Differentiation Strategy Implementation and Organizational Performance of Financial Technology Firms in Kenya

Financial technology companies are inadequately prepared to address the challenges posed by disruptions, competition from larger, more established entities, and globalization, resulting in widespread difficulties in performance. The purpose of this study was to examine the influence of differentiation strategy implementation on organizational performance of financial technology firms in Kenya. The research was based on strategic-fit theory, applied a positivist research philosophy and a descriptive survey research methodology. The research population included 120 financial technology enterprises in Kenya, from which primary data was obtained using a structured questionnaire administered to a sample of 276 managers across 92 firms. Descriptive and inferential statistics were used to analyze the acquired data. The results indicated that that implementation of differentiation strategy has a significant effect on organizational performance of financial technology firms in Kenya (β = 0.648, t = 13.112, p < 0.05). The research concluded that the implementation of differentiation strategy enhances the organizational performance of fintech firms. The study recommends that fintech companies should foster an environment that encourages creative problem-solving and continuous improvement by providing employees with necessary resources and incentives to innovate, and integrating advanced data analytics. The study also recommends to policymakers to support a regulatory framework that encourages fintech firms to pursue differentiation strategies. This includes expanding the Central Bank of Kenya’s regulatory sandbox to include more fintech segments and shortening product approval cycles and increase transparency on sandbox selection criteria.