Strategic Determinants and Organizational Performance among Insurances Companies in Somalia

Abstract

The insurance industry in Somalia operates within a unique economic and social context, facing challenges and opportunities distinct from those in other regions. Understanding the strategic factors that drive organizational performance within this sector is crucial for enhancing efficiency, profitability, and sustainability. The study aimed to identify the strategic determinants affecting organizational performance among insurance companies in Somalia. Specifically, it sought to achieve the following objectives: to investigate how technological factors impact the performance of insurance companies in Somalia; to explore the effect of external environmental factors on these companies' performance; to assess the influence of government regulations on organizational performance; and to examine how different leadership styles affect organizational performance within the insurance sector in Somalia. The research incorporated theoretical frameworks such as Diffusion of Innovation, Open System Theory, and Transformational Leadership Styles Theory. The study focused on five insurance firms: Takaful Insurance of Africa, Umma Insurance Brokers, Amana Insurance, Baraka Insurance, and Som-Takaful Insurance, employing a descriptive research approach. Data collection involved 73 participants, including department heads, CEOs, and their assistants. Due to the small sample size, a census approach was used, with standardized questionnaires distributed to the selected individuals. Quantitative data analysis was performed using the Statistical Package for Social Sciences (SPSS), employing descriptive statistical methods such as frequency distribution tables and percentages. The study also utilized correlation and multiple regression analyses to explore the relationships among variables and the impact of strategic factors on organizational performance. To determine the significance of the model, F-tests and Analysis of Variance (ANOVA) were conducted with a 95 percent confidence level. The research adhered to ethical standards and concluded that several factors have a significant impact on the organizational performance of insurance companies in Somalia. Technological factors (β1 = 0.309, P = 0.005) positively impact effectiveness and efficiency. The external environment (β2 = 0.097, P = 0.003) affects performance, showing that adaptability to market trends and economic factors enhances outcomes. Government policies (β3 = 0.278, P = 0.008) are crucial, with favorable regulations improving operational effectiveness. Lastly, leadership styles (β4 = 0.210, P = .001) are key drivers, with effective leadership practices enhancing performance. These findings highlight the importance of technology, adaptability, supportive policies, and leadership in driving success. Based on findings, the study therefore concluded that external environmental factors, government policies, and leadership styles significantly influence organizational performance in Somalia's insurance sector. The study hence recommended that insurance companies in Somalia should prioritize continuous technological adoption, enhance adaptability to external factors, strengthen compliance with government policies, and foster effective leadership practices to improve organizational performance.