Moderating Effect of Organizational Culture on the Relationship between Adaptive Leadership and Digital Transformation of Insurance Firms in Kenya

This study investigated the moderating effect of organizational culture on the relationship between adaptive leadership behaviors and digital transformation within Kenyan insurance firms, drawing on adaptive leadership framework and the Competing Values Framework (CVF). The research examined four cultural dimensions: clan, adhocracy, hierarchy, and market. Employing a positivist approach and descriptive research design, data was collected from 127 supervisors (63% response rate) across Kenya's 56 registered insurance firms, sampled from a target population of 392. Organizational culture was operationalized using CVF dimensions, adaptive leadership framework utilized Heifetz’s six adaptive leadership behaviors while digital transformation was measured by digital innovation, customer experience, and return on assets. Comprehensive statistical analyses, including correlation, chi-square tests, ANOVA, and ordinal logistic regression, revealed that organizational culture significantly moderates the relationship between adaptive leadership behaviors and digital transformation. The model incorporating organizational culture as a moderator demonstrated a substantial increase in predictive power (Nagelkerke R2=0.376) compared to the model without it (Nagelkerke R2=0.266). Furthermore, the effect of adaptive leadership behaviors on digital transformation was significantly attenuated with the introduction of organizational culture (β=−2.455, p<.05) compared to the initial estimate (β=−19.807, p<.05). These findings align with prior research emphasizing the role of externally focused cultures (adhocracy and market) in facilitating digital transformation. The study also confirms the presence of clan and hierarchical cultures within the Kenyan insurance industry and their potential impact on digital transformation. Future research should explore this framework's applicability in other industries to enhance generalizability.