Strategic Fit and Performance of Insurance Firms in Nairobi City County, Kenya
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Date
2023
Authors
Wambui, Muiruri Terrywinnie
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Downside economic risks (political risks, COVID 19 pandemic and heightened inflation
uncertainty) and uptake of insurance policies by potential customers have negatively
affected the profitability of insurance industry. Further, in the Kenyan insurance industry,
there has been a sequence of variations via reforms, communication and information
technologies advancements, services have been globalized and development in the
economies particularly since 2015 affecting the overall performance. This study
determined the effect of strategic fit on performance of insurance firms in Nairobi City
County. Specifically, it established the effect of structure fit, technology fit, management
fit and operational fit on the performance of insurance firms. Resource dependency,
resource based, diffusion on innovation and the balanced score card theories anchored the
study. The study used both descriptive and explanatory research designs. Fifty five (55)
registered insurance firms in Nairobi City County were targeted. A population of 521
general managers, underwriting managers, claims managers and marketing managers from
the 55 registered insurance firms and employees who were not in management were
focused. Two hundred and twenty six (226) respondents were purposively and randomly
sampled. Questionnaires were the data collection tools where drop and pick later approach
was used. Face and content validity was done by factor analysis and discussing the
questions in the questionnaire with the supervisor while coefficients of above 0.7 was
regarded sufficient to quantify the reliability of the data collection tool. Descriptive
analysis was done while inferential statistics involved linear regression. There was a
positive and significant linear correlation between structure fit (r=0.862, p=0.000),
technology fit (r=0.815, p=0.000), management fit (r=0.799, p=0.000), operational fit
(r=0.987, p=0.000) and performance of insurance firms. The regression results show a
positive and significant effect of structure fit (β = 0.096, Sig. = 0.000), technology fit (β =
0.104, Sig. = 0.006) and operational fit (β = 1.014, Sig. = 0.000) on performance of
insurance firms which implies that structure fit, technology fit and operational fit affects
performance of insurance firms positively. The study concludes that strategic fit
components studied (structure fit, technology fit, management fit and operational fit) are
interrelated and they affect the performance of insurance firms. Therefore, organizations
should continuously work towards attaining strategic fit because it affects profitability,
customers’ loyalty, customers’ satisfaction and market share of insurance firms.
Description
A Research Project Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration (Strategic Management Option) of the School of Business, Economics and Tourism of Kenyatta University, June 2023.
Keywords
Strategic Fit, Insurance Firms, Nairobi City County, Kenya