Strategic Management Determinants of Organizational Performance in the Insurance Industry in Kenya

Abstract

The purpose of the study was to establish the strategic management determinants of organizational performance in the insurance industry in Kenya. The study was guided by the following objectives; to analyze the effect of strategic orientation, core competences, intellectual capital and organizational culture affect performance in the insurance industry in Kenya. The study was grounded on resource-based view theory, competitiveness theory, contingency theory and theory of strategic balancing. The study adopted a descriptive research design. The target population for this study was the senior and middle level management staff of the 49 insurance companies registered with the Association of Kenya insurers (AKI) by December 2014. The study selected the respondents using stratified proportionate random sampling technique. Primary data was obtained using self-administered questionnaires administered using a drop and pick later method. Descriptive statistics such as frequencies, percentages, mean score and standard deviation was estimated for all the quantitative variables and information presented inform of tables and graphs. Inferential data analysis was done using Pearson correlation coefficient and regression analysis (multiple regression analysis) to establish the relations between the independent and dependent variables. Hypothesis testing was done using p-value in a Chi-square test. F-statistic was also be computed at 95% confidence level to test whether there is any significant relationship between strategic management determinants and performance of insurance companies in Kenya. The correlation results revealed that strategic orientation, core competences intellectual capital and organizational culture all promoted performance in the insurance industry in Kenya. The study recommends that the HR of insurance companies in Kenya needs to need to ensure that firm’s policies encourage employee sense of belonging, policies that provide constant feedback on the positives and negatives, encourage open communication, and develop policies that communicate clear goals and expectations to the employees. Employee development should also be encouraged to tap intellectual capital. Standard employee compensation packages should be implemented to poster motivation for better employee productivity. Insurance companies in Kenya should develop strategic marketing plans that differentiate each organization from the market rivals. Continuous market innovation and product development is also advocated. Strong focus on customer retention and building of loyalty is recommended. Insurance firms in Kenya should implement knowledge management systems as this was associated to be a key driver towards Performance of Insurance Companies. Periodically, insurance firms in Kenya should carry out SWOT analysis, business reengineering process is also encouraged to keep operations on tack. Internal flow of activities is effective as the quality of coordination was found to be a crucial factor posting positive performance of organization and that management should work to ensure that strategic policies actively promote organizational effectiveness, reputation, values and ethics. This xx study contributes to the existing body of knowledge concerning strategic management which has become popular among companies. With the good use of Intellectual capital, it is likely to result ineffective management and performance. The purpose is to stimulate organizational capitalization on intellectual capital and to increase company competitiveness. Further, since organizational core competencies are the basis of advantage in organizational competition, this study realization of these core competencies will allow managers to maintain the competitiveness of the companies. Finally the study result also promotes clear understanding on organizational culture especially on leadership.