Innovation Strategies and Financial Performance of Insurance Firms in Kenya: A Case of Sanlam Kenya PLC
DOI:
https://doi.org/10.47604/ejbsm.3531Keywords:
Innovation Strategies, Financial Performance, Organizational Culture, Digital Transformation, Sanlam Kenya PLC, Corporate Governance, Enterprise Risk Management (ERM), Competitive Advantage, Insurance IndustryAbstract
Purpose: The purpose of this study was to evaluate the effect of innovation strategies on the financial performance of Sanlam Kenya PLC and to assess the moderating effect of organizational culture on this relationship. The study specifically focused on three types of innovation strategies: product innovation, process innovation, and market innovation.
Methodology: The research adopted a mixed-methods design anchored on the resource-based view, dynamic capabilities, open innovation, and institutional theory. The target population was 650 employees from the finance, marketing, innovation, and ICT departments at Sanlam Kenya PLC. Using Krejcie and Morgan’s sampling table, a sample of 242 respondents was selected through stratified and purposive sampling techniques. Quantitative data were analysed using SPSS Version 28, employing descriptive statistics (frequencies, means, and standard deviations) and inferential statistics (t-tests, ANOVA, and correlations) to test hypotheses. Qualitative data were analysed thematically to identify emerging patterns and insights that complemented the quantitative results.
Findings: The study revealed that all three innovation strategies product, process, and market innovation had a significant positive effect on financial performance, measured by return on investment, return on assets, and revenue growth. Market innovation showed the strongest influence (R² = 0.367), followed by product innovation (R² = 0.137) and process innovation (R² = 0.123). Moreover, organizational culture was found to significantly moderate the relationship between innovation strategies and financial performance, with a higher explanatory power (R² = 0.846), indicating that culture enhances the effectiveness of innovation in driving performance.
Unique Contribution to Theory, Practice and Policy: The study recommends that insurance firms, particularly Sanlam Kenya PLC, should prioritize market-driven innovation while strengthening their organizational culture to maximize the financial benefits of innovation strategies. Product and process innovations should be aligned with cultural values that encourage adaptability, creativity, and openness to change. Furthermore, the study suggests that future research be extended to other financial services sectors in Kenya, including banking and investment institutions, to validate and generalize the findings across the broader financial industry.
Downloads
References
Adebayo, T. (2022). Innovation and firm performance in financial institutions: Evidence from emerging markets. International Journal of Business and Economics Research, 11(4), 210–225. https://doi.org/10.11648/j.ijber.20221104.13
Al Kuwaiti, A., Ali, S., & Mirza, A. (2023). Artificial intelligence in insurance claims management: A global perspective. Journal of Risk and Financial Management, 16(7), 315. https://doi.org/10.3390/jrfm16070315
Amghar, A., & Ghlamallah, Z. (2024). Transparency, ethics, and resilience in Islamic insurance. African Journal of Business Management, 18(1), 45–59. https://doi.org/10.5897/AJBM2024
Babbie, E. (2020). The practice of social research (15th ed.). Cengage Learning.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Bodie, Z., Kane, A., & Marcus, A. J. (2020). Investments (12th ed.). McGraw-Hill Education.
Cameron, K. S., & Quinn, R. E. (2011). Diagnosing and changing organizational culture: Based on the competing values framework (3rd ed.). Jossey-Bass.
Celia, M., Rossi, M., & Teece, D. J. (2021). Dynamic capabilities in financial services: Adapting to digital transformation. Journal of Business Research, 124, 386–394. https://doi.org/10.1016/j.jbusres.2020.11.051
Chesbrough, H. (2003). Open innovation: The new imperative for creating and profiting from technology. Harvard Business School Press.
Chimakati, J. (2024). Organizational culture and financial outcomes in Kenya’s insurance sector. Kenya Journal of Management Studies, 6(2), 55–73.
Creswell, J. W., & Plano Clark, V. L. (2018). Designing and conducting mixed methods research (3rd ed.). SAGE.
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101
Enkel, E., Gassmann, O., & Chesbrough, H. (2019). Open R&D and open innovation: Exploring the phenomenon. R&D Management, 39(4), 311–316. https://doi.org/10.1111/j.1467-9310.2009.00570.x
Field, A. (2009). Discovering statistics using SPSS (3rd ed.). SAGE.
Foss, N. J., & Pedersen, T. (2019). Microfoundations of innovation: A review and directions for future research. Academy of Management Annals, 13(2), 672–702. https://doi.org/10.5465/annals.2017.0074
Gitonga, P., Kariuki, A., & Omondi, L. (2024). Organizational culture and innovation adoption in Kenya’s insurance industry. African Journal of Business Management, 18(3), 101–114. https://doi.org/10.5897/AJBM2024
Gunukula, V. (2024). Process innovation in financial services: A review. International Journal of Business Innovation, 9(1), 77–92.
Insurance Regulatory Authority (IRA). (2024). Annual report 2023/2024. Nairobi: IRA. Retrieved from https://www.ira.go.ke
Johnson, M. (2023). Product innovations and financial performance of insurance companies in Kenya [Master’s thesis, Kenyatta University]. KU Institutional Repository.
Journal of Insurance Regulation. (2023). Innovation and regulation in insurance markets. Journal of Insurance Regulation, 42(3), 215–233.
Kamau, P. (2022). Multidimensional innovation and financial performance in Kenya’s insurance sector. Journal of Finance and Accounting, 10(2), 88–100.
Kaplan, R. S., & Norton, D. P. (2020). The balanced scorecard: Translating strategy into action. Harvard Business School Press.
Kariuki, J., & Mwangi, P. (2022). Market innovation and financial performance of insurance firms in emerging economies. African Journal of Business Management, 16(12), 356–366.
Khan, A., Ali, S., & Ahmed, F. (2022). Institutional pressures and organizational performance in regulated industries. Journal of Business Strategy, 43(2), 78–89. https://doi.org/10.1108/JBS-11-2020-0254
Kim, W. C., & Mauborgne, R. (2022). Blue ocean strategy (Expanded ed.). Harvard Business Review Press.
Lam, L. W., Loi, R., & Leong, C. (2021). Organizational culture and innovation: A meta-analysis. Journal of Business Research, 132, 322–336. https://doi.org/10.1016/j.jbusres.2021.04.035
Lee, S. M., Olson, D. L., & Trimi, S. (2019). Strategic innovation: A review and future directions. Technological Forecasting and Social Change, 136, 254–264. https://doi.org/10.1016/j.techfore.2018.11.018
Lee, Y., Park, J., & Shin, H. (2021). Open innovation in financial institutions: Partnering for digital transformation. Journal of Open Innovation, 7(1), 88. https://doi.org/10.3390/joitmc7010088
Maina, J., & Kimencu, L. (2024). Innovation strategies and financial performance of insurance firms in Kenya. African Journal of Business Management, 18(2), 65–78. https://doi.org/10.5897/AJBM2024
Marenga, M. (2018). Innovation adoption and financial performance of general insurers in Kenya. International Journal of Economics and Finance, 10(6), 122–130. https://doi.org/10.5539/ijef.v10n6p122
McKinsey & Company. (2020). Global insurance report: Innovation and digital transformation. McKinsey & Company.
Momanyi, P. (2023). Mobile platforms and innovation in Kenya’s insurance industry. African Journal of Business and Economic Research, 18(1), 77–91.
Morgan, D. L. (2014). Pragmatism as a paradigm for social research. SAGE.
Mugenda, O., & Mugenda, A. (2023). Research methods: Quantitative and qualitative approaches. ACTS Press.
Muteru, D., & Omagwa, J. (2024). Innovation and customer satisfaction in Kenya’s insurance sector. Journal of Emerging Economies and Policy, 7(2), 110–125.
Mutua, S. (2022). Digital transformation and financial performance in Kenyan insurance companies. International Journal of Finance and Accounting, 11(3), 55–68.
Muyoka, J. (2013). Innovation and financial performance of insurance firms in Kenya [MBA thesis, University of Nairobi]. UoN Repository.
Naveed, K., Ahmad, T., & Latif, A. (2022). Innovation-oriented culture and firm performance: A cross-industry analysis. Journal of Business Research, 139, 453–463. https://doi.org/10.1016/j.jbusres.2021.09.048
Ngahu, J. (2016). Product innovation and performance of insurance firms in Kenya [MBA thesis, University of Nairobi]. UoN Repository.
Ngugi, S. (2020). Digital insurance processes and operational efficiency in Kenyan insurers. Journal of African Business, 21(4), 505–520. https://doi.org/10.1080/15228916.2020.1754835
Njoroge, L. (2023). Determinants of financial performance among Kenyan insurance companies [Master’s thesis, Strathmore University]. SU Plus Repository.
Njoga, M., & Deya, P. (2024). Response rates and reliability in Kenyan survey research. East African Journal of Social Sciences, 10(1), 34–47.
Onyango, P., & Linge, T. (2021). Institutional theory and innovation adoption in regulated industries. International Journal of Organizational Analysis, 29(5), 1321–1338. https://doi.org/10.1108/IJOA-02-2020-2032
Otieno, D. (2021). Weather-indexed insurance and financial resilience in Kenya. Journal of Development Studies, 57(8), 1344–1360. https://doi.org/10.1080/00220388.2021.1887479
Saebi, T., & Foss, N. J. (2015). Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3), 201–213. https://doi.org/10.1016/j.emj.2014.11.002
Scott, W. R. (2022). Institutions and organizations: Ideas, interests, and identities (5th ed.). SAGE.
Smith, A. (2022). Behavioral analytics and telemedicine in insurance innovation. The Geneva Papers on Risk and Insurance, 47(4), 765–783. https://doi.org/10.1057/s41288-022-00275-3
Teece, D. J. (2018). Dynamic capabilities and strategic management in the digital era. California Management Review, 61(1), 5–35. https://doi.org/10.1177/0008125618793936
Trott, P. (2021). Innovation management and new product development (7th ed.). Pearson Education.
Tuan, N. P., Nhan, N. T., Giang, P. M., & Ngoc, N. M. (2016). The effects of innovation on firm performance of supporting industries in Hanoi, Vietnam. Journal of Industrial Engineering and Management, 9(2), 413–431. https://doi.org/10.3926/jiem.1564
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180. https://doi.org/10.1002/smj.4250050207
Wu, J., Ma, Z., & Shi, Y. (2020). How dynamic capabilities link to competitive advantage: A meta-analytic review. Journal of Management Studies, 57(2), 253–279. https://doi.org/10.1111/joms.12510
Yasin, A., Mhlongo, L., & Wang, Y. (2020). Market innovation and customer engagement in digital insurance. International Journal of Innovation Management, 24(8), 2050071. https://doi.org/10.1142/S136391962050071X
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Winnie Asiko Chitai, Dr. Molson Onchomba, Mercy Njagi
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
