Strategic Resilience and Organizational Performance of Deposit Taking Microfinance Institutions in Nairobi City County, Kenya

Abstract

Deposit-Taking Microfinance Institutions (DT-MFIs) in Kenya play a pivotal role in extending financial services to low-income populations, small enterprises, and rural communities, yet they continue to face challenges related to profitability, operational inefficiencies, and customer satisfaction. Against this backdrop, the present study sought to examine the effect of strategic resilience on the organizational performance of Deposit-Taking Microfinance Institutions operating in Nairobi City County, Kenya. The objectives of this study were to: Assess the effect of risk management on organizational performance of Deposit Taking Microfinance Institutions in Nairobi City County, Kenya; investigate the effect of agile leadership on organizational performance of Deposit Taking Microfinance Institutions in Nairobi City County, Kenya; assess the effect of contingency planning on organizational performance of Deposit Taking Microfinance Institutions in Nairobi City County, Kenya; establish the effect of organizational learning on organizational performance of Deposit Taking Microfinance Institutions in Nairobi City County, Kenya; and examine the moderating effect of industry regulations regulatory framework on the relationship between strategic resilience and organizational performance of Deposit Taking Microfinance Institutions in Nairobi City County, Kenya. The study was underpinned by several theoretical perspectives, including Dynamic Capabilities Theory (as the anchor theory), Resilience Engineering Theory, Balanced Scorecard Framework AND Institutional Theory. Methodologically, the study employed a descriptive and explanatory research design. The population of interest comprised all 12 Deposit-Taking Microfinance Institutions in Nairobi City County licensed and regulated by the Central Bank of Kenya (CBK). From a target population of 282 top and middle-level managers, a census of all 282 top and middle-level managers will be studied. Primary data were collected using a structured questionnaire. Findings showed that all four strategic resilience practices significantly influenced DT-MFI performance. Risk management was positively related to performance (R² = .296; β = .544; p < .05), agile leadership was also significant (R² = .258; β = .508; p < .05), contingency planning emerged as the strongest predictor (R² = .389; β = .624; p < .05), indicating that continuity plans, recovery drills, and ICT redundancies materially improve service reliability and competitiveness. Organizational learning showed the strongest association (r = .714) and explained 35.2% of performance variance (R² = .352; β = .593; p < .05), underscoring the value of knowledge sharing, training, and lessons learned for long-term performance. The regulatory framework had a direct positive effect (β = .519; p < .05) but did not significantly moderate the resilience–performance relationship. The study concludes that strategic resilience practices are critical drivers of DT-MFI performance, with contingency planning and organizational learning being particularly dominant. It recommends that DT-MFI management reinforce risk and credit controls, invest in agile leadership capacity, conduct regular continuity drills, and institutionalize organizational learning. Regulators should streamline compliance and support resilience capacity-building, while industry associations should promote sector-wide training and benchmarking. The study contributes by contextualizing resilience within Kenyan DT-MFIs and clarifying the additive role of regulation, while suggesting future research on digital resilience, cross-county comparisons, and longitudinal analyses.