Does Strategic Orientation Mediate the Relationship Between Board Characteristics and Performance of Insurance Companies in Uganda?

Abstract

This study aimed to investigate the mediating effect of strategic orientation on the relationship between board characteristics and the performance of insurance companies in Uganda. Philosophically, the study applied positivism and utilized a cross-sectional descriptive survey. Data were collected through a structured questionnaire, administered to a census of 131 licensed companies by the Insurance Regulatory Authority (IRA) in Uganda. The companies were spread across the country, and 108 responses were received, resulting in a 74.7% response rate. The hypotheses were tested using simple linear regression analysis and path analysis to examine the mediating effect. The study’s findings suggest that strategic orientation has a statistically significant mediating effect on the relationship between board characteristics and performance. The results provide a contextual overview of the insurance industry in Uganda, highlighting the critical role of strategic orientations in enhancing the stellar performance of insurance companies. The study concludes that strategic orientation mediates the association between board characteristics and the organizational performance of insurance companies in Uganda. The mediating influence of strategic orientation on the relationship between board characteristics and organizational performance accounted for 57.0 percent of the variation in performance. This implies that companies leaning towards strategic orientations of analysis, futurity, proactiveness, defensiveness, and riskiness tend to achieve greater performance. However, it is noted that insurance companies in Uganda predominantly adopt a conservative approach (analysis and defensiveness) to strategy rather than an entrepreneurial approach (futurity, riskiness, pro-activeness, and aggressiveness). Despite this, the study suggests that this conservative approach can significantly positively affect organizational performance, considering that most insurance companies in Uganda align with these orientations. In light of the findings, the study recommends that insurance companies in Uganda should consider embracing the entrepreneurial approach to strategic orientation, with a particular emphasis on aggressiveness, to make a more substantial contribution to the Gross Domestic Product (GDP).