Impact of Operational Process Factors on Strategy Implementation in Microfinance Organisations in a Developing Country

This paper sets to explore management perceptions regarding the impact of operational process factors on strategy implementation in microfinance organisations in Kenya. Small and medium enterprises (SMEs) play a critical role in developing countries as a source of employment creation and a basis for industrialization. However, the sector receives inadequate financial support from commercial banks as it is considered to bear high risks and operational costs associate with lending small loan amounts. Microfinance organisations (MFOs) that serve this sector will need to expand their operations to increase their outreach to SMEs. Formulation and implementation of competitive strategies will enable MFOs to achieve growth and sustainability. Content, context and operational process factors appear to have a significance positive relationship to the level of strategy implementation. This paper is focusing on operational process factors impacting on strategy implementation and is part of a full study on the topic of strategy implementation in MFOs. Comprehensive literature review provided the theoretical framework for the study. Primary data were collected by means of a survey obtaining 300 self-administered questionnaires from managers in 135 MFOs in Kenya. The study revealed that the level of strategy implementation in MFOs in Kenya is moderate to high. This study has revealed that the operational process category of factors is more significant to the level of strategy implementation than content and context factors. Five operational process factors critical to strategy implementation include: operational planning and monitoring, management control systems, people-strategy fit, teamwork, and effective communication. Further, the level of strategy implementation has significance positive influence to MFOs’ financial sustainability and outreach. Practical guidelines are provided to assist MFOs in developing countries to improve the level of strategy implementation by focusing on operational process factors.

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