Effects of Strategic Management Determinants of Corporate Growth in Micro-Finance Institutions in Kenya

Abstract

The main purpose of this study was to assess the strategic management determinants of corporate growth of Microfinance Institutions (MFIs) in Kenya. The specific objectives were; To assess the effects of grand strategy on the growth of Micro Finance Institutions in Kenya; To assess the effects of corporate vision on the growth of Micro Finance Institutions in Kenya; To establish the effects of cost leadership strategy on the growth of Micro Finance Institutions in Kenya; To evaluate the effects of product differentiation strategy on the growth of Micro Finance Institutions in Kenya; To establish the effects of pooling of strategic resources on the growth of Micro Finance Institutions in Kenya and To assess the effects of strategic synergy on the growth of Micro Finance Institutions in Kenya. The study employed descriptive and quantitative research designs. The target population was 57 firms and the sample size was 32 firms arrived at through stratified and purposive sampling methods. The primary data collection instruments were structured questionnaires on effects of strategic management determinants on corporate growth. Secondary data was collected from company records, texts and journals. A Cronbach alpha tool score of above 7.0 was attained to test the data reliability and validity was tested using Kaiser-Meyer-Olkin and Barttlets test. Data was analyzed using SPSS version 20. The hypothesis was tested using Chisquare-test at 95% confidence level and regression coefficients. Multiple linear regression analysis was employed to establish the relationship between the strategic management determinants and corporate growth. Data was presented in tables. The results established that Strategic synergy and product differentiation strategy had the highest effects on corporate growth of MFIs in Kenya. This was followed by pooling strategic resources, cost leadership strategy, grand strategy and lastly corporate vision respectively. It was concluded that MFIs needed to fully embrace strategic management determinants in order to achieve sustainable competitive advantage, which in turn leads to corporate growth. This study adds immensely to the already available literature on corporate growth. Further, this study came up with a growth model that could be further tested to assess its overall influence on corporate growth in MFIs. The study recommended that MFIs should use grand strategy, corporate vision, cost leadership strategy, differentiation strategy, pooling of resources strategy and strategic synergy in their right mixes to propel corporate growth. Further, it recommended that policy makers should come up with a framework to assist MFIs to differentiate their products and encourage strategic partnerships that enhance value creation.