has been influential in reinforcing the development of marketing research. The key concept within this field is value co-creation, a notion which highlights that value is not solely created by the service providers for the customers. Rather it is a creation by both parties throughout the time of interactions.

The basis of S-D logic is that organizations, markets and society at large are fundamentally concerned with exchange of services (Vargo & Lusch, 2004). Given the fact that exchange takes place during interactions and process of transaction, it involves both the providers and the recipients. Hence, building consensus around the conceptualization of value co-creation becomes increasingly important in research as the conception of value co-creation has been considered as research priority by the Science of Service (Ostrom, 2010). Since Vargo’s (2004) seminar article which introduced the premises of the Service Dominance (S-D) logic, more than 890 articles uses “co-creation” in their titles. However, such extant literature is marred by conceptual confusion and ambiguity. Most of the discussions around this field focus on identifying the dimensions in value co-creation. With a better conceptualization, the understanding of value co-creation could eliminate ambiguities regarding the locus of value co-creation, dimensions, actors, as well as the interrelations in the process of value co-creating activities and outcomes.

Past studies have looked into value co-creation in service interactions. Gronroos (2012) conceptualizes value co-creation as ‘‘joint collaborative activities by parties involved in direct interactions, aiming to contribute to the value that emerges for one or both parties.’’ Several key dimensions have been identified, such as individuating joint actions, relating joint actions, empowering joint actions, ethical joint actions, developmental joint actions and concerted joint actions (Karpen, 2012). In addition, variables that are closely associated with value co-creation are also determined, such as satisfaction, trust, and commitment in relationships (Ballantyne, 2006). In line with the context of cooperatives’ business development, the co-creation principle is seen as relevant and pivotal to its service operations which intensely involve both service providers and cooperative members.

The Cooperative Societies Act, 1993, Subsection 4 (1), defines the primary society as a body consisting of individuals to increase the economic interests of its members in accordance with cooperative principles. The Institute of International Cooperative Alliance (ICA) Congress in Manchester in 1995 declared the cooperative core values and principles listed in the Cooperative Identity Statement succinctly as ‘an autonomous association of people, joined voluntarily to meet their needs and aspirations together in the field of economic, social and cultural organizations through a jointly owned and democratically controlled. As such, the present study comes to recognise the relevance and practicality of value co-creation among cooperative members. It

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uses a model based on value co-creation in service interaction. Hence, the objective of this study is to investigate the relationship between the dimensions in value co-creation toward cooperative members’ satisfaction. The key element for the dimension of value co-creation were adapted in this study including individuating joint actions, relating joint actions, empowering joint actions, ethical joint actions, developmental joint actions, and concerted joint actions (Karpen, 2012).


Value Co-creation

In the early 2000s, management scholars began to suggest that the locus of economic value creation was shifting from the organization’s research and development department to the interactions between the organizations and the customers (Pralahad, 2004). Such transition and development gives birth to value co-creation. The term denotes that the production of value which takes place increasingly through the interactions between the organizations and customers is the outcome of collaboration in manufacturing products and services. The co-creation paradigm in S-D logic thus raises two important questions for which conceptual clarity and practicality is needed.

Moving the locus of value creation from exchange to use in a given context indicates transforming the understanding of value from one that is based on organization output to one that is based on processes which integrate resources. Such move is fundamental for the development of service science, which aims to focus scientific attention on the problems associated with innovating services and enhancing service provisions (Chesbrough & Spohrer, 2006; Spohrer et al., 2006). The only article to date that addresses value co-creation dimensions from S-D logic perspective is that of Karpen (2012). The conceptual article, which is based on an in-depth literature review and S-D logic expert interviews and surveys, identifies six types of value-creating interactions or joint actions between service providers and customers, namely individuating joint actions, relating joint actions, empowering joint actions, ethical joint actions, developmental joint actions, and concerted joint actions. Since the present study adopts these dimensions, each of these joint actions is explained in the following paragraphs.

Relating Joint Actions

Any interaction involves a relational element. While relating joint actions can be seen as a necessary condition for interactions to occur (Ballantyne, 2006), it is also part of the value cocreating activity. This supports the notion that relationship marketing has been widely acknowledged as a significant source of customer value (Gronroos, 2012). While discussing an organization’s relational interaction capability, relating joint actions is defined as “an organization’s ability to enhance the connection of social and emotional links with customers and other value network partners” (Karpen, 2012:25). Hence, it is aimed at establishing or enhancing a social and emotional connection between employees and customers within a service interaction.


Individuating joint actions

At the organizational level, individuating joint actions is described as “an organization’s ability to understand the resource integration process, contexts, and desired outcomes of individual customers and other value network partners” (Karpen, 2012:25). Individuating joint actions can include activities such as explaining personal preferences, consumption history, previous service experiences, individual hierarchy of needs or preferred means of interacting, and the desired outcome of the interaction for customers.

Empowering joint actions

Joint activities are built on the premise that participants have the power to influence the outcome of the interaction. At the organizational level, empowering joint actions is defined as “the ability to enable its customers and other value network partners shape the nature and content of exchange” (Karpen, 2012:28). Therefore, empowering joint actions is seen as collaborative actions aimed at negotiating the power to influence the outcome of the interaction among service employees and customers when service interaction takes place.

Concerted joint actions

Collaborative actions aimed at the synchronization between service employees and customers is labelled as concerted joint actions. At the organizational level, concerted joint actions is described as “an organization’s ability to facilitate coordinated and integrated service processes with customers and value network partners” (Karpen, 2012:30). Such interaction capacities include adapting participants’ behaviors to one another, engaging in movement coordination, and establishing agreements and coordination in service interactions.

Developmental joint actions

An organization’s developmental join actions is defined as the “ability to assist customers and other value network partners’ knowledge and competence development” (Karpen, 2012:29). Such interaction capacities are composed of actions aimed at improving the customers’ and employees’ operant and operand resources during service interactions. While operant resources are tangible in nature and include products being exchanged (Vargo, 2004), operant resources are intangible, including knowledge, skills, and networks (Vargo, 2008).

Ethical joint actions

Ethical joint actions is also regarded as collaborative action aimed at setting fair, honest, and moral guidelines between interacting participants. Successful interactions require that both service providers and customers are working together towards a shared goal and hold no conflicting or hidden agendas, personal gains as fundamental basis to collaboration. Therefore, it is surmised that value co-creation involves a certain degree of transparency, integrity, and shared risk (Randall, 2011).

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Customer satisfaction with Co-Creation

Yi (2013) suggested a typology of different definitions to characterize satisfaction as the result of a process consumption experience. According to Frederick (2006), satisfaction is seen as a final state. This state is distinct from the process leading to its formation. The co-creation process offers various social benefits for customers. Customers can, for instance, enhance their social status through being recognized as a valuable information source by other stakeholders. Additionally, active participation in communities with persons sharing the same interests enhances communication skills and creates social contacts and enjoyment (Karpen, 2012). Such concept is emphasized in the present study so as to determine whether an increased satisfaction with their co-creation performance always benefits the company. Satisfaction with the co-creation performance is understood as the satisfaction with the customers’ participation in the creation of the service offering, such as the recommendations the customers make. It can be argued that when customers are satisfied with their own co-creation performance, they are more willing to spend additional money for the service purveyed to them.

Research Framework and Hypothesis Development

Research framework of the present study is developed based on studies done by Karpen (2012), Yi (2013) and Neghina (2014). As mentioned in the literature review, six dimensions pertaining to value co-creation are adopted in the present study, and they are joint actions from the relating joint actions, individuating joint actions, empowering joint actions, ethical joint actions, concerted joint actions and developmental joint actions.

Fig 1: Research Framework based on Karpen et al. (2012), Yi (2013) and Neghina (2014)

In accordance to the research framework, six directional hypotheses are formulated to address the research problems and objectives. The objective of the study is to investigate the relationship between the dimensions in value co-creation toward cooperative members’ satisfaction. These hypotheses are stated as follows:

Fig 1: Research Framework based on Karpen et al. (2012), Yi (2013) and Neghina (2014)

H1

H2

H3

H4

H5

H6

In accordance to the research framework, six directional hypotheses are formulated to address

the research problems and objectives. The objective of the study is to investigate the relationship

between the dimensions in value co-creation toward cooperative members’ satisfaction. These

hypotheses are stated as follows:

H1 There is positive relationship between relating joint actions and cooperative

members’ satisfaction

H2 Thereis positiverelationshipbetweenindividuating jointactions and cooperative

members’ satisfaction

H3 Thereis positiverelationshipbetweenempowering jointactions and cooperative

members’satisfaction

H4 There is positive relationship between concerted joint actions and cooperative

members’satisfaction

H5 There is positive relationship between developmental joint actions and

MEMBER SATISFACTION

RELATING

INDIVIDUATING

EMPOWERING

CONCERTED

DEVELOPMENTAL

ETHICAL


H1 Thereispositiverelationshipbetweenrelatingjointactionsandcooperativemembers’satisfaction

H2 There is positive relationship between individuating joint actions and cooperativemembers’satisfaction

H3 There is positive relationship between empowering joint actions and cooperativemembers’satisfaction

H4 Thereispositiverelationshipbetweenconcertedjointactionsandcooperativemembers’satisfaction

H5 There is positive relationship between developmental joint actions and cooperativemembers’satisfaction

H6 There is positive relationship between ethical joint actions and cooperativemembers’satisfaction


In light of the research problem and objectives, a quantitative approach using survey questionnaire was adopted in the present study. A non-probability sampling technique was adopted instead of probability sampling technique as there is no way to estimate the probability of any one person being included in the sample of a large population, and no assurance is given that each person has a chance of being included (Maxfield & Babbie, 2011). This is due to the confidentiality of information and disorganize of respondent database in the cooperative. Purposive sampling technique was used to sample the cooperative members in Sarawak. It involves selecting individuals who can offer ‘useful manifestations of the phenomenon of interest’ (Patton, 2001:40). The questionnaire consisted of three parts, namely demographic profiles, value co-creation dimensions and members’ satisfaction. It was prepared in both English and Malay languages to ensure the respondents were comfortable with the questionnaire and could comprehend the questions and statements. The scale of measurement was 5-point Likert scale, ranging from strongly disagree to strongly agree.

After pre-test was done, 300 copies of questionnaire were distributed among the cooperative members who attended training programs at the Cooperative College of Malaysia in April until July 2015. A total of 285 copies were subsequently returned but 274 copies were found usable. Such response rate suggests that non-response bias was not an issue in data collection and analysis process. Moreover, the sample size was also deemed adequate for regressions analysis (Sekaran, 2000). Since non-probability sampling technique was used and normal data distribution could not be ascertained, G-Power analysis was performed, with the effect size of f square 0.15, α error prob. of 0.05, and power of 0.8 to test the statistical power in the study with six predictors or independent variables. The result shows that the sample size was adequate. Hence, the data were keyed in into Statistical Package for the Social Sciences (SPSS) version 20 for descriptive and regressions analysis.

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FINDINGS AND DISCUSSIONS

Demographic Profile Table 1 shows the demographic profile of 274 members of cooperatives. Out of the 274 respondents, a total of 130 respondents (47.4 percent) were male members while 144 respondents (52.6 percent) were female members. The age group of 21-30 (32.5 percent) and 31-40 years old (29.2 percent) account for the biggest sample. Majority of the respondents (42.7 percent) hold a position as an ordinary members.

Table 1: Demographic Profiles

Variable Count Percentage

Gender Male 130 47.4

Female 144 52.6

Age 20 and below 10 3.6

21-30 89 32.5

31-40 80 29.2

41-50 37 13.5

51 and above 58 21.2

Position Board Members 99 36.1

Internal Auditor 14 5.1

Representative 6 2.2

Committee MembersMembers Staff

1711721

6.242.77.7


Descriptive and Reliability Findings

Table 2 shows the results for mean value and standard deviation for each item of the variables under investigation. All variables satisfy the requirements for data consistency represented by Cronbach alpha values greater than 0.70 (Nunally, 1978).

Table 2: Reports of Means, Standard Deviations and Reliability

Variables Items

Mean1=StronglyDisagree2=Disagree3=Neutral4=Agree5=StronglyAgree

S.D. Alpha

Relating Joint Actions

REL1 3.588 0.776

0.903

REL2 3.945 0.732

REL3 3.883 0.761

REL4 3.920 0.742

REL5 3.934 0.782

REL6 3.745 0.848

Individuating Joint Actions

IND1 3.880 0.810

0.745IND2 3.964 0.755

IND3 3.974 0.713

IND4 3.858 0.815

Empowering Joint Actions

EMP1 3.624 0.857

0.808EMP2 3.869 0.739

EMP3 3.880 0.758

EMP4 3.818 0.841

Concerted Joint Actions

CON1 3.934 0.800

0.834CON2 3.905 0.806

CON3 3.807 0.805

CON4 3.741 0.762

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Variables Items

Mean1=StronglyDisagree2=Disagree3=Neutral4=Agree5=StronglyAgree

S.D. Alpha

Developmental Joint Actions

DEV1 3.620 0.844

0.865

DEV2 3.737 0.773

DEV3 3.850 0.687

DEV4 3.737 0.682

DEV5 3.832 0.776

Ethical Joint ActionsETH1 3.828 0.748

0.882

ETH2 3.836 0.788

ETH3 3.810 0.785

ETH4 4.157 0.717

ETH5 3.880 0.739

ETH6 3.953 0.742

Satisfaction

SAT1 3.945 0.766

0.903

SAT2 3.741 0.781

SAT3 3.723 0.845

SAT4 3.675 0.803

SAT5 3.923 0.774

SAT6 4.044 0.750Note: S.D. indicates standard deviation and alpha indicates Cronbach alpha in reliability test

Multiple Regressions Findings

Table 3: Regression Analysis (I)

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .850a .722 .715 .34476

a. Predictors: (Constant), Relating, Individuating,Empowering, Concerted, Developmental, Ethical


Table 3 shows the Adjusted R Square of 0.715, meaning that 71.5 percent of the variance in the cooperative members’ satisfaction can be explained by the six value co-creation dimensions. This is an indication of strong predictive or explanatory capacity of the model.

Table 4: Regression Analysis (II)Coefficientsa

ModelUnstandardized

CoefficientsStandardized Coefficients T Sig.

B Std. Error Beta

1

(Constant) .005 .155 .034 .973RELATING .131 .055 .133* 2.482 .014

INDIVIDUATING .061 .058 .055 1.052 .294EMPOWERING .039 .058 .038 .666 .506CONCERTED .203 .058 .204* 3.516 .001

DEVELOPMENTAL .370 .066 .348* 5.632 .000ETHICAL .195 .064 .184* 3.027 .003

a. Dependent Variable: Satisfaction * p < 0.05 (one-tail)

Table 4 shows the findings of significant value for each path relationship between value co-creation dimensions and members’ satisfaction. According to Sekaran (2006), the significant below p < 0.05 is generally accepted conventional level in social science research. As such, all dimensions are found to have significant and positive relationship with members’ satisfaction except for individuating and empowering joint actions. Hence, only H1, H4, H5 and H6 are supported.

The estimation of standardized beta value indicates the amount of effect that each value co-creation dimension has on members’ satisfaction (Sekaran, 2006). Based on standardized coefficients of which relationships are significant, developmental joint action has the highest beta value followed by concerted, ethical and relating joint actions. Thus, developmental joint action is perceived as the most pivotal factor which contributes to members’ satisfaction in the cooperatives in Sarawak. This is likely due to the fact that developmental interaction process is regarded as a rewarding process since both service employees and customers perceive the process as a learning process. From the employees’ standpoint, they seek to provide better service and attempt to make progress. From the customers’ perspective, the developmental aspect of value co-creation makes them willing to be part of the service process to ensure a smoother process and more desirable outcome. The findings correspond to literature pertaining to customer learning (Hibbert, 2012), and bottom-up learning for service employees (Ye, 2012). Thus, it can be surmised that developmental joint action, where learning and improvement are central to the interactions, is critically important to ensure members’ satisfaction in the context of cooperatives in Sarawak.

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Relating, ethical and concerted joint actions are also found to be significant, implying that social and emotional connection between service employees and members, the trust between them, and the coordination during interaction process are crucial to satisfaction. As past study suggest that when the self-efficiency of customers increases, the amount of engagement in the service process is not seen as a cost any longer, but something that contributes to customer value (Van Beuningen, Ruyter, & Wetzels, 2011). However, empowering joint actions and individuating joint actions were found to be not significant in this study. Participants do not have high expectation of the empowerment and individuating joint actions by cooperative. Due to empowerment and individuating joint actions is no longer in the hand of single participant, the power to influence the outcome of interaction that will give benefit to overall goal become difficult to both participants and cooperatives, where it is considered a means of explaining the changing relationships between service providers and customers, in which customers are increasingly taking charge of their value creating activities. Therefore, empowerment and individuating joint actions among members and cooperative should be linked together as to create more values for their future success.

MANAGERIAL IMPLICATIONS AND CONCLUSION

It is imperative to translate the findings and discussions into managerial implications so as to help the cooperative movement in Sarawak, facilitate service improvement and maximize business performance. The present study has underscored the relationship between value co-creation dimensions and members’ satisfaction, and more specifically, the effect of each dimension on satisfaction. Hence, it helps the cooperative movement and the management personnel to consider how value co-creation, particularly developmental, relating, ethical and concerted joint actions, could be incorporated into the cooperatives and exemplified through the culture and operations. This is to ensure members are satisfied with the service and would be willing to continue to use the service.

Notwithstanding its magnitude, the study is limited in several areas which underline the need for future research. Instead of using satisfaction as the outcome variable, members’ loyalty and their repeated usage could be modelled as outcome variables whereas satisfaction as mediator. Moreover, the length of membership which is very much related to service usage rate, knowledge and familiarity of the service could be incorporated in the framework to provide more comprehensive understanding of the value co-creation and members’ satisfaction. Furthermore, the six dimensions of value co-creation could be modelled as formative measurement to avoid erroneous judgment and conclusions due to model misspecification and sampling strategy. Finally, it would be beneficial to conduct a qualitative study on the subject matter so as to delve into value co-creation and other variables of interest in a pragmatic manner not only in Sarawak but in the context of developing markets.


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