SUBMISSION OF MANUSCRIPT IN THE AREA OF BUSINESS ABSTRACT: This survey study aimed identifying the challenge on the development of Cooperative… [600707]

SUBMISSION OF MANUSCRIPT IN THE AREA OF
BUSINESS

ABSTRACT:

This survey study aimed identifying the challenge on the development of Cooperative
organizations in selected three woreda in Bench Maji zone. R esponses were elicited from three
hundred thirty five (335) respondents . Data were analyzed using descriptive and multi -linear
regression analyses. Finally, t he study has suggested cooperative promoter, government, and
prospective members should prioritize those factors that have greater impact on their
success than do others i.e., financial condition and their politico -legal status. The future study
needs to provide longitudinal data to examine continuity of response and to observe
development that occur over time and also add other developmental factors of cooperative
organization (such as market access and infrastructure).

Key Words : Development of cooperative organization, management factor,
structural factor, awareness factor, financial factor, politico -legal
factor, entrepreneurial factor.

INTRODUCTION
When we consider human beings history, greatest socio -economic achievements have merely
become possible through community participation and group collaborative work starting from
the hunting and gathering way of life. In cooperatives, the members join toge ther with a view
to enjoy economic advantages by securing the goods and services they need to exist, to carry
out their occupation or to run their business. The international representative body for
cooperatives, the International Co -operative All iance, defines a co -operative as: An
autonomous association of persons united voluntarily to meet their common economic,
social and cultural needs and aspirations, through a jointly owned and democratically
controlled enterprise (ICA, 1995).
Even though, it is generally believed that successfully managed cooperatives have great
potential in development; a mixture of definitions has been used, in order to determine the

development of cooperatives enterprise. For instance, Curl, (2010) defines development in
terms of business growth, profitability, and members’ satisfaction. Tulus, October, (2004)
studies co -operative success in Asia and defines development as attaining a free market
paradigm.
With respect to the challenges to the development of cooperative organization, the findings in
Mellor, (2009) indicates that lack of members’ knowledge, lack of commitment and customer
loyalty is the challenging factor for cooperative organization developm ent.
In addition awareness factor, Birchall, (2003) considering the structural challenges to the
development of cooperative organization. (Cornforth, Hall, & Keynes, 1995) has also indicate
the striking features of structures and procedures both from the point of view of efficiency and
how well they meet cooperative principles, and to make changes which achieve a workable
balance between different objectives. Also (Nilsson & Ohlsson, 2007) shows, organizational
structure factor for the development of marke t in the cooperatives will be impotant for the
development of cooperative organization development.
(Sevarlic , Raicevic, & Glomazic , 2012) Indicate cooperatives capital as social funds for both
their members and non -members which is maintained if the deve lopment of cooperative
organization will be successful . Hussain, (2014)Indicate people commited to engage in
cooperative activities but due to lack of capital they cannot do so, these affects the activities
of Cooperative organizations especially i n rural areas and it hampers economic growth.
The other important factor challenges to the development of cooperative organization is
management factor. Hariyoga & Sexton, (2009 )findings on management factor shows a
number of poor business decisions that led to significant financial stress and the eventual
dissolution of the firm is due to lack of available skill of the management. (Gray & Kraenzle,
2002) identified problems on cooperative management that result in low commodity prices,
the agricultural economy,operational issues, and increasing costs.
Spielman & Bernard, (2003 ) indicates the government/ politico legal factor with respect to
their relationship among cooperatives affects their development. (Stearns, Cobia, & Warman,
1997) Indicate the go vernment factor on cooperative elevator structure and operations during
the late 1980s and early 1990s and shows the over control and regulation by the government
led to failure of the cooperative organization.
However, currently with varying degrees of organizational development, cooperatives are
longstanding and widespread throughout the country (Spielman & Bernard, 2003; Getnet &
Tsegaye , 2012; Bezabih , 2009) indicates Ethiopian government enact cooperatives

proclamations, and formulated a five year cooperative development programme and shows its
implication as the realization of federal and regional governments contributed for the
development of cooperatives to economic and social development, food security and poverty
reduction in Ethiop ia. However, Emana, (2009) adds, at the district level where most decision
making on capacity building programmes, budgeting and resources allocation takes place; lack
of awareness about the role of cooperatives in economic and social development, and lack of
awareness regarding cooperative law has made it difficult for integrated promotion and
development of cooperative organization.
Having the above issues in mind and important role cooperatives can play in the development
of the country through further p romotion, deepening and supporting of cooperativ es is
important Getnet & Tsegaye, ( 2012). As a result studying on the district level challenges to the
development of cooperative organization for which Bench maji zone among them would be
selected.
REVIEW OF LITERATURE

The theoretical and empirical analysis found various factors as vital in development of
cooperative organization. A number of studies have been carried out with the objective of
establishing the relationship between various factors and its influence on the development of
cooperative organization in different parts of the world. The researchers found that the impact
of different factors like, management, structural, awareness, financial, politico -legal and
entrepreneurial factors as significa nt factors on the development of cooperative organization .
But no studies use entrepreneurial factor as additional variable to this five other variables. As
the best knowledge of the researcher, no other research has used entrepreneurial factor as
independ ent variable specifically in Ethiopia and this paper tr y to see the six factors and the its
relationship with development of cooperative organization in Bench maji case .
Conceptual framework
For the purpose of this study, “development of cooperative organization ”, as the main
dependent variable, is defined as the function of maximizing different developmental goals;
i.e. “s ervice offerings ”, and. “ members` satisfaction” . This definition of cooperative
organization development was partially a dopted, from (Bruynis et al., 2007; John W, 2009 and
Esman & Uphoff, 2008) . And it evaluates the degree of Cooperatives development in terms of
service offerngs to members in order to enhance member satisfaction . From the review of a
broad range of literat ure, the researcher proposes the challenges to the development of

cooperatives organization would in six factors: It can be argued that the challenges to the
development of cooperative organizations are: Structural factor ; politico -legal factor , financial
factor , awareness factor , management factor and entrepreneurial factor. Moreover the
following figure illustrates how these attributes would be designed as factors to the
development of cooperative organization.

Sources: Researcher own design based on literature
Figure Conceptual frame work
NEED/IMPORTANCE OF THE STUDY
Management
factor
Financial
factor
Structural
Factor
Entrepreneurial
factor
Awareness
factor
Politico -legal factor Development of
Cooperative
organization

The central purpose of this research study is to find out and examine Impact of factors
on development of cooperative organization in Ethiopian, a case of Bench maji zone, SNNP
Regional state and to examine the developmental factors/challenges have significantly affect
the development of cooperative organization in Ethiopia. In turn, the findings of the research
add to the existing knowledge. Specifically, this study is significant in the sense that:
 Create meaningful awareness among the concerned body primary cooperative
organization managers, DA, agricultural office workers, heatth exte nsion workers,
teachers, and FTC about the developmental factors that affect the development of
cooperative organization for optimal organizational development.
 The study findings help scholars to seek more knowledge about the development of
organization i n many other service giving institutions in order to shot light on
developmental factor for organizational development.
 The findings also helpful in building on the already existing literature about
developmental factor and organizational development of cooperative organization.
 The policy makers and government find the study findings vital especially in building
and widening on the existing information on the developmental factors and
development of cooperative organization.
 Cooperative institutions find the research findings useful in providing an insight in to
the sound organizational development practices.
Statement of Problem
Starting and operating cooperatives includes a possibility of development as well as failure.
Because of many factors eithe r from the mistake done by the cooperatives or simple
management mistake the cooperatives led to failure. (Mohammed & Lee, 2015) Study on
Ethiopian cooperative sector on SNNPR and indicate development stories of some or few
cooperatives, and found major ch allenge of cooperatives organization development as due to
past attitude (ideology), lack of committed leadership, lack of good governance (management),
lack of working capital, attitude and practice of corruption, lack of knowledge and skill, lack in
provision and utilization of improved technology, weak vertical and horizontal linkage within
and among cooperatives, lack and inappropriate support from government and other
stakeholders. In addition Bezabih ,(2009) studied in Ethiopia indicate the major challenges on
the development of cooperative organization on lack of awarness, failure in structure of the
cooperatives, capital shortage and management problems.

Gaikar, (2015) An empirical study of co -operatives in India: with reference to the five
year plans on the world famous co -operative and found five major challenges to the
development of cooperative organization as structural factor, lack of capital, lack of awareness,
poor management, and over control and regulatio n of the government is identified as the major
problem.
Although a number of studies have examined various key issues contributing to
development of cooperative organization , recent studies has pointed out that the re is
variety in th e literature with regard to development of cooperative organization factors
(Dube, (2015); Tchami, (2007); Maghsoudi & Davodi, (2011); Panagiota & Nastis, (2011) ).
Furthermore with diversity in method as well as subject matter, understandably from c ountry
to country ( Kangaraj, 2012 ), a growing body of literature seeks fu rther studies on factors that
contributed to the success of cooperatives. Therefore, this highl ights the need for further
research in this area.
Moreover further analysis on the challenges toward the development of cooperative
organization is essential . Limo K & Popoi, 2011; Maghsoudi & Davodi, 2011 indicates
enterpreneur ial factor as additional challenge towards the development of cooperative
organization in Iran . As po inted out in Donnell, Macknigh, & Donnelly, (2012) In scotland
found entrepreneurial factors as significantly affecting the development of cooperative
organization. T he current research was included new variable as developmental factor ,
which has significant impact on the development of cooperative organization and gives
policy option for the development of cooperative organization in Ethio pia that is not yet
included by other researcher in Ethiopian previous study. Moreover, the current study was
examine whether entrepreneurial factor has influenced the development of cooperative
organization in Ethiopia; a case of Bench maji zone, SNNPR Regional state .
From the above research gap found in the empirical studies, this st udy attempt to fill the gap by
investigating the impact of entrepreneurial factor on the development of cooperative
organization in Ethiopia.
Objective of the study
General Objective
The general objective of the study is to analyze the challenges to the development of
cooperative organization in Bench maji zone.

Specific Objectives
In an attempt to achieve the general objective of the research, it also addressed the following
specific objectives are:
 To examine the relationship between management factors and development of cooperative
organization in Bench maji case.
 To examine the relationship between structural factors and development of cooperative
organization in Bench maji case.
 To examine the relationship between awareness factors and development of cooperative
organization in Bench maji case.
Hypothesis
With the help of sufficient and a ppropriate empirical data, various factors that affect the
development of cooperative organization . Dube, (2015) indicate modern economic and social
structures may have weakened co‐operative social fabric but it is an important foundation upon
which the concept and philosophy of modern co ‐operatives as economic enterprises can be
successfully built and sustained . From all some researchers namely, Gaikar, (2015) ; Develtere
et al. ( 2008) ; Chambo, (2009) ; Dias, (2012) ; Kanagaraj, (2012) ; and Emana, (2009) indicate
there are various factors affecting development of cooperative organizations.
From the above empirical study, the researcher tries to develop testable hypotheses to examine
the impact of factors on the development of cooperative organization in Ethiopia: a case of
Bench Maji zone; SNNPRegional state. The research hypothesis was developed to estimate
the sign of the relation by supporting with empirical evidence to examine the relationship
between factors affecting the development of cooperative organization in terms of managerial
factor(Mgrf), structural factor(Strf), awareness factor(Awf), financial factor(Finf),
politico -legal factor(Polf) and entrepreneurial factor(Enf).
Managerial factor (Mgrf)
Theoretically, good management increases the effectiveness and performance of cooperative
organization, which in turn increase the development of cooperative organization. Dube,
(2015) indicate the positive and significant relation of management and development of
selected 390 village primary milk cooperative societies, by a newly appointed group of
professional managers through training and technical help. In addition Curl, (2010) ; Wanyama,
(2008) ; and Dogarawa , 2005) also show positive and significant relation between management

and development of cooperative organization through their interpersonal skills of managers,
good understanding the concept of cooperative, good educational level, and good experience
in cooperative.
Over all, most of the empirical studies indicate positive relationship b etween management and
development of cooperative organization. Therefore, this study expected that management
factor has positive and significant impact on development of cooperative organization in
Ethiopia.
Hypothesis 1: M grf has significant positive impact on development of cooperative
organization
Structural factor (Strf)
Most of the empirical literature made around the world put the result that structural
factor in terms member homogeneity, members’ cooperation, practice of sharing experiences
of other developed cooperatives , good relationship with other cooperatives, availability of
well-structured faci lities, and large number of workers has positive impact on development of
cooperative organization.
A study by ( Hariyoga & Sexton, (2009) ; Fulton & Hueth, (2009) ; Cornforth et al. (1995) and
Nilsso n & Ohlsson, (2007) conclude that structural factor has positive and statistically
significant on the development of cooperative organization.
Over all, most of the empirical studies indicate positive relationship b etween structural factor
and development of cooperative organization. Therefore, this study expected that structural
factor has positive and significant impact on development of cooperative organization in
Ethiopia.
Hypothesis 2: Strf has significant positive impact on development of cooperative
organization
Awareness factor (Awf)
Awareness in cooperative context means incorporating effective member -owner awareness in
order to help develop the capacity of the management and members to listen well and respond
appropriately to the genui ne concerns of the cooperative organization in terms of good
communication mediu m, members access to timely, worthwhile information and provide
regular feedback to members to allow them to share in collective successes as highly important

in term s of its influence on the development of society’s, awareness on member owner
responsibility and benefits, awareness of related coop eratives news and market trends,
accuracy of messages cooperatives communicate to members . According to Mellor, (2009) ;
Emana, (2009) ; Bond et al. (2009 ); Fulton & Hueth, (2009) conclude that awareness factor has
positive and statistically significant on the development of cooperative organization.
Over all, most of the empirical studies indicate positive relationship b etween awareness factor
and development of cooperative organization. Therefore, this study expected that awareness
factor has positive and significant impact on development of cooperative organization in
Ethiopia.
Hypothesis 3: Awf has significant positive impact on development of cooperative
organization
Financial factor (Finf)
In theory finance of cooperative means one of the key important influential term if
cooperatives are established, grow and flourish, which critically focus on the development of
cooperative organization.
Most of the empirical literature made around the world put the result that financial factor
in terms share capital contribution, loan application by banks a nd other lending institution,
cash management skill , interest charged by banks and other lending institutions and high
collateral requirements for banks and other lending institution .
A study by ICA, (2013) ; Gray & Kraenzle, (2002) ; Dogarawa ( 2005) conclude that financial
factor has positive and statistically significant on the development of cooperative
organization.
Over all, most of the empirical studies indicate positive relationship b etween financial factor
and development of cooperative organization. Therefore, this study expected that financial
factor has positive and significant impact on development of cooperative organization in
Ethiopia.

Hypothesis 4: Finf has significant positive impact on development of cooperative
organization
Politico -legal factor (Polf)
Many empirical study analysis politico -legal influences on development of cooperative
organization in terms of Lack of accessible information on government regulation that are
relevant to cooperatives , political intervention , bureaucracy in cooperative registra tion and
licensing , tax levied on cooperative business and government support .
According to Gorz, (2007) ; Gray & Kraenzle, (2002) and Hussain, (2014) the empirical
results of their study show that the politico -legal factor is positive and statistically
significant with the development of cooperative organization . In Ethiopia, research by
Veerakumaran, ( 2007) ; Kanagaraj, (2012) ; Emana, (2009) ; Getnet & A nullo, ( 2012) indicate
politico -legal factor has positive and stati sticaly significant with the development of
cooperative organization.
Therefore , most of the empirical studies indicate positive relationship b etween politico -legal
factor and development of cooperative organization. Therefore, this study expected that
politico -legal factor has positive and significant impact on development of cooperative
organization in Ethiopia.
Hypothesis 5: Polf has significant positive impact on development of cooperative
organization
Entrepreneurial factor (Enf)
Many empirical study analysis Entrepreneurial influences on development of cooperative
organization in terms of entrepreneurship training, tolerance to work hard, motivation and
drive , absence of initiative to assess one’s strengths and weakness , persistence and courage to
take responsibility for one’s failure and lack of information to exploit business opportunities .
According to Donnell et al. (2012) ; Maghsoudi & Davodi, (2011) the empirical res ults of their
study show that the entrepreneurial factor is positive and statistically significant with the
development of cooperative organization .
Therefore , most of the empirical studies indicate positive relationship b etween entrepreneurial
factor and development of cooperative organization. Therefore, this study expected that

entrepreneurial factor has positive and significant impact on development of cooperative
organization in Ethiopia.
Hypothesis 6: Enf has significant positive impact on development of cooperative
organization

RESEARCH METHODOLOGY
Sampling design
Dattalo, (2008) indicate multiple approaches to calculating appropriate effect -size values and
corresponding sample sizes should be used and he sggests as one strategy might be to begin
with a sample size and, through resampling, explore the consequences of incremental changes
in sample size on power. Therefore for the sample house hold, have to be determined as, to be
more scientific, Yamane (1967), the sample size is based on the following proposed simplified
formula.
𝑛=𝑁
1+𝑁(𝑒)2 , in which 𝑒 is the level of precision i.e., e = 0.05 (level of precision assumed for
the purpose of determining sample size).
Where : n = 𝑁
1+𝑁(𝑒)2 = 4635
1+4635 (0.05)2 = 4635
12.6
368
n = number of sample size,
N = Total number of study population,
e = level of confidence is 95 % for this study.
Data collection tools and techniques
Questionnaire
The literature in the study was used as a guideline for the development of the questions in
the questionnaire. Some questions in the questionnaire were partially adopted from other
sources Azadi, et al. (2010) were employed to collect quantita tive and qualitative data.
The validity of the questionnaire was approved through face validity. The reliability of the
indic es used was tested both in the pilot study and after the completion of the study. To assess
reliabili ty and internal consistency of the variables, Cronbach‟s „alpha‟ was calculated. A
benchmark alpha of .70 was set as an acceptable measure of reliability (Cronbach, 1951).

Based on t his an internal consistency reliability the Cronbach’s alpha coefficient for the
instrument was found as 0.837 which is highly reliable.
Interview
The interview method of collecting data involves presentation of oral -verbal stimuli and reply
in terms of oral -verbal responses (R.Kothari, 2004). Semi -structured interview will be used to
gather in -depth qualitative data from officers of zone and woreda promotion officers, and also
from the primary and secondary cooperative management and officers. Using semi -structured
interview is important, because it provide opportunity to observe non -verbal behavior of
respondents; gives opportunities for clearing up misunderstandings, as well as it can be
adjusted to meet many diverse situations (Creswell, 2009)
Data Processing and Analysis
Data Processing
Data processing has two phases namely: data clean -up and data reduction. During data
clean -up the collected raw data was edited to detect anomalies, errors and omissions in
responses and checking that the questions are answered accurately and uniformly.
Data Analysis
After the data pr ocessing have been done the next tasks was analyzing the processed data. This
is the further transformation of the processed data to look for patterns and relationship
between and/or among data groups by using descriptive and multip le regression a nalysis.
The Statistical Package for Social Science (SPSS) version 20 was used to analyze the data
obtained from primary sources.
Interviews and qualitative nature questions in the questionnaire are considered as qualitative
data, which tog ether will be processed in to themes and arranged to relatedness. Finally,
considering all the variable, findings, conclusions, and some possible recommendations will be
drawn.
Model specification and description of study variables
Then multi -linear regres sion analysis shows the association between two or more variables and
how several independent variables might explain the variance in a dependent variable through
Pearson product moment correlation coefficient. Pearson product moment correlation
Coefficien t is a widely used statistical method for obtaining an index of the relationships
between two variables when the relationships between the variables is linear and when the two

variables correlation are continuous. To ascertain whether a statistically signi ficant
relationship exists between management factors, awareness factors, structural factors, financial
factors, politico -legal factors and entrepreneurial factors with the development of cooperative
organization, the Product Moment Correlation Coefficient was used.
According to Duncan and Dennis (2004:38 -41), correlation coefficient can range from -1 to
+1. The value of -1 represents a perfect negative correlation while a value of +1 represents a
perfect positive correlation. A value of 0 correlations represents no relationship. The results of
correlation coefficient may be interpreted as follows.
Regress development status of cooperative organization on Selected Variables
Y1 = 𝛽0+𝛽1X1+ 𝛽2X2+ 𝛽3X3+ 𝛽4X4+ 𝛽5X5+ 𝛽6X6
Where:
Y is the response or dep endent variable – Development status of COOP’s organization;
X1= management factors, X 2= awareness factors, X 3= structural factors, X 4= financial factors,
X5= politico -legal factors and X 6= entrepreneurial factors
𝛽0 is the intercept term constant whi ch would be equal to the mean if all slope
coefficients are 0.
𝛽1, 𝛽2, 𝛽3, 𝛽4, 𝛽5, 𝛽6 are the coefficients associated with each independent variable which
measures the change in the mean value of Y, per unit change in their re spective independent
variables.
Result and discussion
Regressions Analysis
The basic assumptions of multiple regressions were checked before going to analysis and
all assumptions were meet successfully . The decisions rule for Durbin -Watson statistics is that
a p-value approaching two indicates that there is no auto -correlation problem. As shown in the
DW table below there is no problem of auto -correlation.
Table 4.10 DW statistics
Durbin -Watson 1.84
Source: Field survey, 2016
The other assumption test by Guajarati (2004) is one of the assumptions of the classical linear

regression model is that there is no multicollinearity among the explanatory variables, the X’s.
According to Kennedy (2008) multicollinearity problem exists when the cor relation
coefficient among the variables are greater than 0.70.

Correlation

Docorg Mgrf Strf Awrf Finf Polf Enf
Docorg 1
Mgrf .693** 1
Strf .609** .410** 1
Awrf .627** .388** .306** 1
Finf .896** .623** .531** .566** 1
Polf .708** .494** .413** .290** .632** 1
Enf .247** .206** .144** .226** .201** .033* 1
**. Correlation is significant at the 0.01 level (2 -tailed).
*. Correl ation is significant at the 0.05 level (1 -tailed).
Source: Field survey, 2016
Multiple linear regressions method was used to determine how development of cooperative
organizations is affected by six factors. The regression analysis is presented as follows.
Model summary
Model Summary
Model R R Square Adjusted R
Square Std. Error of
the Estimate Durbin -Watson
1 .948a .899 .897 .328 1.838
Source: Field survey, 2016
a. Predictors: (Constant), entrepreneurial factor, Politico -legal factor, awareness factor,
structural factor, managerial factor, Financial factor
b. Dependent Variable: development of cooperative organization
Analysis of table above shows the correlation between the observed value of development of
cooperative organization and the optimal linear combination and the independent variable
(managerial, structural, awareness, financial, pol itico-legal and entrepreneurial factor) is
0.948, R square 0.899 and adjusted R square 0.897, and it may be realized that 89.9% explained

by the explanatory variables and the remaining 10.1% of the variable is explained by other
variable not included in th e study.
Table 4.13 ANOVA

ANOVAa
Model Sum of Squares Df Mean Square F Sig.

1 Regression 314.237 6 52.373 486.188 .000b
Residual 35.333 328 .108
Total 349.570 334
Source: Field survey, 2016
a. Dependent Variable: development of cooperative organization
b. Predictors: (Constant), entrepreneurial factor, Politico -legal factor, awareness factor,
structural factor, managerial factor, Financial factor

Coefficientsa
Model Unstandardiz
ed
Coefficients Standardized
Coefficients T Sig. 99.0%
Confidence
Interval for B Correlations Collinearity
Statistics
B Std.
Error Beta Lower
Bound Upper
Bound Zero-
order Parti
al Part Tolerance VIF
1 (Constant) .895 .091 9.871 .000 .660 1.130
Mgrf .128 .020 .148 6.406 .000 .077 .180 .693 .333 .112 .578 1.730
Strf .106 .016 .141 6.724 .000 .065 .147 .609 .348 .118 .699 1.431
Awf .136 .016 .181 8.372 .000 .094 .178 .627 .420 .147 .659 1.518
Finf .270 .017 .476 15.999 .000 .226 .313 .896 .662 .281 .348 2.874
Polf .172 .018 .222 9.458 .000 .125 .219 .708 .463 .166 .560 1.785
Enf .040 .014 .052 2.827 .005 .003 .076 .247 .154 .050 .914 1.094
Source: Field survey, 2016
a. Dependent Variable: development of cooperative organization
The coefficient analysis result shows that the predictor variables managerial (P= 0.000),
structural (P= 0.000), awareness (P= 0.000), financial (P= 0.000), politico -legal (P= 0.000) and
entrepreneurial factor (P= 0.005) are statistically significant.
In conclusion, managerial, structural, awareness, financial, politico -legal and entrepreneurial
factor are the factors that determine the level of development in cooperative organizations.
The model is:
Y = β 0 + β 1 Mgrf + β 2 Strf+ β 3Awf + β 4Finf+ β 5 Polf+ β 6 Enf
Therefore, β 0 =.895, β 1 =0.148, β 2 =0.141, β 3 = 0.181, β 4 =0.476, β 5 =0.222, β 6 = 0.052

Y= 0.895 + 0.148(Mgrf) + 0.141(Strf)+0.181(Awf) + 0.476(Finf)+ 0.222( Polf)+ 0.052 (Enf)
This multiple regression equation tells us following results.
As coefficients table 4.13 of the regression presents, all of six independent variables
(management factor, structural factor , awareness factor, financial factor and politico -legal
factor and entrepreneurial factor) found significant predictors of the dependent variable
(development of cooperative organizations ). Furthermore as the standardized beta value
shows Financial factor and politico -legal factor found as the strongest pr edictor of
development of cooperative organization with the β value of .476 and .222 respectively. This
result is consi stent with the findings of (Veerakumaran, 2007) , Kanagaraj , (2012) ; Emana,
(2009) ; Hussain, (2014) ; Gray & Kraenzle, (2002) ; Goddard, et.al (2009) and; Dube, (2015) .
Therefore; we need to work more on improve financial condition and politico -legal ground in
order to make the development of cooperative organization. In other word, decline in finance
and politico -legal instability are factors behind the cooperative failure.
The other variable which are significant for the development of cooperative organizations are
managerial factor with the beta value of .148 and awareness with beta value of .181 . This
result is supported by the findings of Kanagaraj , (2012) ; Dube, (2015) ; Bond, et.al (2009) ;
Purvis (2007) ; Azadi et al. (2010) ; Scribner (2007) ; Emana, (2009) ; Kanagaraj , 2012 ; and
Hussain, 2014; ). Therefore, specific factors related to managerial and awareness factors should
be met sat isfactorily in order to have a development of cooperative organization. Furthermore,
factors such as good interpersonal skills of managers , good understanding the concept of
cooperative , good educational level, good experience of management in cooperative of
managerial factor and good communication medium, members access to timely and
worthwhile information, regular feedback to members to allow them to share in collective
successes awareness on member owner responsibility and benefits, awareness of related
cooperatives news and market trends and accuracy of messages coope ratives communicate to
members of awareness factors of awareness factor which need emphasis in order to reduce
cooperative business failure
Finally, factors which are significant for the dev elopment of cooperative organizations are
structural factor with the beta value of .141 and entrepreneurial factor with beta value of
.052. This result is supported by the findings of Kanagaraj , (2012); Dube, (2015); Tchami,
(2007); Maghsoudi & Davodi, (2011); Panagiota & Nastis, (2011); Hussain, 2014; ). Therefore,
specific factors related to structural and entrepreneurial factors should be met satisfactorily in

order to have a development of cooperative organization. Furthermore, factors such as member
homogeneity, members’ cooperation and practice sharing experiences of other developed
cooperatives, good relationship with other cooperatives, availability of well -structured
facilities and large number of workers of structural factors and entrepreneurship training,
tolerance to work hard, motivation and drive and absence of initiative to assess one’s strengths
and weakness has an entrepreneurial factor are important for the development of cooperative
organization. In light of these findi ngs, it is interesting to note that, if these factors are arranged
well we can substantially reduce the failure rate of cooperative business and achieve higher
success rate of cooperative organization.
Recommendations
In this sub section based on th e empirical results of this study the researcher provides
the following recommendations with regard to the developmental factors of cooperative
organization. The researcher believes that giving due attention and an in -depth analysis of the
following recommendations can even reduce the failure rate of cooperatives.
Since it is confirmed that the financial factor is really important contributor to
cooperative organization development, the cooperative leaders, promoters and other
stakeholders should encourage member share contribution for the development of cooperative
organization.
Cooperatives need to find a stable ground of politico -legal condition as regulatory framework
and support policies that are coherent with the co -operativ e form and favor its development as
another factor. Therefore to support cooperative and act accordingly it must have strong legal
ground.
Finally, management affects effective performance of cooperative organization and it needs a
lot of expertise a nd understanding of the management on collective work and can better
realize the key points of the cooperative development . Therefore in order to make more
successful interpersonal skill of managers and its experience to cope up diverse situation have
to be considered.
Finally, all cooperative concerned organization or individuals should work with members in
increasing members’ faith to cooperative philosophy in orde r to boost up the spirit
cooperation and understanding involvement, mutual trust and good will by conducting
different training courses and sharing best experiences and enlightening the success stories as

concrete example. As overall recommendation, the st udy has suggested present and future
cooperative promoter, government, prospective members and other stakeholders to take those
identified development factors into consideration while they organize cooperative, making
policies and strategies for coop eratives. In addition, since cooperative firms have very limited
resources to solve their problems, it is critical to prioritize those items that have greater impact
on their success than do others. This is expected to give cooperatives a competitiv e,
successful and sustainable advantage of understanding and doing business in the
competitive business environment.
Conclusions
The study was conducted using six major groups of variables, namely managerial,
structural, awareness, f inancial, politico -legal and entrepreneurial factors. The main
accompanying research question posed in the study was to investigate the most influential
developmental factor of cooperative organizations. The question was investigated using data
collected f rom member of primary cooperatives functioning in Shebench woreda,
Semienbench woreda and Debubbench woreda of Bench maji zone. Moreover, the major
conclusions about these success factors are presented hereunder:
In comparing the mean score of the factors relating to financial and politico -legal the study
found that share capital contribution, loan application by banks and other lending instit ution,
cash management skill, accessible information on government regulation that are relevant to
cooperatives, political intervention, and bureaucracy in cooperative registration and licensing
are the most influential factors for the development of cooperative organization. More
precisely, to be successful organizational development, the study argues that members shou ld
pay attention for their member share capital contribution in line with the legal ground.
With regard of managerial and awareness factors the study identified that although there are
many managerial and awareness factors which have substantial contribution to the
development of cooperative organization; interpersonal skill of managers, understanding the
concept of cooperative, good communication medium, educational qualification, and member
access to timely and worthwhile information are f actors that affect the development of
cooperative organization.
Structural and entrepreneurial factors w ere also identified as critical factors for development of
cooperative organization. The studies concludes member homogeneity, members’

cooperation a nd practice sharing experiences of other developed cooperatives, good
relationship with other cooperatives, availability of well -structured facilities and large number
of workers , entrepreneurship training, tolerance to work hard, motivation and drive and
absence of initiative to assess one’s strengths and weakness factors are as the most influential
items that have significantly contributed to the development of cooperative organization.
Finally, it is important to consider the results of multi -linear regression for the relationships
between development of cooperative organization and its independent variables are linear
and positive ranging from low to strong correlation coefficients. Besides, the result of
multiple regres sion analysis clearly illustrates that, even if all of six independent variables i.e.,
managerial, structural, awareness, financial, politico -legal and entrepreneurial factor found
significant predictors of the development of cooperative orga nization; financial,
politico -legal and managerial factors are the most significant and strongest predictor of
development of cooperative organization as compared to other factors in the research area.

SCOPE FOR FURTHER RESEARCH

This study has yielded considerable results and produced substantial contributions to the
existing body of knowledge; however, there are also significant limitations which require
further research that rigorously tests its validity and applicability in oth er populations to be
conducted.
The limitations of the study are primarily related to the methodology, the study undertaken was
cross -sectional, which various segments of a population are sampled and data are collected at a
single moment in time. However, the study observes that those developmental factors in
cooperatives are better understood if we collect data at different time. Therefore, the future
study needs to provide longitudinal data to examine continuity of response and to observe
development that occur over time and also add other development al factors of cooperative
organization (such as market access and infrastructure).

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MIZAN TEPI UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF COOPERATIVES
Dear respondent,

Instructions:
 Please do not enter your name or contact details on the questionnaire. It remains
anonymous.
 Please indicate your answers with a check mark (√) in the appropriate block for Likert scale
type stateme nts and multiple choice questions.
Section 1 General Background of Respondents
1. Sex
Male Female
2. Age
18-33 33-48 49-63 64 & over
3. Your highest educational qualification?
Illiterate
Basic education (Read and Write)

Elementary education
High school Education
Other (specify)
4. Marital status:
Married Single Divorced Widowed
Section 2: Evaluation of cooperative development
In this section, you evaluate your cooperatives' in achievement trend of “ service
offerings ”, and “satisfaction ” among the members in consideration of the past performance .
And evaluate them in relation to your society and then put a tick mark (√) under the
choices below. Where, 1= Very low, 2 = Low, 3 = Medium 4 = high and 5 = Very high.
5. How do you evaluate your society development in terms of increase the “ service
offering ” to the members and enhance the “ satisfaction ” among the members.

S.No. Level of development 1 2 3 4 5
1 Very low
2 Low
3 Medium
4 High
5 Very high

Section 3: Challenges to the development of cooperative organization
The major challenges to the development of Cooperatives organization are listed below.
Please indicate the degree of influence to which these factors are contributed the
development of your society. After you read each of the challenging factors, evaluate
them in relation to your society and then put a tick mark (√) under the choices below.
Where, 1= least challenging (very low) , 2 = challenge slightly (low) , 3 = challenge
moderately (medium) , 4 = challenge highly (high) and 5 = challenge critically (very high) .
6. Please indicate the degree of challenge of each of the mentioned factors below
concerning management factor in your society.

S. No. Managerial factor 1 2 3 4 5
1 Interpersonal skills of managers
2 Understanding the concept of cooperative
3 Interest of management to work in cooperatives
4 Educational level
5 General business and managerial skills
6 Efficient conflict solving abilities
7 Good experience of managers in cooperative
7. Please indicate the degree of challenge of each of the mentioned factors below concerning
structural factor in your society.

S. No. Structural factor 1 2 3 4 5
1 Member homogeneity
2 Good relationship with other cooperatives
3 Large number of workers
4 Availability of well -structured facilities
5 Practice of sharing experiences of other successful
cooperatives
6 Members cooperation

8. Please indicate the degree of challenge of each of the mentioned factors below concerning
awareness factor in your society
S. No. awareness factor 1 2 3 4 5
1 Member access to timely and worthwhile information
2 Awareness on member owner responsibility and benefits
3 Awareness of related cooperative news and market trends
4 Accuracy of messages cooperatives communicate to
members
5 Provide regular feedback to members to allow them to
share in collective success

6 Good communication medium
9. Please indicate the degree of challenge of each of the mentioned factors below concerning
financial factor in your society
S. No. Financial factor 1 2 3 4 5
1 Share capital contribution
2 Cash management skill
3 Accessibility of working capital
4 High collateral requirements for Banks and other lending
institution
5 Interest charged by Banks and other lending institution
6 Loan application by banks and other lending institutions
are complicated

10. Please indicate the degree of challenge of each of the mentioned factors below concerning
politico -legal factor in your society
S. No. Politico -legal factor 1 2 3 4 5
1 The tax levied on cooperative business is not reasonable
2 Bureaucracy in cooperative registration and licensing
3 Government support
4 Political intervention
5 Accessible information on government regulation that
are relevant to cooperatives

11. Please indicate the degree of challenge of each of the mentioned factors below concerning
entrepreneurial factor in your society
S. No. Entrepreneurial factor 1 2 3 4 5
1 Motivation and drive
2 Tolerance to work hard
3 Persistence and courage to take responsibility for one’s
failure
4 Initiative to assess one’s strengths and weakness
5 Accessibility entrepreneurship training

6 Lack of information to exploit business opportunities

12. Please indicate the degree of challenge of each of the mentioned factors below concerning
general factor in your society

S. No. General factor 1 2 3 4 5
1 Management factor
2 Structural factor
3 financial factor
4 Awareness factor
5 Politico -legal factor
6 entrepreneurial factor

13. What do you suggest to the concerned body to overcome the problem/challenges to the
cooperatives development

Thank you for your time and patience!!!