Abstract:
Firm performance is the ability of a firm to maintain a steady growth and high
profitability. This study aimed at analyzing the moderating effect of career development
on the relationship between dynamic capabilities and firm performance of Insurance
firms in Nairobi, Kenya. The specific objectives were; to examine the effect of
innovation capability on the performance of Insurance firms; to determine the effect of
quality service capability on the performance of Insurance firms; to establish the effect
technological knowledge capability on the performance of Insurance firms; to
determine the effect of learning culture capability on the performance of Insurance
firms; and to evaluate the moderating effect of career development on the relationship
between dynamic capability and performance of Insurance firms in Nairobi City. This
study was grounded on Resource Based View (RBV) theory, Dynamic Capability
theory (DCT), Service Quality model and Social Cognitive Theory (SCT). It adopted
explanatory research design and the target population was one hundred and sixty five
(165) top management personnel of 55 insurance firms operating in Nairobi. Since the
population involved was not so large, census was the best preferred method to have all
165 top managers involved in the study. Data collection was achieved by use of
questionnaire with closed ended questions. Data collection was carried out using a drop
and pick method. Data analysis involved both descriptive and inferential statistics. The
direct results indicated that innovation capability (β=.266, ρ=.00), quality service
capability (β=.322, ρ=.00), technical knowledge capability (β=.200, ρ=.01) were
positively statistically significant. Learning culture capability however was statistically
insignificant hence did not affect firm performance. The predictors explained 53.8% of
the variance on firm performance. The interaction between career development and
innovation capability (β=1.64, ρ=.050) was statistically significant implying that career
development moderates the relationship between innovation capability and firm
performance. However, the subsequent models with interaction terms did not
significantly improve the model's fit, indicating that the moderating effect of career
development was not substantial in explaining the relationship between dynamic
capabilities and organizational performance. This study recommended that Insurance
firms should prioritize the development of innovation capabilities, quality service
capability, and technical knowledge capability within their organizations. The findings
should also inform insurance policy as it regards innovation, quality service and
technical knowledge capabilities. Furthermore, the study extends literature on dynamic
capability, social cognitive and resource-based view theories and recommends further
studies in other contexts other than the insurance sector.