Service Quality Management Practices,organizational Characteristics, Industry Competition and Performance of Insurance Companies in Kenya

Abstract

The general objective of this study was to establish the effect of service quality management practices, organizational characteristics and industry competition on performance of insurance companies in Kenya. The specific objectives were to establish the relationship between service quality management practices and performance of insurance companies in Kenya; determine the effect of organizational characteristics on the relationship between service quality management practices and performance of insurance companies; assess the effect of industry competition on the relationship between service quality management practices and performance of insurance companies and to establish the joint effect of service quality management practices, organizational characteristics and industry competition on the performance of insurance companies. Existing studies have used different conceptualization and methodology besides posting mixed results. The study adopted a descriptive cross-sectional survey with primary data collected through semi-structured questionnaires. The Cronbach’s Alpha Coefficient ranged from 0.783 to 0.853 showing the reliability of all the scales used in the study. Data was analyzed using descriptive statistics and regression analysis. The results of the study revealed a statistically significant relationship between service quality management practices and performance of insurance companies in Kenya (R=0.758, F=31.066, P<0.05). The results further revealed that organizational characteristics and industry competition have no statistically significant moderating effect on the relationship between service quality management practices and performance of insurance companies. Finally, the study established that there is a statistically significant joint effect of service quality management practices, organizational characteristics and industry competition on the performance of insurance companies in Kenya (Adjusted R square=0.575, F=8.659, P<0.05). The results of the study have implications on theory, policy and managerial practices. Service quality management practices have been found to influence performance of insurance companies. The study further established that there exists a joint effect of service quality management practices, organizational characteristics and industry competition on the performance of insurance companies thereby extending the knowledge of Service Quality Theory which contends that service quality depends on the nature of the discrepancy between expected service and what is perceived. Adoptions of service management practices appear to render the influence of organizational characteristics and industry competition on the relationship between service quality management practices and performance irrelevant. The implementation of service quality management practices by the policy makers assist in meeting the dual responsibility of insurance companies which are risk mitigation measures and national economic growth. At the managerial level, the implementation of service quality management practices increases performance. The study concludes that insurance companies should adopt service quality management practices to improve performance taking cognizance of the organizational characteristic and industry competition which have joint influence on performance. One of the main limitations of the study was the use of cross sectional research design where the survey data was collected at a single point in time. A longitudinal research design would better capture dynamic causal effects of the variables. The study recommends investigation of the effects of other factors like ownership structure, marketing capabilities, corporate image and organizational resources on the relationship between service quality management practices and performance of insurance companies in Kenya.