THE RESOURCE CAPABILITIES-PERFORMANCE NEXUS: EMPIRICAL EVIDENCE FROM MICROFINANCE BANKS IN KENYA
THE RESOURCE CAPABILITIES-PERFORMANCE NEXUS: EMPIRICAL EVIDENCE FROM MICROFINANCE BANKS IN KENYA
Ann Mutave Peter - MBA Candidate, School of Business, Economics and Tourism, Kenyatta University, Kenya
Anne W. Muchemi (PhD) - Lecturer, School of Business, Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
Microfinance banks play a critical role in advancing financial inclusion and supporting economic development in Kenya, yet many continue to experience performance constraints reflected in operational inefficiencies, limited outreach, and declining profitability. These challenges underscore the need to examine how internal capability configurations can be leveraged to enhance organizational outcomes. This study therefore examined the influence of resource capabilities on the performance of microfinance banks in Kenya. Anchored on the resource-based view and dynamic capabilities theory, the study adopted an explanatory research design targeting managerial staff across licensed microfinance banks. A structured questionnaire was used to collect primary data from managers in key functional areas, including finance, operations, and human resource management. The instrument’s validity was established through expert evaluation, while reliability was confirmed using Cronbach’s alpha coefficients exceeding the acceptable threshold. Descriptive statistics were employed to summarize the data, and multiple linear regression analysis was used to determine the effect of resource capabilities on firm performance. The findings revealed that resource capabilities exert a significant positive influence on performance, indicating that the availability, allocation, and effective utilization of financial, human, and physical resources enhance operational efficiency, service delivery, and profitability. The results further demonstrate that microfinance banks with stronger resource bases are better positioned to respond to market dynamics, optimize internal processes, and sustain competitive advantage. The study recommends that management of microfinance banks prioritize strategic resource mobilization, strengthen resource allocation frameworks, and invest in capacity development to enhance performance outcomes. Strengthening resource capabilities provides a foundation for resilience and long-term sustainability in an increasingly competitive and regulated financial environment.
