| dc.description.abstract | In spite of a growing body of literature on firm performance, explaining why firms in the
same industry and markets differ in their performance remains a fundamental question
within strategic management field. Researchers have attributed differences in firm
performance to resources owned by a firm. However, other researchers have argued that
resources alone cannot be a source of competitive advantage. Therefore, the debate is still
open. This study sought to contribute to knowledge and was premised on the view that
resources influence performance both directly and indirectly through intervening effect of
innovation and moderating effect of external environment. The study was anchored on
the resource based theory, dynamic capabilities theory, knowledge based theory and the
open systems theory. The main objective of the study was to establish the influence of
external environment and innovation on the relationship between organizational
resources and performance of insurance companies in Kenya. The study employed a
positivist research paradigm and a cross-sectional survey design. Both primary and
secondary data were collected from 46 insurance companies. Primary data was collected
using a 5 point Likert type questionnaire and an interview guide. Secondary data on
financial performance was collected from Association of Kenya Insurers annual report of
2011 and 2012. The study was guided by six specific objectives. To achieve these
objectives, eight hypotheses were formulated and tested. Descriptive statistics, correlation
and multiple regression analysis were used to analyze data. The findings established that
both tangible and intangible resources had a statistically significant influence on nonfinancial
performance of insurance companies in Kenya. However, there were mixed
findings as regards the individual influence of resources on various firm performance
indicators. Intangible resources evidenced statistically not significant results individually
but when combined, they had a statistically significant influence on non-financial
performance. The study also revealed that intangible resources had a statistically
significant positive moderate correlation with innovation. Tangible resources evidenced a
weak positive correlation with innovation that was not statistically significant. Innovation
had a statistically significant intervening influence on the relationship between resources
and non-financial performance. There was a statistically not significant relationship
between organizational resources, external environment and innovation. The external
environment did not have a statistically significant moderating effect on the relationship
between organizational resources and performance of insurance companies in Kenya.
Finally, the joint effect of organizational resources, innovation and the external
environment on non-financial performance was found to be greater than that of the
individual variables. In the joint influence, innovation had the highest contribution
followed by organizational resources. The contribution of the external environment was
statistically not significant. The findings of this study lend partial support to previous
studies. The results support the resource based view which proposes that resources are a
source of a sustainable competitive advantage for the firm. The results of the study are
significant for theory, policy and practice. The findings adds to the knowledge in the field
of strategic management by establishing that organizational resources influence firm
performance both directly and indirectly through intervening effect of innovation. The
moderating effect of the external environment was statistically not significant. | en_US |
