Information and Communication Technology (ICT) Capabilities and Performance of Tier 1 Deposit-Taking SACCOs in Kenya: A Dynamic Capabilities Perspective

The objective of this study was to determine the influence of Information and Communication Technology (ICT) capabilities on the performance of Tier 1 Deposit-Taking Savings and Credit Co-operative Societies (SACCOs) in Kenya. Anchored on Dynamic Capabilities Theory, ICT capabilities were conceptualized as a second-order construct comprising three dimensions: digital option, Information Technology (IT) staff capability, and IT support. A mixed-methods approach was applied, drawing data from finance, audit, credit, Front Office Service Activity (FOSA), marketing, and ICT management staff across all 42 Tier 1 Deposit-Taking SACCOs (DT-SACCOs) licensed by the Sacco Societies Regulatory Authority (SASRA) in Kenya, using structured questionnaires. Data were analyzed using the Statistical Package for Social Sciences (SPSS), applying descriptive statistics and simple linear regression. The findings indicated that ICT capabilities contributed significantly to improved operational efficiency, reflected in clearly defined digital strategies, integration with real-time payment platforms such as PesaLink, real-time system dashboards, and continuous training of IT staff, although IT support service responsiveness remained comparatively weak (mean = 2.33). Regression analysis showed that ICT capabilities had a positive and statistically significant influence on performance (R² = .481, β = .694, t = 15.191, p < .001), and remained a significant predictor (β = .113, p = .023) even after controlling for knowledge management, product, and physical infrastructure capabilities in a joint model. The null hypothesis that ICT capabilities do not influence the performance of Tier 1 DT-SACCOs was therefore rejected. The findings are consistent with Dynamic Capabilities Theory, illustrating how ICT-enabled sensing, seizing, and reconfiguring capacity supports performance in a rapidly digitalizing financial sector. The study concludes that ICT capabilities are an important driver of Tier 1 DT-SACCO performance in Kenya and recommends strategic prioritization of ICT upgrades, continuous IT staff training, and strengthened IT support systems to improve competitiveness, operational resilience, and sustainable performance.