Organizational Culture and Performance: Evidence From Microfinance Institutions in Kenya

Abstract

The study aimed at determining the influence of organizational culture on the performance of microfinance institutions in Kenya. A descriptive cross-sectional survey design was adopted. Secondary data were collected from annual reports by the Association of Microfinance Institutions in Kenya and the Microfinance Rating Africa. Primary data were collected using structured questionnaire targeting the chief executive officer, human resource manager, and marketing manager. Data were analyzed using factor analysis and hierarchical regression. Our analysis identifies clan and hierarchy as the dominant cultural typologies in the microfinance industry. The results obtained demonstrate that organizational culture has a significant influence on non market performance. In addition, market culture is inversely associated with debt/equity ratio. We conclude that organizational culture is a major source of sustainable competitive advantage in the microfinance industry. Furthermore, we conclude that market culture promotes financial independence and sustainability in the long term.