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Building revenue diversification capacity for an organization requires management to engage in strategic planning that create innovative programs and services, build resilience against adverse conditions, and establish a sustainable financial performance. However, previous studies show that managers of most nonprofit sports organizations lack requisite strategies for developing diversified financial portfolios to achieve sustainability. Enactment of sports Act 2013 in Kenya made it mandatory for all registered National Sports Federations (NSFs) to engage in strategic planning with the hope of improving their performance generally and revenue streams in particular, which has remained elusive. The purpose of this study was to analyze effect of strategic planning on revenue diversification capacity of NSFs through the lens of Markowitz’s modern portfolio theory and resource dependence theory espoused by Pfeffer and Salancik’s (1978). The study employed descriptive and correlation research designs. A target population of 156 officials from 39 National Sports Federations (NSFs) was used. A sample of 144 respondents was randomly picked using Fisher’s model. Primary data was collected using structured questionnaire and analysis of financial documents. Descriptive statistics involving percentages were run. Multiple regression analysis was employed to analyze the effect of strategic planning on revenue diversification capacity of NSFs in Kenya. The study established that there was significant and positive correlation between formulation of strategies and revenue diversification at r = 0.488; p = 0.005. However, correlation between other components of strategic planning (establishing strategic planning platform, strategy implementation, and monitoring and evaluation revealed insignificant positive linear relationship implying that the NSFs in Kenya although formulated strategies aimed at diversifying their revenue base, they did not consider the relevance of financing strategies to their industry environment which could be revealed by establishing strategic planning platform. The financing strategies were also not consistently implemented and consequently not monitored and evaluated. When effect of strategic planning was tested against revenue sources as a proxy of revenue diversification the effect was insignificant (B = 0.189, Beta =0.110; p = 0.544) although a positive relationship between strategic planning and financial sources (R = 0.110) existed. The R2 value of 0.012 indicated that strategic planning influenced only 1.20% of the decisions on financial sources in the case of NSFs in Kenya implying that strategic planning lacked intensity hence, the low revenue diversification capacity.
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In-Text Citation: (Obonyo, 2021)
To Cite this Article: Obonyo, M. O. (2021). Strategic Planning and Revenue Diversification Capacity of National Sports Federations in Kenya. International Journal of Academic Research in Accounting Finance and Management Sciences, 11(2), 106–122.
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