IMPACT OF DISRUPTIVE TECHNOLOGY ON THE PERFORMANCE OF INSURANCE FIRMS IN KENYA
DOI:
https://doi.org/10.47672/jsm.367Keywords:
Disruptive technology, performance, insurance firms.Abstract
Purpose: The purpose of this paper was to explore the impact of disruptive technology on the performance of insurance firms in Kenya.
Methods: The study utilized desktop literature review and focused on previously published journals in PDF format that address technology and the performance of insurance firms. A total of 13 journals was found relating to technology and the performance of insurance firms. The study utilized a sample of 12 journals which were randomly selected from a list of published journals in PDF format relating to disruptive technology and performance of insurance firms. The theories underpinning of the study entailed Christensen's Theory of Disruptive Technology, the Diffusion of Innovation Theory and Schumpeterian Theory of Creative Destruction.
Results: The review of literature revealed that various aspects of disruptive technology have a significant impact on organizational performance. The review showed that mobile phone technology has a significant influence and explains to a large extent the growth of micro insurance in Kenya. It was also found that the increase in industrial convergence, technological innovation and social digital trends increases the financial performance of financial institutions including insurance firms. The study also established that there is a strong and positive relationship between insurance innovation strategies and a firm’s performance. In addition, it was found out that real-time business evaluation through big data analytics boosts overall performance and profitability, thus thrusting the organization further into the growth cycle.
Unique Contribution to theory, practice and policy: The leadership and management of insurance companies should put greater emphasis on the adoption of disruptive technologies to improve on both financial and non-financial performance as well as their competitiveness within the industry. These include Big Data, Analytics, Artificial Intelligence Systems, Cloud Computing and Digital Currency Technologies. Processes in the organizations should be refined to ensure that they are efficient and effective as this serves to increase market share and to reduce on operational costs. Moreover, explorations in disruptive technology should continue in the insurance industry as these would play a significant role in ensuring that efficiencies and effectiveness of business processes are achieved. The Insurance Regulatory Authority (IRA) should also develop policies that encourage innovation and the adoption of technology. The authority whilst exercising due diligence in its mandate to protect consumers should ensure policies do not stifle the growth and creativity of insurers. The regulatory body should also strive to create a favourable environment for the adoption of disruptive technologies.
Downloads
References
Agarwal, R., & Prasad, J. (1998). The antecedents and consequents of user perceptions in information technology adoption. Decision support systems, 22(1), 15-29.
Anderson, P., & Tushman, M. L. (1990). Technological discontinuities and dominant designs: A cyclical model of technological change. Administrative science quarterly, 604-633.
Anthony, S. D. (2004). A diagnostic for disruptive innovation. Boston. Harvard Business School Press
Aoko, L. (2017). Effect Of Digital Disruption On The Financial Performance Of Commercial Banks In Kenya: A Case Of Ecobank Bank Kenya Limited (Doctoral dissertation).
Association of Kenya Insurers Report [AKI], 2014
Bissessar, S. (2016). Opportunities and risks associated with the advent of digital currency in the Caribbean.
Charumathi, B. (2012). On the Determinants of Profitability of Indian life insurers–an Empirical Study. In Proceedings of the World Congress on Engineering (Vol. 1, No. 2, pp. 4-6). London.
Christensen, C. M. (1997). The innovators’ dilemma: When new technologies cause great firms to fail (Boston: Harvard Business School).
Christensen, C. M. (2001). Competitive advantage. MIT Sloan Management Review, 42(2), 105-109.
Christensen, C. M., & Bower, J. L. (1996). Customer power, strategic investment, and the failure of leading firms. Strategic management journal, 197-218.
Christensen, C., & Raynor, M. (2013). The innovator's solution: Creating and sustaining successful growth. Harvard Business Review Press
Didier, B., & Olsson, C. (2011). Microinsurance and the importance of an inclusive approach in service innovation.
Gikonyo, T. C. (2014). The effect of mobile phone technology on the growth of micro insurance in Kenya. University of Nairobi, MBA project, unpublished.
Gitau, B.N. (2013). Strategies adopted by Kenyan Insurance companies to Alleviate low Insurance penetration. Nairobi: Kenyan Insurance companies.
Govindarajan, V., & Kopalle, P. K. (2006). The usefulness of measuring disruptiveness of innovations ex post in making ex ante predictions. Journal of product innovation management, 23(1), 12-18.
Habtay, S. R., &Holemen, M. (2012). From disruptive technology to disruptive business model innovation: In need for an integrated conceptual framework. Creativity and Innovation Management. Forthcoming.
Hill, C. W., & Rothaermel, F. T. (2003). The performance of incumbent firms in the face of radical technological innovation. Academy of Management Review, 28(2), 257-274.
Kassicieh, S. K., (2002). Factors differentiating the commercialization of disruptive and sustaining technologies. IEEE transactions on engineering management, 49(4), 375-387.
King, A. A., & Baatartogtokh, B. (2015). How useful is the theory of disruptive innovation?.MIT Sloan Management Review, 57(1), 77.
Kiraka, R., Kobia, J., & Katwalo, P. (2013). Micro, Small and Medium Enterprise Growth and Innovation in Kenya: A case study on Women Enterprise Fund. Investment Climate and Business Environment Research Fund Report.
Kruger, J. P. (2010). A study of strategic intelligence as a strategic management tool in the long-term insurance industry in South Africa (Doctoral dissertation).
Downloads
Published
How to Cite
Issue
Section
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work’s authorship and initial publication in this journal.
