Strategic Knowledge Management Capabilities and Organizational Performance of Investment Management Firms in Nairobi City County, Kenya

Abstract

Investment management firms are important players in the economy as they help individuals and organizations to grow their wealth, channeling funds into productive investments and supporting overall economic growth. However, in Kenya, Investment Management firms (IMFs) have continued to perform below the industry average despite the implementation of various policies aimed at enhancing sector effectiveness, largely due to challenges such as weak knowledge management practices, limited innovation, inadequate use of technology, and gaps in strategic decision-making. This study sought to examine the effect of Strategic Knowledge Management Capabilities on the organizational performance of IMFs in Nairobi City County, Kenya. Specifically, the study sought to investigate the effect of strategic knowledge acquisition capabilities, strategic knowledge storage capabilities, and strategic knowledge dissemination capabilities on organizational performance; and to assess the moderating effect of organizational culture on the effects of Strategic Knowledge Management Capabilities on organizational performance of Investment Management Firms in Nairobi County, Kenya. The study was anchored on the Resource-Based View. The supporting theories were the Dynamic Capabilities Theory, the Organizational Learning Theory, and the Institutional Theory. It adopted a descriptive and explanatory research design. The target population comprised IT managers, human resource managers, and operations managers in the 44 registered IMFs in Nairobi City County. A total of 132 respondents, comprising IT managers, human resource managers, and operations managers, formed the target population, and the study uses a census approach. Primary data was collected using structured questionnaires. The data were coded and analyzed using Statistical Package for Social Sciences (SPSS) v28. Descriptive statistics such as means, frequencies, and standard deviations were used to summarize the data, while inferential statistics, specifically Pearson correlation and multiple linear regression analysis, were used to test the effects of Strategic Knowledge Management Capabilities on organizational performance in Investment Management Firms. The findings showed that knowledge acquisition (β = 0.394, p = 0.001), storage (β = 0.231, p = 0.007), and dissemination (β = 0.268, p = 0.023) had positive and significant effects on performance. Organizational culture also had a significant moderating effect (β = 0.332, p = 0.003), indicating that a supportive culture enhances the impact of strategic knowledge management capabilities. It was concluded that strategic knowledge acquisition capabilities positively influence the performance of investment management firms in Nairobi City County. Regular benchmarking against top-performing firms contributes to sustained growth in market presence. Frequent environmental scanning leads to timely and responsive service, as firms adjust quickly to external developments. It was recommended that these firms should establish dedicated cross-functional knowledge governance committees tasked with periodically evaluating how knowledge is acquired, stored, and disseminated across operational units. These committees should consist of representatives from strategy, operations, compliance, and client services, and be empowered to propose firm-wide improvements. This structure would ensure that knowledge management practices remain aligned with organizational goals and are responsive to emerging performance gaps in areas such as service efficiency and client satisfaction. The Capital Markets Authority should introduce a regulatory requirement for all licensed investment management firms to submit an annual knowledge capability report, detailing strategies used to acquire, retain, and apply knowledge for performance improvement.