INFLUENCE OF STRATEGIC CORPORATE RESTRUCTURING ON PERFORMANCE OF INSURANCE FIRMS IN KENYA

Abstract

The performance of insurance firms in Kenya continues dwindling, yet the industry has
undergone various improvements and consolidations over the years. The total growth rate
either stagnates or drop every year. This has also changed the dynamics of operations in this
sector as the companies are faced with an even harder task in attaining competitive advantage.
This has seen various insurance companies that were not meeting the stakeholder‟s
expectations or experiencing huge losses seeking for other alternatives. The purpose the study
was to examine the relationship between strategic corporate restructuring and performance of
insurance firms in Kenya. The study was guided by the following specific research objectives:
To determine the influence of diversification strategy on the performance of insurance firms in
Kenya; To examine the influence of disinvestment strategy on the performance of insurance
firms in Kenya; To establish the influence of divestiture strategy on the performance of
insurance firms in Kenya; To assess the influence of strategic alliances strategy on the
performance of insurance firms in Kenya. The study was anchored to Wieck‟s Model Theory of
Organizing, Transaction Cost Economics and Resource Based Theory. The study adopted a
descriptive research design. The study population was 319 head of departments of the
insurance firms in Kenya. The unit of analysis will be insurance firm in Kenya. The study
sampled 178 respondents established by Slovin‟s sample size determination formular. The
study adopted purposive, stratified and random sampling techniques. Primary data was
collected through the use of questionnaires. Quantitative and qualitative data was generated
from the closed-ended and open-ended questions, respectively. Qualitative data was analyzed
on thematic basis and the findings provided in a narrative form. Inferential and descriptive
statistics were employed for analysis of quantitative data with the assistance of Statistical
Package for Social Sciences (SPSS version 25). Descriptive statistics such as frequency
distribution, mean (measure of dispersion), standard deviation, and percentages were used.
Inferential data analysis was conducted by use of Pearson correlation coefficient, and multiple
regression analysis. The study results were presented through use of tables and figures. Results
revealed that all the strategic corporate restructuring dimensions had a positive and significant
relationship with performance of insurance firms in Kenya. However, the magnitude of the
influence was different for the specific strategic corporate restructuring dimensions. The
disinvestment strategy had the largest effect followed by divestiture strategy then
diversification strategy and finally the strategic alliances.