Effect of Market Creation Strategy on Performance of Insurance Industry in Kenya

Abstract

Market creation is triggered by the problem or opportunity an organisation sets out to address, offering a breakthrough solution to the industry's existing problems or solving a brand-new problem, or seizing a brand-new opportunity outside the industry's existing boundaries. This study analyzed the effect of market creation strategy on the performance of the insurance industry in Kenya with firm size as the moderating variable. Market creation was operationalised by resource accumulation, stakeholders networking and customer acquisition. The study was anchored on the new venture creation model and resource-based theory. The study employed a descriptive cross-sectional research design. The target population was 504 top and middle managers from all 56 insurance companies licensed by the insurance regulatory authority by year 2023. The study adopted a stratified random sampling technique, with a sample size of 218. Primary data was collected using semi- structured questionnaires. Secondary data was collected on return on assets (ROA), return on equity (ROE), customer satisfaction index (CSI), total sales and total assets and market share. Pearson’s correlation coefficient was used to indicate the direction of the relationship between variables. Simple regression analysis was used to explain the nature of the relationship between variables, the F-statistic was used to decide the suitability of the model and test hypothesis while R2 was used to determine the model's goodness of fit. The study findings indicated that the market creation strategy (MCS) had a positive statistical significance effect on the performance of the insurance industry (p<0.05). Firm size as a moderating variable had a positive significance effect on the relationship between market creation strategy and performance of the insurance industry (p<0.05). The study concluded that the market creation strategy contributed to industry performance. The study recommended the need for the firms to leverage on their resources and stakeholders’ collaborations in order to create new markets for improved performance.