Effect of Innovation on Financial Performance of General Insurance Companies in Mombasa County, Kenya
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Date
2018Author
Marenge, Patterson M
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
A business entity operates with an objective of making profits in the long-run.
Financial sector in any country plays a major in the growth and development of the
economy. In Kenya, the insurance industry has continued to grow despite the fact that
its growth had remained minimal. However, the continuous reduction in insurance
penetration remains a puzzle to both the industry players and the government. This
has made many insurance companies to focus their attention in improving their
bottom line by embracing innovation and which has been considered to be key in
reducing operational expenses and improving the overall financial performance. The
core objective of this study was to assess if the General Insurance Companies
operating within Mombasa County had adopted innovation in their operations and if
innovation had had any impact on their financial performance. The innovation was
assessed using innovation factors: Product, Marketing, Organizational and Process
innovation while that of the financial performance was assessed using the ROA and
ROE. The appropriate research design adopted for this study was cross-sectional
survey design. The targeted population of the study was small and it comprised of all
the 33 general insurance companies that have been operating in Mombasa County
from the Year 2014 to 2017. The study therefore opted for a census survey where all
the elements of study were included in the population. The primary data was collected
using a structured questionnaire and the secondary data was generated from the
industry regulator (IRA) annual published reports. SPSS version 20 was used to
analyze and generate the descriptive statistics. 31 Respondents returned the
questionnaires translating to a response rate of 94%. Mean, Medium and Standard
Deviation were used to describe the data while the Percentage and Frequency tables
were used to present the data. The regression analysis and correlation analysis was
used to test the relationship and association between the two variables respectively.
The model fitness was tested using the ANOVA. The study established a strong
positive correlation between innovation and financial performance of General
insurance companies in Mombasa County. The study further established that the level
of education of these managers had a direct relationship with the financial
performance of these companies. This is because an educated person tends to be more
creative and hence innovative. Due to the rapid changing of the technology and which
affects how insurance products will be issued and distributed, a further study on
Process innovation was also proposed. Several recommendations were made from the
study findings such as: Education level for all employees working for general
insurance companies needs to be enhanced in order to make them cope with
innovation, general insurance firms to allocate more funds to innovation budget, firms
to improve technology that would enable insurance products to reach a larger market,
creating awareness on contemporary innovation skills to employees working for all
the general insurance firms and finally, a need for all general insurance firms to
promote various aspects of innovations that could enhance their sales volume, market
share, profitability and net income.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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