DYNAMIC CAPABILITIES AND PERFORMANCE OF MICRO FINANCE INSTITUTIONS IN KENYA
Abstract
The main aim of the study was to determine effect of dynamic capabilities on performance of micro finance institutions in the Nairobi City County. Therefore, this study sought to determine the influence of dynamic capabilities and performance of micro finance institutions. The specific objectives were to analyze the effect of sensing capability on the performance, to establish the effect of integration capability on the performance, to examine the effect of reconfiguration capability on performance and to determine the effect of operational capability on the performance of micro finance institutions. The study was guided by Resource Based Theory, Dynamic Capability Theory, Knowledge Based View Theory and Relational Coordination Theory (RCT). Descriptive research design was employed in this study. The study targeted 196 respondents from 49 microfinance institutions in Kenya. The sampling frame comprised of customer service representatives, operations managers, marketing managers and credit managers. The study sampled 132 respondents using stratified random sampling technique. Primary data was collected using a well-designed semi-questionnaire. Pilot study was conducted to establish reliability and validity of research questionnaire. Quantitative data was analyzed using descriptive and inferential statistics using SPSS Version 26.0. Descriptive analysis and inferential analysis were used at a significance level of 0.05. Descriptive analysis included; frequencies, Mean, standard deviation and percentage while inferential analysis involved correlation analysis and linear regression analysis. The data was presented in form of tables and models. From the findings, this study establishes that there exists a significant effect of sensing capability, integration capability, reconfiguration capability and operational capability on performance of micro finance institutions. The study therefore concluded that dynamic capabilities have significant influence on performance of micro finance institutions. The study recommended that Microfinance institutions should implement robust systems to collect and analyze customer feedback, ensuring that insights lead to tangible improvements in products and services. Management of microfinance institutions should promote cross-functional collaboration by encouraging teamwork across different departments to align efforts with common goals. Microfinance institutions should focus on enhancing their agility by developing flexible decision-making processes that allow for quick adjustments to strategies as market conditions evolve.
Keywords: Sensing Capability, Integration Capability, Reconfiguration Capability, Operational Capability
CITATION: Ngichabe, J. W., & Miroga, J. (2024). Dynamic capabilities and performance of micro finance institutions in Kenya. The Strategic Journal of Business & Change Management, 11 (4), 236 – 254. http://dx.doi.Org/10.61426/Sjbcm.v11i4.3078
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3078
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