Strategic Capabilities for Sustainable Competitive Advantage of Insurance Firms in Kenya

Abstract

Strategic capability refers to the ability of an organization to transform its resources and competences into services and products that match the needs of consumers in the market. This study focused on the Resource based theory and Dynamics capability theory which discuss how firms can utilize their resources and strategic capabilities to achieve a competitive advantage. The researcher undertook this study to determine the strategic capabilities present in the insurance industry in Kenya and the extent to which they achieve a sustainable competitive advantage. The study was conducted through a survey of all the 49 insurance companies in Kenya and data was gathered through questionnaires which were distributed to all insurance companies. To communicate the research findings, data obtained from the questionnaires was processed through editing and coding and analyzed with the help of Statistical Package for Social Sciences (SPSS) version 20. The results indicated that the main strategic capabilities that sustain a competitive advantage in insurance companies in Kenya are: advanced technology, effective marketing skills, quality customer service, efficiency in claim settlement and product diversity. These strategic capabilities were considered paramount in that they enhanced profitability, quality of business written, customer base, turn-around time and the market-share of different insurance firms significantly. The study concluded that the survival and growth of insurance firms is highly dependent on the strategic capabilities they each possess and how well they are executed. It also concluded that most insurance firms are more concerned with the value and rarity found in their strategic capabilities as opposed to how easy to copy or substitute they are. The researcher recommended continuous development of strategic capabilities by insurance firms in order to remain competitive. Further, it recommended prioritization of the main strategic capabilities such as marketing, in the annual budget of respective insurance firms in Kenya so as to ensure continuous success in the market. The researcher suggested that future studies should establish the impact of each of the strategic capabilities on the performance of insurance firms in Kenya.