Effect of Service Capabilities on Competitive Advantage of Insurance Companies in Kenya

Abstract

The main objective of the study was to establish the effect of service capabilities on competitive advantage of insurance companies in Kenya. Service capabilities were represented by the front office capabilities and the back-office capabilities on competitive advantage of insurance firms. The research was anchored on two theories, namely; Dynamic capability theory and the Resource Capability Theory. The research adopted a cross-sectional descriptive research design with the population of the study being 55 insurance firms operating in Kenya. A questionnaire was the data collection instrument while the data was analysed using descriptive measures of mean and standard deviation. The study found that front office capability, with a regression coefficient of 0.420, has a positive effect and significant effect the insurance firm’s competitive advantage. In regard to the back-office capabilities, the findings suggest that it has a positive and significant effect on competitive advantage of insurance firms (β=0.873, p=0.873). On overall effect of service capability on competitive advantage, the study established that both front office and back-office capabilities explains 63.0% of the competitive advantage. The study recommends that insurance firms should devise ways of strategizing front office and Back office departments to realize more effective results on competitive advantage outcome. The study further recommends that employees should, on routine basis, subject their employees to training in order to equip them with fresh knowledge on service capabilities both at front door and back door. The study further recommends that customer satisfaction surveys should be undertaken on continuous basis to assess the extent of satisfaction and build on the feedback from the customers