Strategic Drift and Its Effect on the Performance of Insurance Companies in Nairobi City County, Kenya

Abstract

Organizations functions in an external setting which is continually altering and mostly characterized by instability linked to globalization, changes in customers and investors demands, increased competition and markets deregulation. This study determined strategic drift and its effect on the performance of insurance companies in Nairobi, County. The study’s specific objectives were to establish how organizational culture, leadership, strategic planning and finally innovation affect the performance of insurance companies in Kenya. The study embraced both descriptive survey and explanatory research designs and census was used to get the 49 registered insurance companies carrying out business in Nairobi County. A sample size of 49 respondents was purposively sampled where only general managers in the insurance companies were interviewed. Data was collected using questionnaires. This study used construct, face and content validity and a Cronbach’s Alpha of 0.7 was satisfactory for the assessment of the questionnaire’s reliability. Data was analyzed using excel and SPSS software where both descriptive and inferential statistics were conducted. Results indicated that the mission of the insurance company has been communicated to the employees clearly had the highest mean with having a centralized decision making in all matters concerning the company key in the leadership of insurance companies. Results further indicated that innovative products have the ability of attract diverse consumers with varied needs obtained a high mean followed by innovative insurance products have high success chances regardless of the insurance firm that launches the product. Additionally, during formulation of strategic plans in the company, views of all staff are considered had the highest mean among the strategic planning indicators evaluated. Findings also showed a statistically significant negative relationship between organization culture and organization performance, a statistically insignificant negative relationship between leadership and organization performance. Additionally, there was an insignificant positive relationship between both innovation and strategic planning and organization performance. ANOVA results which assessed the overall significance of the regression model indicated that it was significant. The study concluded that organizational culture is a key strategic drift indicator that affects performance of insurance companies as it was found to significantly affect organization performance. The management of insurance companies should therefore consider organizational culture for their companies to improve customer satisfaction and profitability and increase their market share.