Strategic positioning and is it a useful construct in improving performance of microfinance institutions in Kenya
DOI:
https://doi.org/10.20525/ijrbs.v12i7.2909Keywords:
Strategic Positioning, Strategic leadership, Resource allocation, Strategic leadership, Customer Focus.Abstract
This paper aims to examine the effect of strategic leadership, resource allocation, information technology, customer focus, and differentiation on the performance of microfinance institutions in Nairobi City County. The study was founded on a resource-based view, dynamic capability and life-cycle theories. A target of 300 employees was targeted from which a sample of 172 research participants was recruited. The sample was selected through a combination of both stratified and sampling techniques. Questionnaires were used for primary data collection. Analysis used both descriptive and multiple regression analyses. The findings of the study indicated the urgency for microfinance organizations to adopt growth strategies that encompass innovative digital advancements, the introduction of novel products, innovation-focused strategies, and the digitization of services. The findings further highlighted the pivotal roles played by strategic positioning, strategic leadership, information technology integration, and differentiation in significantly shaping microfinance institutions’ performance. The findings also indicated that a unit enhancement of strategic positioning indicator had a significant enhancement on their individual performance. However, the effect of customer focus and resource allocation did not exhibit the same level of significance. The study recommended the reinforcement of strategic positioning, optimized resource allocation, embracing technological integration, and an unwavering focus on customer needs. The study recommended the exploration of diverse leadership styles, resource allocation strategies, and the undertaking of comparative analyses to draw insights into the effects of these factors on microfinance institutions.
Downloads
References
Abdirashid, A. A., & Jagongo, A. O. (2019). Group lending and loans performance in micro-finance institutions in Nairobi city County, Kenya: Case of Kenya women Microfinance bank limited. International Journal of Current Aspects, 3(III), 96-110. https://doi.org/10.35942/ijcab.v3iiii.33 DOI: https://doi.org/10.35942/ijcab.v3iIII.33
Agyei-Boapeah, H., Adu-Boakye, S., Amankwah-Amoah, J., & Brodmann, J. (2020). Customer satisfaction in microfinance institutions: Insights from Ghana. Enterprise Development & Microfinance, 31(3), 164-193. https://doi.org/10.3362/1755-1986.19-00016 DOI: https://doi.org/10.3362/1755-1986.19-00016
Alam, K. Ali, M. A., Erdiaw-Kwasie, M., Shahiduzzaman, M., Velayutham, E., Murray, P. A., & Wiesner, R. (2022). Effect of ICTs on Innovation and Performance of Firms. Sustainability, 14(2): 5801. https://doi.org/10.3390/su14105801. DOI: https://doi.org/10.3390/su14105801
Ambrosini, V., & Bowman, C. (2009). What are Dynamic Capabilities and are they a Useful Construct in Strategic Management? International Journal of Management Reviews, 11(1), 29-49. https://doi.org/10.1111/j.1468-2370.2008.00251.x. DOI: https://doi.org/10.1111/j.1468-2370.2008.00251.x
Anekwe, R. I., Onudugu, V., Ndubuisi, O. P. & Grace, A. (2021). Differentiation Strategy and Organizational Growth of Manufacturing Firm in Ebonyi State, Nigeria. European Journal of Social Sciences, 61 (3): 175 – 181.
Arbelo, A., Arbelo-Pérez, M., & Pérez-Gómez, P. (2020). Profit efficiency as a measure of performance and frontier models: A resource-based view. BRQ Business Research Quarterly, 24(2), 143-159. https://doi.org/10.1177/2340944420924336 DOI: https://doi.org/10.1177/2340944420924336
Bett, R. K. (2020). In selected commercial effect of employee commitment and organization performance banks in Uasin Gishu County, Eldoret, Kenya. The International Journal of Business & Management, 8(6). https://doi.org/10.24940/theijbm/2020/v8/i6/bm2006-025 DOI: https://doi.org/10.24940/theijbm/2020/v8/i6/BM2006-025
Cady, S. H., Wheeler, J. V., Schlechter, A. F., & Goodman, S. (2019). A proposed theory life cycle model: Standing on the shoulders of giants. The Journal of Applied Behavioral Science, 55(4), 428-452. https://doi.org/10.1177/0021886319873050 DOI: https://doi.org/10.1177/0021886319873050
Central bank Banks Supervision Report. (2018). Bank Supervision & Banking Sector Reports. Nairobi: Central Bank of Kenya.
Central Bank of Kenya. (2020). Membership categories – Amfi Kenya. Amfi Kenya. https://amfikenya.com/membership-categories/
Chaudhuri, A., Subramanian, N., & Dora, M. (2022). Circular economy and digital capabilities of SMEs for providing value to customers: Combined resource-based view and ambidexterity perspective. Journal of Business Research, 142, 32-44. https://doi.org/10.1016/j.jbusres.2021.12.039. DOI: https://doi.org/10.1016/j.jbusres.2021.12.039
Cox, A. M., & Tam, W. W. (2018). A critical analysis of lifecycle models of the research process and research data management. Aslib Journal of Information Management, 70(2), 142-157. https://doi.org/10.1108/ajim-11-2017-0251 DOI: https://doi.org/10.1108/AJIM-11-2017-0251
Dang, H. (2021). Factors influencing customers’ decision to save with microfinance institutions: The case of Advans Cameroon. SSRN Electronic Journal, 4(3), 123-151. https://doi.org/10.2139/ssrn.3883700 DOI: https://doi.org/10.2139/ssrn.3883700
Dias, Á. L., Manuel, E. C., Dutschke, G., Pereira, R., & Pereira, L. (2021). Economic Crisis on SME dynamic capabilities. International Journal of Learning and Change, 13(1), 63-80. 10.1504/ijlc.2021.111662. DOI: https://doi.org/10.1504/IJLC.2021.111662
Elikwu, M. I., & Mohammed, M. N. (2020). Effect of Differentiation Strategy on Performance of Selected Small Scale Manufacturing Firms in Nigeria. International Journal of Science and Economic Research, 5(8):786. https://doi.org/10.46609/ijsser.2020.v05i08.004. DOI: https://doi.org/10.46609/IJSSER.2020.v05i08.004
Ferreira, J., Coelho, A., & Moutinho, L. (2020). Dynamic capabilities, creativity and innovation capability and their impact on competitive advantage and firm performance: The moderating role of entrepreneurial orientation. Technovation, 92, 102061. https://doi.org/10.1016/j.technovation.2018.11.004. DOI: https://doi.org/10.1016/j.technovation.2018.11.004
Friebel, G., Raith, M., Alonso, R., & Bar-Isaac H. (2009). Resource Allocation and Organizational Form. American Economic Journal Microeconomics, 2(2): 345-654. https://www.jstor.org/stable/25760387. DOI: https://doi.org/10.1257/mic.2.2.1
Gachara, J., & Okeyo, W. (2021). Influence of strategic planning and organizational resources on financial performance of state corporations: A case of Kenya electricity transmission Company Limited (KETRACO). International Journal of Management and Leadership Studies, 11(3), 1-11. https://doi.org/10.52281/jv3i102.
Gachara, J., & Okeyo, W. (2021). Influence of strategic planning and organizational resources on financial performance of state corporations: A case of Kenya electricity transmission Company Limited (KETRACO). International Journal of Management and Leadership Studies, 11(3), 1-11. https://doi.org/10.52281/jv3i102. DOI: https://doi.org/10.52281/jv3i102
Ghalem, A., Okar, C., Chroqui, R., & Semma, E. (2016). Performance: A Concept to Define. https://doi.org/10.13140/RG.2.2.24800.28165.
Gupta, S., Modgil, S., Gunasekaran, A., & Bag, S. (2020). Dynamic capabilities and institutional theories for Industry 4.0 and digital supply chain. In Supply Chain Forum: An International Journal, 2(21):139-157. DOI: https://doi.org/10.1080/16258312.2020.1757369
Islam, A., Ushchev, P., Zenou, Y., & Zhang, X. (2018). The value of information in technology adoption: Theory and evidence from bangladesh. Available at SSRN 3310344. DOI: https://doi.org/10.2139/ssrn.3302358
Issaias, L. A., Odondo, A. J., & Okelo, S. (2021). Effect of financial inclusion on performance of Microfinance institutions in Nairobi, Kenya. The International Journal of Business & Management, 9(2). https://doi.org/10.24940/theijbm/2021/v9/i2/bm2102-036 DOI: https://doi.org/10.24940/theijbm/2021/v9/i2/BM2102-036
Jamil, E., & Siddiqui, D. A. (2020). Assessing firms’ environmental, social and governance performance (ESGP) and its effect on financial performance: Evidence from Pakistan. SSRN Electronic Journal, 1(1), 123-151. https://doi.org/10.2139/ssrn.3681226 DOI: https://doi.org/10.2139/ssrn.3681226
Javeed, L., & Tabassam, R. (2018). Financial leverage and financial performance: Empirical evidence from listed textile industry of Pakistan. International Journal of Accounting and Financial Reporting, 8(4), 457. https://doi.org/10.5296/ijafr.v8i4.14136 DOI: https://doi.org/10.5296/ijafr.v8i4.14136
Kabetu, D. G. & Iravo, M. A. (2018). Influence of strategic leadership on performance of international humanitarian organizations in Nairobi, Kenya. International Academic Journal of Innovation, Leadership and Entrepreneurship, 2(2), 113-135. https://doi.org/10.53819/81018102t2015. DOI: https://doi.org/10.53819/81018102t2015
Kahihu, P. K., Wachira, D. M., & Muathe, S. M. (2021). Managing market risk for financial performance: Experience from micro finance institutionin Kenya. Journal of Financial Regulation and Compliance, 29(5), 561-579. https://doi.org/10.1108/jfrc-02-2021-0014 DOI: https://doi.org/10.1108/JFRC-02-2021-0014
Kanini, I. (2021). User challenges and performance of mobile banking: The case of selected commercial banks in Nairobi County, Kenya. Journal of Finance and Accounting, 5(3), 22-59. https://doi.org/10.53819/81018102t2006 DOI: https://doi.org/10.53819/81018102t2006
Karanja, S., & Simiyu, E. (2022). Credit management practices and loan performance of Microfinance institutions in Nairobi, Kenya. Journal of Finance and Accounting, 6(1), 108-139. https://doi.org/10.53819/81018102t6009 DOI: https://doi.org/10.53819/81018102t6009
Kimiti, P. G., Muathe, S. M., & Murigi, E. M. (2020). Nexus between cost leadership strategy and performance: Fact or fallacy in milk processing firms in Kenya. International Business Research, 13(10), 1. https://doi.org/10.5539/ibr.v13n10p1 DOI: https://doi.org/10.5539/ibr.v13n10p1
Kisuna, P. M., & Gogo, J. (2017). An analysis of competitive strategies employed in microfinance institutions: A case of Kenya women finance trust. Journal of Business and Strategic Management, 2(3), 78-100. https://doi.org/10.47941/jbsm.163 DOI: https://doi.org/10.47941/jbsm.163
Kotler, P. & Keller, K. (2014). Marketing Management (14th Edition), India: Prentice Education
Kotler, P. (2013). Philip Kotler's contributions to marketing theory and practice Review of marketing research: Special issue - marketing legends: UK: Emerald Group Publishing Limited.
Kubai, E., Karanja, P., & Kihara, A. (2021). Influence of differentiation strategy on performance of the insurance companies in Nairobi, Kenya. Journal of Business and Strategic Management, 6(4), 21-31. https://doi.org/10.47941/jbsm.730 DOI: https://doi.org/10.47941/jbsm.730
Le, P. B., & Lei, H. (2018). The of innovation speed and quality on differentiation and low-cost competitive advantage: The case of Chinese firms. Chinese Management Studies. DOI: https://doi.org/10.1108/CMS-10-2016-0195
Lehtinen, N. (2017). Strategic marketing analysis: DNA Plc. Bachelor of Business Administration. South-Eastern University of Applied Sciences
Lewis, W. E., Dobbs, D., & Veerapillai, G. (2017). Quality through continuous improvement process. Software Testing and Continuous Quality Improvement, 3(5), 75-84. https://doi.org/10.1201/9781439834367-5 DOI: https://doi.org/10.1201/9781439834367-5
Liu, J. (2020, February). The “life code”: A theory that unifies the human life cycle and the origin of human tumors. In Seminars in cancer biology 60(1): 380-397; https://doi.org/10.1016/j.semcancer.2019.09.005. DOI: https://doi.org/10.1016/j.semcancer.2019.09.005
Marinkovi?, V., ?or?evi?, A., & Kalini?, Z. (2020). The moderating of gender on customer satisfaction and continuance intention in mobile commerce: a UTAUT-based perspective. Technology Analysis & Strategic Management, 32(3), 306-318. https://doi.org/10.1080/09537325.2019.1655537. DOI: https://doi.org/10.1080/09537325.2019.1655537
Mitchell, S. L., & Clark, M. (2019). Reconceptualising product life-cycle theory as stakeholder engagement with non-profit Organisations. Journal of Marketing Management, 35(1-2), 13-39. https://doi.org/10.1080/0267257x.2018.1562487. DOI: https://doi.org/10.1080/0267257X.2018.1562487
Mitic, S., Popovic, J., Postin, J., Cilderic, V., & Szabo, L. (2021). Information technology as an Indicator of the level of Organizational Performance. Journal of Engineering management and Competitiveness, 11(1):67-90. https://doi.org/10.5937/jemc2101029m. DOI: https://doi.org/10.5937/jemc2101029M
Muathe, S.M.A. (2010). The Determinants of Adoption of Information and Communication Technology by Small and Medium Enterprises within the Health Sector in Nairobi, Kenya. Unpublished PhD Thesis, Kenyatta University
Muithya, V. (2022). Undoing performance in micro finance institutions: Reflections on regulatory framework in Kenya. The Journal of Entrepreneurial Finance, 24(2), 128-143. https://doi.org/10.57229/2373-1761.1397 DOI: https://doi.org/10.57229/2373-1761.1397
Muithya, V. M., Muathe, S., & Kinyua, G. (2021). Undoing performance in micro finance institutions: Reflections on regulatory framework in Kenya. The Journal of Entrepreneurial Finance, 23(1), 1-13. https://doi.org/10.57229/2373-1761.1404 DOI: https://doi.org/10.57229/2373-1761.1404
Mwara, J., & Nyaga, J. (2013). Faulu Kenya deposit taking Microfinance institution case study. Transforming Microfinance, 3(11), 189-214. https://doi.org/10.2307/j.ctv1ddcsct.11 DOI: https://doi.org/10.2307/j.ctv1ddcsct.11
Ndede, C. (2020). Motivation on employee retention in commercial banks in homabay County, Kenya. International Journal of Advanced Research, 8(7), 66-72. https://doi.org/10.21474/ijar01/11263 DOI: https://doi.org/10.21474/IJAR01/11263
Nyachwaya, J. M., & Rugami, J. M. (2020). Competitive strategies and performance of commercial banks in Mombasa County, Kenya. International Journal of Business Management, Entrepreneurship and Innovation, 2(1), 65-74. https://doi.org/10.35942/jbmed.v2i1.109 DOI: https://doi.org/10.35942/jbmed.v2i1.109
Nzongang, J., & Nishimikijimana, E. (2013). Social and financial performance of Microfinance institutions: A multi-stage data envelopment analysis application. Promoting Microfinance, 1(1), 148-169. https://doi.org/10.1057/9781137034915_8 DOI: https://doi.org/10.1057/9781137034915_8
Odhiambo, O. E., & Mang’ana, R. (2022). Strategic adoption of technological innovations on competitive advantage of commercial banks in Nairobi, Kenya. Journal of Business and Strategic Management, 7(2), 16-36. https://doi.org/10.47941/jbsm.885 DOI: https://doi.org/10.47941/jbsm.885
Omran, S. K. (2013). The relationships between the organizational, environmental characteristics and marketing performance. International Journal of Customer Relationship Marketing and Management, 4(2), 36-50. https://doi.org/10.4018/jcrmm.2013040103 DOI: https://doi.org/10.4018/jcrmm.2013040103
Onu, C.A., Odunmbaku, A. A., & Akinlabi, B.H. (2021). Effect of strategic marketing practice (SMP) on market share of selected Insurance companies in Lagos State, Nigeria. Arctic Journal 74(4): 149-243. https://doi.org/10.22367/jem.2016.24.06. DOI: https://doi.org/10.22367/jem.2016.24.06
Otundo, M. R. (2019). Effect of green production practices on financial performance of manufacturing firms in Kenya. SSRN Electronic Journal, 4(5), 123-151. https://doi.org/10.2139/ssrn.3449494 DOI: https://doi.org/10.2139/ssrn.3449494
Philip, G. (2018). Process flow improvement. Sustaining a Culture of Process Control and Continuous Improvement, 20(2), 195-224. https://doi.org/10.4324/9781315099361-12 DOI: https://doi.org/10.4324/9781315099361-12
Pichler, S., Cordazzo, M., & Rossi, P. (2018). An analysis of the firms-specific determinants influencing the voluntary IFRS adoption: Evidence from Italian private firms. International Journal of Accounting, Auditing and Performance Evaluation, 14(1), 85. https://doi.org/10.1504/ijaape.2018.089418 DOI: https://doi.org/10.1504/IJAAPE.2018.089418
Rahman, A. M. (2017). Assessment of self-service banking in Bangladesh: Are private commercial banks one step further building customer centric model or becoming money making machines in market competition? SSRN Electronic Journal, 3(2), 120-190. https://doi.org/10.2139/ssrn.2919778 DOI: https://doi.org/10.2139/ssrn.2919778
Sabourin, V. (2021). Strategic market positioning and the industry structure. Strategic Management for the Hospitality and Tourism Industry, 4(2), 65-81. https://doi.org/10.1201/9781003105831-4 DOI: https://doi.org/10.1201/9781003105831-4
Silva, R., & Oliveira, C. (2020). The influence of innovation in tangible and intangible resource allocation: A qualitative multi case study. Sustainability, 12(12): 4989. DOI: https://doi.org/10.3390/su12124989
Tavakol, M., & Dennick, R. (2011). Making sense of Cronbach's Alpha. International Journal of Medical Education, 2(3), 53-55. https://doi.org/10.5116/ijme.4dfb.8dfd. DOI: https://doi.org/10.5116/ijme.4dfb.8dfd
Wairimu, K. M. & Osieko, M. (2020). Influence of relationship marketing on growth of micro finance banks in Nairobi, Kenya. International Academic Journal of Human Resource and Business Administration, 3(9): 246-255. https://doi.org/10.61426/sjbcm.v4i1.408. DOI: https://doi.org/10.61426/sjbcm.v4i1.408
Waithaka, S. M., Gakure, R., & Wanjau, K. (2013). The of Leadership Characteristics on Microfinance Institutions’ Social Performance In Nairobi, Kenya. European Centre for Research, Training and Development, 1(1), 26-43. https://doi.org/10.61426/sjbcm.v3i3.290. DOI: https://doi.org/10.61426/sjbcm.v3i3.290
Wakhisi, W. (2021). Effect of Strategic Leadership on Organizational Performance of State-owned Sugar manufacturing Firms in Western Kenya. International Journal for Innovation, Education and Research, 9(9): 569-789. 10.31686/ijier.vol9.iss9.3312. DOI: https://doi.org/10.31686/ijier.vol9.iss9.3312
Wanjogu, B., & Waithaka, P. (2021). Total Quality Management and Organizational Performance of Deposit Taking Micro Finance Institutions in Nyandarua County, Kenya. International Journal of Business Management, Entrepreneurship and Innovation, 3(1): 121-135. https://doi.org/10.35942/jbmed.v3i1.176. DOI: https://doi.org/10.35942/jbmed.v3i1.176
Widuri, R., & Sutanto, J. E. (2019). Differentiation Strategy and Market Competition as Determinants of Earnings Management. Advances in Business and Management Research, 69(1):176-245. https://doi.org/10.2991/teams-18.2019.30. DOI: https://doi.org/10.2991/teams-18.2019.30
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Jackline Kapukha, S.M. Muathe
This work is licensed under a Creative Commons Attribution 4.0 International License.
For all articles published in IJRBS, copyright is retained by the authors. Articles are licensed under an open access Creative Commons CC BY 4.0 license, meaning that anyone may download and read the paper for free. In addition, the article may be reused and quoted provided that the original published version is cited. These conditions allow for maximum use and exposure of the work, while ensuring that the authors receive proper credit.
