Influence of Organizational Structure on Performance of Insurance Brokerage Firms in Kenya

Abstract

Organizational structure plays a critical role in shaping the performance and operational efficiency of insurance firms. This study examines the influence of organizational structure on the performance of insurance brokerage firms in Kenya, addressing a contextual research gap in the local insurance sector. Despite the sector’s significant contribution to the country’s GDP and its dominance in East Africa, Kenyan insurance firms continue to face challenges related to rigid and centralized structures, limiting their responsiveness to dynamic market needs. The study adopted a correlational research design targeting 170 registered insurance brokerage firms in Nairobi County. Using the Taro Yamane formula, a sample size of 119 respondents was selected through simple random sampling. Data was collected using structured questionnaires and analyzed using SPSS through descriptive and inferential statistics, with a regression model applied at a 0.05 significance level. Findings revealed a strong positive correlation (R = 0.715) between organizational structure and firm performance. The R Square of 0.512 indicated that organizational structure accounted for 51.2% of the variance in performance. The ANOVA results (F = 104.879, p = 0.000) confirmed the statistical significance of the regression model. The study concluded that organizational structure positively and significantly influences the performance of insurance brokerage firms in Nairobi County, leading to a rejection of the null hypothesis. The study recommends that brokerage firms adopt more flexible and responsive organizational structures that can adjust to market dynamics. Firms should also conduct regular strategic reviews and promote cross-functional teams to enhance internal coordination and overall performance within the competitive insurance market.