EFFECTS OF COMPETITIVE ADVANTAGE STRATEGIES ON PERFORMANCE OF MICRO-FINANCE INSTITUTIONS AT KENYA WOMEN MICRO-FINANCE BANK
Abstract
The study investigated the effects of competitive strategies on performance of Kenya Women Micro-Finance Bank in Mombasa. Descriptive research design was used to collect data from 34 employees working in the 4 branches in Mombasa. The regression analysis result indicated that focus strategy had the greatest predictive power of the bank’s performance but innovation initiatives had the least predictive power. From these findings conclusions and recommendations were made; one; It was concluded that the bank did not have a clear generic competitive strategy; as such it was recommended that it adopts one strategy and sticks to it. Two; cost leading MFIs records positive performance as such cost cutting measures should be at the heart of all employees for performance conscious firms. Thirdly focus strategy was a powerful predictor of performance, hence prioritizing focus initiatives throughout the firm would enable the MFIs achieve good performance status. The effect of innovation on performance was positive, though not statistically significant. In this regard, it was concluded that innovative efforts adopted by the bank were not effectively producing differentiated products that appeals to customers nor produced services and products at optimal cost. Based on the market theory it was recommended that the bank should come up with innovative programs that considers both industry factors and external market orientation that are critical in producing innovative products and services that are effectively competitive. This will be critical in increasing market base and expansion of number of branches and customers thus creating the much needed jobs in the region. However because of limitations of the current study both in terms of scope and methodology, it was recommended that future studies should be undertaken that consider more similar financial institutions and larger sample sizes to enable the findings to be more representative. Again future studies should consider more variables apart from the competitive strategies considered in this study. This will result in a more comprehensive and practical model of MFIs performance in the region. Such a model will be more valuable and significant to both practitioners and academicians.
Key Terms: Competitive Strategies, Cost Leadership, Differentiation, Focused Strategy, Innovation, Strategic Focus
Full Text:
PDFReferences
Abdullahi (2010). Strategic Responses Adopted by Kenyan Insurance Companies, Unpublished MBA project, School of Business, University of Nairobi.
Acharya, V., & Xu, Z. (2017). Financial dependence and innovation: The case of public versus private firms. Journal of Financial Economics, 124(2), 223-243.
Allen R. S, Helms M. M. (2012). Linking Strategic Practices and Organizational Performance to Porter’s Generic Strategies. Business Process Management Journal,12 (4),433- 454.
AMFI (2013). Annual report on microfinance sector in Kenya. Retrieved from www.microfinanzarating.com on 21st October 2014.
Arend, R.J. (2016)Revisiting the Logical and Research Considerations of a Competitive Advantage. Strategic Management Journal,(24), 279-284
Armstrong, Gary, and Philip Kotler. Principles of Marketing. 8th ed. Upper Saddle River, NJ: Prentice Hall, 1999.
Awadh S (2015), Role of Microfinance in Empowering Women Research Paper, Mombasa University of Nairobi Campus
Bain (2015), Industrial Organization, John Wiley and Sons, New York.
Banerjee A., Chandhury S. Singh, D, K. Banerjeel, Mahato, A L, Haldar, S (2015) statistics.
Barney J. (2015). Gaining and Sustaining Competitive Advantage. New Jersey: Prentice Hall Person.
Barney J. B. and Wright, P, M (2015). “On becoming a strategic partner: The role of human resources in gaining competitive advantage,” Human Resource Management, 37, (1): 31-46.
Barney, J. B. and Hesterly, W, S. (2010). Strategic Management and Competitive Advantage: Concepts and Cases.
Brandenburger A.M. and B.J. Nalebuff (2015), Competition, New York: Doubleday.
Caves R. E. (2015), ‘Industrial organization, corporate strategy and structure: a survey’, Journal of Economic Literature, vol. 18, no.1, pp. 64-92.
Caves R.E. & Porter, M.E (2015), ‘From entry barriers to mobility barriers: conjectural decisions and contrived deterrence to new competition’, Quarterly Journal of Economics, vol. 91, pp. 241–261.
Chepkwony (2015), Marketing Strategies Adopted by Micro and Small entrepreneurs in Eldoret, Kenya. Unpublished MBA Project, School of Business. Kenyatta University
Cooperative Bank of Kenya (2015). Cooperative Bank of Kenya Report on the SACCO movement in Kenya, AFRACA workshop. Nairobi, Kenya. Available on www.afraca.org/main. (Accessed on 14th June 2013.
Dulo G.A(2015). The sources of competitive advantage and the performance of firms in the Kenya sugar industry. Unpublished MBA Project. School of Business University of Nairobi.
Fahy, J. (2009) The resource based view of a firm: some stumbling blocks on the road to understanding sustainable competitive advantage. Journal of European Industrial Training, 94-104
Filbeck, G., Foster, B., Preece, D., & Zhao, X. (2017). Does diversity improve profits and shareholder returns? Evidence from top rated companies for diversity by DiversityInc. Advances in Accounting, 37, 94-102.
Furrer O. Thomas, H. & Goussevskaia, (2015), ‘The structure and evolution of the strategic Management field: a content analysis of 26 years of strategic management research’, International Journal of Management Reviews, vol.10, no.1, pp. 1–23.
Gakumo D.N(2012). Application of Porter’s Generic strategies by commercial banks in Kenya. Unpublished MBA Project School of Business. University of Nairobi.
Gamba P. and Komo, I. (2010): Evolution, growth and decline of the cooperative sector. A paper prepared for the Centre for Governance and Development downloaded on 3rd December 2014.
Grant R. (2010), ‘Prospering in dynamically-competitive environments: organisational capability as knowledge integration’, Organisation Science, vol. 7, no. 4, pp. 375-387.
Grant R. (2010), ‘The resource-based theory of competitive advantage: implications for strategy formulation’, California Management Review, vol. 33, no. 3, pp. 114-135.
Hannula M. & Pirttimaki. V. (2015). Business intelligence empirical study on the top 50 Finnish companies, American Academy of Business, Vol. 2 No.2, pp.593-9.
Hauswald R. & Marquez, R. (2010). `Relationship banking, loan specialization and competition', Indiana University Working Paper.
Hill Charles w.l., Gareth R. j (2012). Strategic Management Theory: An IntergratedApproach, 10th edition, USA, Cengage Learning
Hlavacka H.T, Dicken, P., Forsgren, M., Malmberg, A. (2010). The local embeddedness of transnational corporations, in Amin, A., Thrift, N. (eds.) Globalization, institutions and regional development in Europe, Oxford: Oxford University Press, 23-45.
Hoskisson R. E., Hitt, MA, Wan, WP& Yiu, (2009), ‘Theory and research in strategic management: swings of a pendulum’, Journal of Management, vol. 25, no. 3, pp. 417-456.
Hyatt L. (2010). A simple guide to strategy, Nursing Homes, Vol. 50 No.1, pp.12-3.
Johnson G., Scholes, K., and Whittington, R. (2015). Exploring Corporate Strategy, Prentice Hall, 8th edition.
Kabugu M.K. (2014), The Effect of Improved Commercial Bank Services on Saving and Credit Cooperative Societies Membership: A Case Study of Murang’a Town, Kenya. International Journal of Academic Research in Economics and Management Sciences July 2014, Vol. 3, No. 4.
Kakungulu Y., Muzingiti, G. & Schmidt, O. (2010). The state of business and operations of Rural Microfinance Institutions in Ruwenzori Region, Portal unpublished.
Karanja P. W. (2015) Competitive strategies of Real Estate firms: The perspective of Porter’s competitive Advantage. Unpublished MBA Thesis, University Of Nairobi
Kariuki, P.N (2009). Marketing Strategies Applied by Private Middle level Colleges in Nairobi. Unpublished MBA Project, School of Business. Kenyatta University.
Kavale, S., Mugambi, F., & Namusonge, G. (2014). Strategic Management Determinants of Corporate Growth in Selected Micro-Finance Institutions in Kenya. Global journal of commerce and management perspective, 3(5), 95-119.
Kees van der Heijden, Back to basics: exploring the business idea, Strategy & Leadership, 29.3, 2013
Kombo K and Delno L A (2011), An Introduction, Proposal and Thesis Writing, Nairobi, Pauline Publications Africa.
Kothari C. R, (2014) Research methodology, 2nd edition New Delhi, New Age International limited publisher.
Kumar S., and Phrommathed P. (2012). Research methodology. Springer US.
Labie M. & Perilluex A. (2015). Corporate Governance in Microfinance: Credit Union , Center for European Research in Microfinance . Solvay Business School. ULB. Brussels, Belgium.
Lado A., Boyd N., Wright P. & Kroll M., (2015). Paradox and theorizing within the resource-based view, AMR, 31: 115-131
Lin, B. W. (2016). Technology transfer as technological learning: a source of competitive learning for firms with limited R&D resources. R&D Management, (33) 3,327.
Ma H. (2014). Toward global competitive advantage:Creation, competition, cooperation & co- option. Management Decision Economics,(42) No. 7,
Makadok R. (2009) Rational Expectations; Strategic Management Journal of Resource- Capabilities, Vol. 23(11).
Mbai M. (2015) competitive strategies adopted by mwalimu Sacco as a result of external environmental changes since 1997.Unpublished MBA project, University of Nairobi.
McCracken, L. (2009). Differentiation: win new business with less effort, Principal's Report Vol. 2 No.4, pp.1. .
Micro Capital Monitor (2009): Free Preview Edition, Volume 4, Issue 3.
Mintzberg (2015), ‘Patterns in strategy formation’, Management Science, vol. 24, no.9, pp. 934-948.
Mintzberg H., Ahlstrand, B. & Lampel, J. (2015), Strategy Safari: a guided tour through the wilds of Strategic Management, Free Press, New York.
Mosongo,E.,Gichana,I.,Ithai,J.&Munene,N.(2013).Financial Innovation and Financial Performance. International Journal of Research in Management, Vol. 5, Issue 3 , ISSN 2249-5908, September 2013.
Mugenda and Mugenda (2013). Research Methods “Qualitative and Quantitave Approaches”,Nairobi: Acts Press.
Murage S. W. (2015) Competitive strategies adopted by members of the Kenya Independent Petroleum Dealers Association. Unpublished MBA Thesis, University Of Nairobi.
Mutura J.K. (2012) Factors influencing the effectiveness of guarantorship in loan recovery. Unpublished MBA project, Kenyatta University.
Muturi (2010) Strategic Responses by firms facing changed competitive conditions – East Africa Breweries ltd. Unpublished MBA project, School of Business, University of Nairobi.
Mwakajumilo, (2011). The Role of Informal Microfinance Institutions in Saving Mobilization, Investment and Poverty Reduction. A Case of Savings and Credit Cooperative Societies (SACCOS) in Tanzania from 1961-2008. Unpublished Doctoral Thesis, St. Clements University.
Ndungu N. & Ngugi R. (2009) Adjustment and liberalization in Kenya: the financial and foreign exchange markets. Journal of international development, Vol. 11, 465-491.
Neuman W. L. (2009). Social research methods: Qualitative and quantitative approaches (4th ed.). Boston: Allyn and Bacon.
Ngechu M. (2012), Understanding the research process and methods. An introduction to research methods. Acts Press, Nairobi.
Njanike, K. (2009). The Impact of Effective Credit Risk Management on Bank Survival, Journal of Financial Regulation and Compliance, Working paper, Bindura University, Zimbabwe. Available at: https://ideas.repec.org.
Njanja W. L. and Pelissier, R. (2010) ‘An Investigation into the Effect of Management Factors on Performance of Micro, Small and Medium Enterprises in Kenya’. International Journal of Business and Management Vol. 5, No. 11; November 2010.
Njoroge, J N (2012) Competitive strategies adopted by liquefied petroleum gas marketers in Kenya to cope with competition: Unpublished MBA research Project, University of Nairobi, Nairobi, Kenya.
Orodho A (2010), Techniques of Writing Research proposals and reports Kenyatta University, Kanezja HP Enterprise. Nairobi.
Peat I. Mellis, C, C. Williams, K. Xuan W, (2009), Health science research a handbook of quantitative method London sage.
Penrose E.T. (2015), The Theory of Growth of The Firm, Blackwell, Oxford.
Perrow C. (2012), Complex Organizations: A Critical Essay, 3rd edn, McGraw-Hill, New York.
Peteraf , M.A. & Barney, J.B. (2016). Unravelling the resource-based tangle. M anagerial & Decision Economics, (24), 309-323
Peteraf M.A. & Bergen, M.E. (2010), ‘Scanning dynamic competitive landscapes: a market-based and resource-based framework’, Strategic Management Journal, vol. 24, no.10, pp. 1027-1041.
Peteraf, M.A. & Bergen, M.E.. (2016). Scanning dynamic competitive landscapes: A market based & resource-based framework. Strategic Management Journal, (24), 1027-1041.
Porter M. E. (2015), Competitive Strategy: Techniques for Analysing Industries and Competitors, Free Press, New York.
Porter M. E. (2015), ‘How competitive forces shape strategy’, Harvard Business Review, vol. 57, no. 2, pp. 137-146.
Porter M. E. (2009), ‘What is Strategy?’ Harvard Business Review, vol. 74, no.6, pp. 61-78.
Powell W. W. (2010), ‘Competitive advantage: logical and philosophical considerations’, Strategic Management Journal, vol. 22, no.9, and pp.875-888.
Prahalad C. K. & Hamel G. (2010), ‘Strategy as a field of study: why search for a new paradigm?’ Strategic Management Journal, vol. 15, pp. 5-16.
Prescott. et al, “TOWS Analysis: The Role of Competitive Intelligence”, Competitive Intelligence Magazine, 13 (3): 9-12
Rejina J and Aurino (2010), Micro Banking for Rural Entrepreneurship, Indonesia, BakrieUniversity, Available on mulyangrum@bakrie.ac.ke
Republic of Kenya (1997a) Sessional Paper No. 6 of 1997 on Cooperatives in A Liberalized Economic Environment, Nairobi, Government Printer.
Samli A. C. (2013). International consumer behavior in the 21st century DOI 10.1007/978-1-4614-5125-9-2 published by Springer New York.
Sapienza H. J., Autio, E., George, G., & Zahra, S. A. 2012. A capabilities perspective on the effects of early internationalization on firm survival and growth. Academy of Management Review, 31(4): 914-933.
SASRA (2015) .The SACCO Societies (deposit – taking Sacco business) regulations, Kenya Gazette Supplement, Government Printer, Nairobi, Kenya.
Schendel (2009), ‘Competitive organizational behavior: toward an organizationally: based theory of competitive advantages’, Strategic Management Journal, vol. 15, pp.1-5.
Sekarani U. (2012), Research methods for business a skill building approach, pp 22, New Delhi: John wily
Sharma N. , Simkhada, N.R. & Shrestha R. (2015). Impact Assessment of SACCOS in Nepal's Hill Districts. Centre for Microfinance Ltd, Kathmandu.
Shrestha S.M. (2009). State of Microfinance in Nepal. Retrieved March 24, 2015 from http:www.inm.org.bd/saarc/document/Nepal.pdf.
Silas K. Kobia (2011), The Cooperative movement in Kenya: Challenges and Opportunities. Colors capes Media Ltd.
Singh A. S. (2014), Sampling Techniques & Determination of Sample Size in Applied Statistics Research: International journal of Economics, Commerce and Management, vol. II, Issue 11, November 2014.
Spanos, Y. E.; Lioukas, S. (2013), An examination into the causal logic of rent generation: contrasting Porter's competitive strategy framework and the resource-based perspective, Strategic Management Journal, 22, pp. 907-934.
Teece D., Pisano G. & Shuen, (2015), ‘Dynamic capabilities and strategic management’, Strategic Management Journal, vol. 18, no.7, pp. 509-533.
Thompson A.A., Strickland, A, and Gamble, J.E. (2015). Crafting and Executing Strategy, Text and Readings. 15th Edition, McGraw-Hill Irwin.
Thompson A.A., Strickland, A.A., and Gamble, J.E. (2015). Crafting and Executing Strategy, The Quest for Competitive Advantage, Concept and Cases, 16th Edition, McGraw Hill Irwin.
Turban, E., King, D., Lee, J. K., & Viehland, D. (2012). Electronic Commerce 2012: A Managerial Perspective (p. 832). International edn, Prentice Hall, Upper Saddle River, NJ.
Wang H. L. & Ghose, (2009), ‘On the foundations of strategic alignment’, in The 2009 Australia and New Zealand Academy of Management Conference (ANZAM 2009), Dunedin.
WOCCU (World Council of Credit Unions). 2015. 2015 Statistical Report. Available at www.woccu.org (accessed June 14, 2013).
DOI: http://dx.doi.org/10.61426/sjbcm.v5i2.679
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.