Strategic Flexibility and Effectiveness of Insurance Firms in Kenya

Abstract

Environmental turbulence , increased competition and technological advancements have led to firms developing and continually renewing their capabilities to achieve superior performance for growth and survival. Strategic flexibility is considered as one the capabilities that firms consider so as to respond to the changes in the environment and ultimately influence their effectiveness. The study examined the effect of strategic flexibility on organizational effectiveness of insurance firms in Kenya. The dimensions of market, competitive and human resource flexibility were used to measure strategic flexibility. The dynamic capabilities and the resource dependence theories formed the theoretical framework. A descriptive cross sectional research design was adopted. A census survey of all the fifty five insurance firms formed the study population. Primary data were collected using a semi structured questionnaire. The unit of analysis was the insurance firm. A single respondent approach was used to collect the pertinent data. Data were analysed using descriptive statistics. A multiple linear regression model was used to determine the effect of strategic flexibility on organizational effectiveness. The study established a positive and significant effect of strategic flexibility on organizational effectiveness. The market flexibility dimension had the highest score followed by human resource and finally the competitive flexibility dimension. The study concludes that in a dynamic and uncertain environment, insurance firms must implement strategic flexibility as a capability to improve their organizational effectiveness for survival and growth. The study further recommends future studies be carried out in other sectors for generalizabilty of results. Future studies may also consider additional dimensions of strategic flexibility and test the indirect effect of strategic lexibility and organizational effectiveness relationship