The Influence of Corporate Strategy on Performance of Insurance Companies in Kenya

Abstract

The objectives of the research were to find out the association between corporate strategy and performance of the Kenyan insurance companies. The questionnaire was the major too of enquiry that collected primary data while secondary data from regulatory authority was incorporated to supplement the data collected by questionnaires. The data were analysed through regression analysis and it was established that corporate strategy adopted had an influence on the firm performance as measured by both financial and non-financial metrics and it was also established that more companies are adopting strategic alliances and partnerships in order to increase and maintain respective market shares. The research recommends that government through its various agencies should put in place the right policies which support the insurance firms as a way of increasing the contribution to the economy. Further studies are recommended to establish the effect of competitive advantage on the survival of insurance companies and how portfolio mix influence the adoption of generic corporate advantage strategy by insurance companies in Kenya. It was established that corporate strategy enhances competitive advantage of the organization over its rivals. It is evident that the ever increasing competition and entry of new firms in the insurance sector makes it mandatory for corporate strategies to guarantee better and enhanced performance so as to gain a competitive edge. To determine the influence of corporate strategy on firm performance of the Kenyan Insurance companies. The study was based on the following theories; agency theory and resource-based view theory. The study adopted the descriptive research design. The study population constituted 55 insurance companies that were in operation in Kenya as at 31st December, 2016. Data collection involved self-administered questionnaires as the main instrument for data collection. The data collected was then be edited for completeness, coded and entries fed into the SPSS computer package The study concludes that, though at a low rate, there has been continuous increase in the average sales turnover, organization’s Net Income after Tax and Return on Investment has been on increase since 2013. The study model had an average adjusted coefficient of determination (R2) of 0.5944 and which implied that 59.4% of the variations in performance of Insurance firms in Kenya are explained by corporate strategies, Sustainable Strategies and Competitive advantage Strategies. The calculated value was greater than the critical value (2.8509> 2.32) an indication that Corporate strategies, Sustainable Strategies and Competitive advantage Strategies all have a significant effects on performance of the Kenyan Insurance firms. The study therefore recommends that all cooperate strategies be put in place to enable the insurance firms have a very high growth.