Role of Employee Competencies, Quality Decisions and Competitive Strategies in the Relationship Between Organizational Learning and Performance of Insurance Firms in Kenya

Abstract

Achieving superior performance is a major pre-occupation of senior managers in the competitive and slow growth markets, including the insurance industry in Kenya. The insurance firms operate in a dynamic environment defined by stiff competition in which they have to seek to learn, respond to the environment in a timely way and maintain practices that would ensure they remain competitive with superior performance levels. The purpose of this study was to establish the role of employee competencies, quality decisions and competitive strategies in the relationship between organizational learning and firm performance. Specifically, the study sought to establish the relationship between organizational learning and firm performance; the moderating effect of employee competencies on the relationship between organizational learning and firm performance, the moderating effect of competitive strategies on the relationship between organizational learning and firm performance; the mediating effect of quality decisions on the relationship between organizational learning and firm performance and the joint effect of organizational learning, employee competencies, competitive strategies and quality decisions on firm performance. The research design was descriptive. A census survey was carried out on a population of 45 insurance firms in Kenya using self-administered questionnaires. The response rate was 88.89%. Descriptive statistics, correlation and regression techniques were used to analyze the data. The results showed that organizational learning has a positive and statistically significant effect on firm performance in the case of return on assets, growth of market share and the overall firm performance. Although the introduction of employee competencies significantly improved the influence of organizational learning on firm performance both in the case of return on assets and growth of market share, results did not support the moderation effect on the relationship between organizational learning and firm performance. The introduction of competitive strategies also significantly improved the influence of organizational learning on firm performance, in the case of return on assets, growth of market share and the overall firm performance. However, results did not support the moderation of competitive strategies on the relationship between organizational learning and firm performance. The study found that the joint effect of organizational learning, employee competencies, competitive strategies and quality decisions on firm performance was significantly greater than the individual effect of organizational learning on firm performance in the case of return on assets, growth of market share and the overall firm performance. The study added to knowledge by determining that the influence of organizational learning on firm performance is mediated by quality decisions for the firms in the insurance industry in Kenya. The study should guide managers on the need to continuously learn and the variables to be well-managed to maintain expected standards of performance in a regulated environment with intense competition. The study concurs with the resource-based view, which proposes that firms may obtain enhanced performance from the synergistic effect of applying a combination of internal resources together. The findings of this study may guide policy-makers in the insurance industry to take steps that can facilitate firms to attain superior performance by promoting organizational learning along with quality decisions, appropriate competitive strategies and employee competencies. Longitudinal studies could be carried out to establish if the results would remain the same or change and thereby obtain a better understanding of the relationships. Future studies could also establish the effect of organizational learning on other measures of performance not used in this study.