Beyond direct effects: the moderating role of organizational policies in the working conditions-employee retention nexus in tanzanian microfinance institutions”

Tanzania microfinance institutions (MFIs) face high employee turnover (averaging approximately 23%) due to demanding conditions, resource constraints, and policy inconsistencies, weakening service delivery and contributions to poverty alleviation and financial inclusion. Prior research has examined direct effects of working conditions, compensation, and leadership on retention, yet the moderating role of organizational policies in the working conditions–retention link within resource-constrained East African MFIs remains largely unexamined. This study fills that gap. Using a cross-sectional quantitative design grounded in March and Simon’s Push-Pull Model, Herzberg’s Two-Factor Theory, Organizational Justice Theory, and Social Exchange Theory, data were collected via structured questionnaires from 243 employees across 18 MFIs in Dodoma, Shinyanga, Manyara, and Mbeya using simple random sampling. Multiple linear regression assessed direct effects; hierarchical multiple regression tested moderation. Results showed working conditions positively predicted retention (β=0.486, p<0.001; CI [0.412, 0.660]), as did organizational policies (β=0.189, p=0.002; CI [0.016, 0.263]). Policies positively moderated the relationship (β=0.126, p=0.003; CI [0.042, 0.194]). The model explained 56.2% of variance in retention (R²=0.562). Findings extend the four theories by showing how policies act as a boundary condition in resource-poor settings, buffering push-pull and hygiene factors through reciprocity and justice perceptions, and advancing interactive retention models.