Effect of Organizational Culture on the relationship between Corporate Diversification and Financial Performance in the Kenyan Insurance Service Sector

Abstract

Purpose - The study examines how organizational culture moderates corporate diversification- performance link in the Kenyan insurance sector.

Methodology - The target population comprised fifty six insurance firms in Kenya. Secondary data was collected from published account and company accounts filled at the insurance regulatory authority. Data for organizational culture was gathered using a semi structured questionnaire, from managers and top level employees from registered insurance companies in Kenya. The operational items of the questionnaire to measure organizational culture were guided by the Denison model. Descriptive and inferential analysis was performed by SPSS and STATA. Moderation effect analysis was guided by Baron and Kenny moderation steps.

Findings – Based on the findings, it was established that composite organizational culture has a statistically positive moderation effect on the link between corporate diversification and ROA. Moreover, mission, involvement and adaptability, influence corporate diversification-financial performance linkage of the Kenya insurance sector.

Implications - The managers gain insights from study findings and use the findings as a tool to instill the right mindset and behavior to employees or agents and formulate the framework to guide actions of participants since the right ethics and culture can only be sponsored from the top. Further research can be extended to contexts within the developing economies category and other financial service sectors and non-financial sectors by evaluating the diversification index that is well suited to them that would provide more insights into the relationships.

Keywords:     Corporate Diversification, Organizational Culture, Performance, Kenyan Insurance Service Sector