Innovation Strategies and Financial Performance of Insurance Firms in Kenya: A Case of Sanlam Kenya PLC

Abstract

Purpose: The purpose of this study was to evaluate the effect of innovation strategies on the financial performance of Sanlam Kenya PLC and to assess the moderating effect of organizational culture on this relationship. The study specifically focused on three types of innovation strategies: product innovation, process innovation, and market innovation. Methodology: The research adopted a mixed-methods design anchored on the resource-based view, dynamic capabilities, open innovation, and institutional theory. The target population was 650 employees from the finance, marketing, innovation, and ICT departments at Sanlam Kenya PLC. Using Krejcie and Morgan’s sampling table, a sample of 242 respondents was selected through stratified and purposive sampling techniques. Quantitative data were analysed using SPSS Version 28, employing descriptive statistics (frequencies, means, and standard deviations) and inferential statistics (t-tests, ANOVA, and correlations) to test hypotheses. Qualitative data were analysed thematically to identify emerging patterns and insights that complemented the quantitative results. Findings: The study revealed that all three innovation strategies product, process, and market innovation had a significant positive effect on financial performance, measured by return on investment, return on assets, and revenue growth. Market innovation showed the strongest influence (R² = 0.367), followed by product innovation (R² = 0.137) and process innovation (R² = 0.123). Moreover, organizational culture was found to significantly moderate the relationship between innovation strategies and financial performance, with a higher explanatory power (R² = 0.846), indicating that culture enhances the effectiveness of innovation in driving performance. Unique Contribution to Theory, Practice and Policy: The study recommends that insurance firms, particularly Sanlam Kenya PLC, should prioritize market-driven innovation while strengthening their organizational culture to maximize the financial benefits of innovation strategies. Product and process innovations should be aligned with cultural values that encourage adaptability, creativity, and openness to change. Furthermore, the study suggests that future research be extended to other financial services sectors in Kenya, including banking and investment institutions, to validate and generalize the findings across the broader financial industry.