Transformative Capabilities: Does it play a Role in the Nexus Between Late Movers’ Strategies and Performance of Microfinance Banks in Kenya?

Microfinance banks have been critical players in enhancing financial deepening hence fostering socioeconomic development. Despite anchoring socioeconomic transformation and fostering societal wellbeing of households in Kenya, financial performance and sustainability of microfinance have been a concern to players in the industry. The study investigated the mediating effect of transformative capabilities in the nexus between late-mover strategies and the performance of Microfinance Banks. The anchoring theory was dynamic capability theory supported by the balanced scorecard model and theory of change. Positivism research philosophy was employed while integrating descriptive and explanatory research designs. The study population was 13 microfinance banks within Nairobi City County with a target population of 389-unit managers. The sample size was 197-unit managers. To select the sample size, both simple random sampling and stratified sampling were employed. Primary data was employed collected using semi-structured questionnaire. In ascertaining the reliability of the questionnaire, Cronbach's Alpha coefficient was adopted where a value of 0.7 and over indicated the tool is consistent. Validity was ascertained by using content, construct and face validity. Baron and Kenny techniques were employed to investigate mediating role of transformative capabilities on the association between late mover strategies and performance of microfinance banks. It was found out that transformative capabilities mediate the relationship between late movers' strategies and the performance of microfinance banks. The study recommends that mangers in charge of training should regularly organize in-service training, workshops, and seminars in collaboration with industry experts and regulatory bodies to strengthen employee competencies that are key in fostering performance.