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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