ORGANIZATIONAL CAPABILITIES AND PERFORMANCE OF INSURANCE COMPANIES IN NAIROBI CITY COUNTY, KENYA
Kogo Philemon Kipkoech - Master of Business Administration in Strategic Management, Kenyatta University, Kenya
Dr. Linda Kimencu - Department of Business Administration, School of Business, Kenyatta University, Kenya
ABSTRACT
Insurance sector in the country is thriving because of its competitiveness; as a result firms tend to build robust capabilities to ensure they achieve superior performance which creates greater performance than its competitors in the industry. Low penetration and uptake of insurance is one major setback the insurance industry development is encountering in particular market share, diversification of products among other measures. The growth of insurance uptake in Kenya has been at slow pace. The general objective of the study was to establish the organizational capabilities on the performance of the insurance firms in Nairobi County and is guided by four specific objectives that will seek; to examine the effect of marketing capabilities, product capabilities, human resource capabilities and technological capabilities on performance of insurance firms. The study was anchored on the following theories; capability based view, resource based view theory, knowledge based view, market based view and industrial organizational theory. The study adopted a descriptive research design. To achieve this, the study focused on a target population of 1300 employees of the 51 insurance firms in Nairobi city. Sampling was done using stratified random sampling and simple random sampling technique to come up with a size of 375 respondents. The researcher used primary data by administering questionnaires. Data was collected using questionnaires. Data was then analyzed using the descriptive techniques. Quantitative data was analyzed using descriptive. Qualitative data was analyzed using thematic techniques. The study concluded that Marketing capabilities in insurance companies encompass better use of marketing tools that help the insurance companies in the application of new and creative marketing plans and ideas which ultimately enhance their performance. Product capabilities in insurance companies can help insurance firms’ organizations to develop both radical new products or employ existing products with new features and attributes to satisfy both the needs of current customers and new customers to ensure the stability, survivability, and avoidance of shocks from new waves of competition based on new technologies and new value proposition. Proper linkage between human resources and organizational performance will enable the human resource managers to design programmes that will bring forth better operational results to attain higher organizational performance. Technological capability is the ability to manage three resources namely; Information Technology (IT) infrastructure, human skills in working with IT, and organization’s ability to manipulate IT. The study recommends that Insurance companies should put adequate efforts and resources to market research in order to tap into a set of processes needed to discover information about customer needs and broad market information, and design marketing programs to meet and exceed these needs and foreign market conditions. Insurance companies should reflect their product capabilities by focusing on product quality, strict quality control, meeting customer needs and addressing their product requirements. Insurance companies should invest in people through the introduction and encouragement of learning processes designed to increase capability and align skills to organizational needs. Technological capabilities go a long way in influencing the performance of organizations. Thus, insurance companies should take into cognizant the cost of production in which they should try to produce their products at the lowest cost possible.