Organizational Culture, Marketing Capabilities, Market Orientation, Industry Competition and Performance of Microfinance Institutions in Kenya
Abstract
The broad objective of this study was to assess the influence of organizational culture,
marketing capabilities, market orientation and industry competition on performance of
microfinance institutions in Kenya. Seven specific objectives were pursued to
determine direct and indirect relationships among organizational culture, marketing
capabilities, market orientation, industry competition and firm performance. Seven
hypotheses were formulated based on the specific objectives of the study. The
hypotheses were tested through regression analysis. The population of the study
comprised all microfinance institutions that were members of the Association of
Microfinance Institutions (AMFI) in Kenya. A descriptive cross-sectional survey was
used. Secondary data were collected from annual industry performance reports by
AMFI. Primary data were collected through structured questionnaire. Data were
analyzed through descriptive statistics, contingency tables, Chi-square tests, factor
analysis and regression analysis. Results of Cronbach’s alpha test confirmed
reliability of all the measurement scales used in the study. Results revealed that the
influence of organizational culture was stronger on non financial performance than
financial performance. The results also revealed that marketing capabilities had strong
statistical predictability of firm performance. It was established that industry
competition had weak influence on firm performance. Finally, the joint moderating
influence of industry competition and marketing capabilities as well as the mediating
influence of market orientation on the relationship between organizational culture and
performance were established. Findings of the study had implications for theory and
policy. The study clarified the strength of influence of marketing capabilities on firm
performance. The findings showed that product capability has the greatest explanatory
power on firm performance. In addition, the study further explained the indirect
influence of market orientation on the relationship between organizational culture and
performance. In addition, the study supported findings of previous studies on the
influence of competition and firm performance. It was concluded that organizational
culture and product capability strongly influence performance outcomes in the
microfinance industry. However, the study had a number of limitations. The crosssectional
research design could not measure changes in organizational culture and
performance over time. In addition, structured survey instrument could not reveal all
cultural values, behaviours and attitude of organization members. Finally, collection
of data from top management limits scope of interpretation of findings. Results could
have been different if employees at different hierarchical levels of the organization
were involved in the study. Based on the limitations of the study, it was
recommended that future studies should adopt longitudinal research design to assess
changes in organizational culture and performance over time. In addition, future
studies need to use mixed methods approach involving both qualitative and
quantitative designs in the study of organizational culture. Further, to capture
representative view of organization, future studies need to sample respondents at
different levels of organizational hierarchy.
Citation
Doctor of Philosophy in Business AdministrationPublisher
University of Nairobi