Effects Of Speed Of Internationalization On Performance Of Listed Indigenous Financial Services Companies In Kenya
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Date
2015Author
Gikundi, Raphael K
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The internationalization of firms can affect firm growth, survival and competitive position,
but also influence a nation’s economic growth and development. The financial services
sector in Kenya has sought opportunities internationally more than any other sector in
Kenya. The Kenyan financial system comprises banks, non-bank financial institutions,
insurance companies, microfinance institutions, stock brokerage firms, fund managers. The
banking industry with asset base of over Kshs. 2.3 trillion as at 2013 is the largest sector in
the Kenyan financial sector. There are currently 20 listed financial services companies at
the Nairobi Securities Exchange (NSE) comprising of 11 banks, 6 insurance companies
and 3 investment firms. Of these, 17 are indigenous companies while three are subsidiaries
of international finance companies. Internationalization refers to the process through which
a firm becomes a multinational enterprise. Often, this happens in a series of stages. In the
first stage, the firm sells its products and services in the domestic market. In the subsequent
stages, the firm may start selling its products abroad and/or establish an international sales
network, and in advanced cases of internationalization an individual firm establishes a
manufacturing, sales and Research & Development (R&D) operations in a number of
countries, effectively becoming a multinational firm (Levitt, 1986). Incremental
internationalization process theory builds on knowledge accumulation and experience
while international new ventures thrive on their lean structures, lack of structural inertia
and quick turnaround of ideas to thrive internationally. This study set out to determine the
effects of speed internationalization on performance of listed indigenous financial services
firms in Kenya. The objectives were to establish the effects of speed internationalization
on performance of listed indigenous financial services firms. This study is very important
in generating new knowledge and contributes to academic research and those it's supposed
to serve including managers, policy makers and investors in the financial services
companies. To answer the research question, a census study of nine listed financial services
firms with significant international operations were studied. Secondary data was collected
from the companies’ annual financial reports, CMA and NSE. Regression analysis was
used to analyze the data and descriptive statistics were computed. The study finds that the
speed of internationalization has a positive effect on performance of listed indigenous
financial services firms. This was indicated by the ROA P value of 0.014 and the R Squared
value. A Pearson coefficient measure showed a strong, significant, positive relationship
between ROA and internationalization speed of listed financial services firms in Kenya.
Therefore basing on these findings the study rejected the null hypothesis that speed
of internationalization has no effect on the financial performance of listed indigenous
financial services companies and accepted the alternative hypothesis that speed of
internationalization has an effect on performance of listed indigenous financial services
firms in Kenya. Speed of internationalization by the firm seems to be related to the degree
of firm’s performance. The study concludes that firms should consider the speed at which
they internationalize if they want to improve performance. It concludes that faster
internationalizing financial firms in Kenya have benefited from higher returns for every
shilling invested. The study recommends that more indigenous financial services firms in
Kenya seek growth opportunities in the region since expansion internationally affects
positively on their overall financial performance.
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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