Factors Influencing Competitive Advantage of Firms in the Micro Finance Industry in Kenya

Abstract

Competition is a universal social process that exists in all types of societies either civilized or uncivilized. This may in form of service or goods offered to their customers. Competitive advantage is a superiority that gives an organization an edge over its rivals and an ability to generate greater value for the firm and its shareholders. It occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. This study set out to address two objectives which were to establish the types of competitive advantages enjoyed by firms in the micro finance industry and to determine factors influencing the competitive advantage of firms in the micro finance industry. To achieve this objective the study made use primary data only collected through questionnaires sent to 37 Micro Finance companies. The study recommended that it is important for the Mfis to evaluate to what extent it uses the competitive advantages to compete with others in the industry.The study suggested that a further research is necessary on the implementation of competitive advantages strategies since this research only considered the extent it is used by MFIs and the factors influencing it.The study concluded that that Marketing strategy, networks effects ,strong research and development capabilities,Cost leadership and redefining customer value were used by many MFIs as competitive strategies. It was also concluded that being a low cost provider,use of technology, support structures Risk, Service offered,quality,location,an embedded customer base and innovation have atleast more than moderate influence in the competetitive advantage.