The Influence of Organizational Culture and Market Orientation on Performance of Microfinance Institutions in Kenya | Chapter 09 | Current Perspective to Economics and Management Vol. 4
Firms operating in highly competitive industries strive to bolster their
performance by building sustainable competitive advantage. Organizational
culture and market orientation are considered sources of competitive advantage.
Organizational culture creates competitive advantage only when it is strong,
encourages creativity and adaptation to changing conditions in the market.
Organizational culture creates behaviors such as market orientation that
ultimately leads to superior performance of the firm. Competition in the
microfinance industry is intense as microfinance institutions compete with each
other, commercial banks, savings and cooperative societies and informal money
lenders. In such competitive markets, understanding the drivers of firm
performance is necessary. Therefore, our study was designed to assess the influence
of organizational culture and market orientation on performance of microfinance
institutions in Kenya. The population of the study comprised microfinance
institutions that were members of the Association of Microfinance Institutions
(AMFI) in Kenya. We used descriptive cross-sectional survey design. We
collected primary data using structured questionnaire. Our hypotheses were
tested through linear regression analysis. Our results demonstrate that
organizational culture significantly and positively influence performance of
microfinance institutions. The partial mediation effect of market orientation
on the relationship between organizational culture and performance was
confirmed. The complimentary effect of organizational culture on market
orientation implies that organizations need to spend more resources in
nurturing market orientation to create sustainable competitive advantage
through delivery of superior customer experience. We conclude that the
influence of organizational culture and market orientation on performance is
more plausible for mature industries regarded as diverse in terms of customer
needs.
Author(s) Details
Owino O. Joseph [Ph.D]
Department of Business
Administration, University of Nairobi, Kenya.
Prof. Kibera Francis [Ph.D,
OGW, CBS]
Department of Business
Administration, University of Nairobi, Kenya.
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