AMANDA T MBAWA

Assessing the responsiveness of short-term insurers to the dynamic business

environment in Zimbabwe .

CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

This chapter will cover both theoretical and empirical literature for the study. It discloses
important issues which form the background of this study. The empirical literature will focus
on the past findings or studies on organizational responses to dynamic business environment.
It discusses both the conceptual and theoretical framework of this study. It addresses the
empirical evidence of previous studies on the area of strategic responses of organizations to
dynamic business environment. The purpose of the literature review is to convey to the reader
what knowledge and ideas have been established on a topic and what their strengths and
weaknesses are.

2.2 Theoretical Review

Over the years timeously responding to changes in the business environment has been a
major issue of discussion concerning how it contributes to the success of businesses. The
following theories were raised to address changing business environments.

2.2.1 Open Systems Approach Theory

System theory originated from biology, economics and engineering, which explores
principles and laws that can be generalized across various systems (Yoon and Kuchinke,
2005; Alter, 2007). Whether the organization’s internal systems are linked to the external
environment is what differentiates between a closed and open system. A closed system is
where an organization interacts with various internal components ignoring external
environment. It focuses on procures for monitoring outputs, comparison of outputs with pre-
set standards, evaluating discrepancies between actual output and pre-set standards and
mechanism of taking remedial action to rectify negative variances between actual and pre-set
standards (Brown, 1977). Effective closed system generally focuses on structures,
productivity, effectiveness, cost control, profitability and quality. Management focuses on
improving the internal operations. The closed system will eventually lose any competitive
advantage it may have enjoyed due to the focus on internal operations.

Open system realizes the importance of external environment and views internal operations in
relation to changing external environment. Open system is based on the premise that no
organization can survive for long if it ignores external factors like government regulations,
suppliers, or myriad external constituencies upon which it depends (Robbins, 2000: 606).
Open system approach is necessary since organizations do not operate in a stable and
predictable environment. Internal operations are evaluated against the changing external
environment. External factors impose new pressures and challenges, compelling the
organization to respond, conform, adapt and innovate. Appropriate responses to external
demands result to interactions that benefit the organization and the constituencies‟
organization serves.

According to Brown (1977) organization depends on the environment to receive inputs

which are transformed and supplied as output to benefit the environment. Open systems
theory suggests that an organization’s interface with its external environment need to be
viewed as an exchange relationship. Dill (1958) identified four factors in the environment
that are relevant for the organizational goal setting and achievement which include
customers, suppliers of labour, materials, capital ,regulatory group and competitors for both
market and resources. The systems theory therefore confirms that an organization to have
competitive advantage need to operate in an open system. In addition, appropriate responses
to changing dynamic business environment should be in place for the organization to adapt
and conform to the changing environment. Effective management is founded on open system
which enables an organization to succeed and survive in a turbulent environment.

2.2.2 Chaos Theory

According to, Levy, (1994) industries evolve in a dynamic way over time due to the complex
interactions that occur among industry players such as competitors, consumers and regulators
as well as other environmental elements. He cites Cartwright, (1991) who says the Chaos
Theory is a study of complex non-linear dynamic systems and is a useful framework for
reconciling unpredictability of industries with emerging distinctive patterns. Levy, (1994),
says that complexity of industry systems calls for the need for broad strategies while the
dynamic environment created by the evolving chaotic systems mandates that strategies must
adapt to change through change of a firm’s guidelines and decision rules. This aligns to the
views of Ansoff under the Strategic Management Theory where he talks about varying plans
in order to meet changing conditions in the market. Coming to the Zimbabwean market,
short-term insurers need not to be static in their decisions as well.

Chaos theory provides a useful theoretical framework for understanding the dynamic
evolution of industries and the complex interactions among industry actors. It is argued that
industries can be conceptualized and modelled as complex, dynamic systems, which exhibit
both unpredictability and underlying order. By understanding industries as complex systems,
managers can improve decision making and search for innovative solutions. The business
strategy chosen should allow the firm to best exploit its core competencies relative to
opportunities in the external environment.

Peters (1987), offers a strategy to help corporations deal with the uncertainty of competitive
markets through customer responsiveness, fast-paced innovation, empowering personnel, and
most importantly, learning to work within an environment of change. He asserts that we live
in a world turned upside down, and survival depends on embracing revolution. This means
that business strategies should be just in time supported by more investment in general
knowledge, a large skill repertoire, the ability to do a quick study, trust in intuitions, and
sophistication in cutting losses.

The dynamic capability approach focuses attention on the firm’s ability to renew its
resources in line with changes in its environment. These means that firms with greater
dynamic capabilities will outperform firms with smaller dynamic capabilities. Dynamic
capabilities help to understand how firms can create and sustain a competitive advantage over
other firms by responding to and creating environmental changes (Teece, 2007). According to
Helfat et al. (2007), a dynamic capability is “the capacity of an organization to purposefully
create, extend, and modify its resource base” (pg.4). The resource-based perspective
highlights the need for a fit between the external market context in which a company operates
and its internal capabilities.

2.3 Organization and Operating Environment

Amongst the contributors of organizational theory, there is no consensus on the basic

definition of environment. Over the past fifty years; researchers have used different
approaches to define this concept. Pioneer researchers in this field include Dill (1958),
Thompson (1967), and Duncan (1972). Dill (1958) introduced the idea of task environment,
and focused on the external environmental factors. The factors had an impact on
organizational goal settings. He stated that: task is cognitive formulation, consisting of goals
and usually also constraints on behaviours appropriate for reaching the goals. The work of
Thompson (1967) on organizational domain identified the area of potential dependency for
the organization and the dependencies include range of product, population served and
services rendered among others.

Most theorists caution that it is a mistake to emphasize one aspect of organizational design
over the others. Instead, organizational design, and reorganization as well, should be a
purposeful effort to balance all the factors in organizational performance. According to much
of the literature, the central purpose of organizations is to allow people to accomplish things
with others that they cannot accomplish individually (Drucker, 1946). A common desire
within a group to fulfil a collective purpose, even if for different individual reasons, leads to
the formal creation of an organization. Members of high performance organizations tend to
have shared purpose, values, and goals (Andrews, 1980).

An organizational mission statement or charter often captures these shared goals and values,
but their ultimate articulation is through the organization’s actions. In turn, values and goals
shape an organization’s strategy, which is the way an organization fulfils its purpose.
Strategy is based on the limitations and possibilities of the external environment and
available resources. Strategy can include organizational design, and should according to
much of the literature since done well; it can be a source of competitive advantage for the
organization (Barney, 1995).

Others researchers who discussed various aspects of organizational environment include

Lindsay and Rue (1980), Astley and Fomburn (1983), Dess and Beard (1984), and Walter
(2003), and Boyne and Meier (2009). Lindsay and Rue (1980) in their research attempted to
investigate the effects of organizational environment on long term planning. They assert that
organization tends to adopt the long term planning as the complexity and inability of the
business environment increases. Astley and Fomburn (1983) explain relationship between
environment and organizational autonomy. Their view was that organization is not
autonomous actor of its strategic choice as there are many external factors that compel the
organization to revise its strategic planning and implementation.
The environmental scanning enable organizations to understand the Political, Economic,
Social-cultural, Technological, Environmental and Legal forces (PESTEL) which are source
of environmental turbulence. According to Pearce and Robinson (2003) organizations to
achieve their objectives require adjustment to the environment. Scholes and Whittington
(2005) contend that organizations exist in the context of complex political, economic, social,
technological, environmental and legal factors. Pearce and Robinson (2007), states that the
direction and stability of political factors are a major consideration for managers when
formulating firm’s strategy. Political factors define the legal and regulatory parameters within
which the firms must operate. Political factors to be considered are tax policies, stability of
the government, entry mode regulations, social policies and trade regulations. This may place
strain on how a firm operates and may impact negatively on the firm’s performance. There
are political factors which benefit the firm such as patent laws and government subsidies.

Economic factors concern the nature and direction of the economy on which the firm
operates. According to Wachira (2010) economic factors has a direct impact on the potential
attractiveness of the various strategies. Scholes and Whittington (2005), identify business
cycles, GNP trends, money supply, interest rate, inflation, unemployment and disposable
income as being the significant factors affecting economic environment. Economic
environment influences the strategic choices of the organizations.

Social factors that affect an organization include population demographics, distribution of

wealth, changes in lifestyles and trends and Education levels. Like other factors in external
environment social factors are dynamic with constant change resulting in efforts of
individuals to satisfy their desires and needs by controlling and adapting to environmental
factors (Wachira (2010). According to Mwangi (2005), technological factors require
monitoring to ensure that a firm is not rendered obsolete in addition to promoting innovation.
Technological variables include new discoveries and innovations, rate of technological
advances and innovations, rate of technological obsolescence and new technological
platforms. According to Porter (2005), creative technological adaptations can suggest
possibilities for new products/services or improvement in existing products/services or in
manufacturing and marketing techniques.

2.4 Strategic Response and Dynamic Business Environment

Strategic responses are ways an organization ensures a fit into the changing environment.
Coping with an increasingly competitive environment has compelled firms to rethink their
marketing strategies (Pearce and Robinson, 2005). The days when firms could simply wait
for clients to beat a path to their doors are long gone. Organizations must realize that their
services and products, regardless of how good they are, simply do not sell themselves
(Kotler, 2000). According to Ansoff and McDonnell (1990), strategic responses involve
changes in the firm’s strategic behaviour to assure success in transforming future
environment. Pearce and Robinson (1997) defined strategic responses as the set of decisions
and actions that result in the formalization and implementation of plans designed to achieve a
firm’s objectives. Strategic management suggests that a successful firm’s strategy must be
favourably aligned with the external environment. According to Ansoff and McDonnell
(1990), strategic responses involve changes in the firm’s strategic behaviour to assure success
in transforming future environment.

A strategy is a long term plan of action designed to achieve particular goal most often
“winning” (Thompson et al, 2007). Strategy is a deliberate search for a plan of action that
will develop a business’s competitive advantage and compound it. For any company, the
search is an iterative process that begins with the cognition of where you are and what you
have now.

The overall objective of strategy is to create competitive advantage, so that the company can
outperform the competitors in order to have dominance over the market and guide the
company successfully through all changes in the environment. Johnson et al. (2005), defines
strategy as „the direction and scope of an organization over the long-term, which achieves
advantage in a changing environment through its configuration of resources with the aim of
fulfilling stakeholder expectations‟. In its determination of the long-term direction of an
organization, strategy involves the interplay of three elements: the organization’s external
environment, its resources and its objectives (in meeting the expectations of its stakeholders).

Forces in the business environment may act as either opportunities or threats for the business.
This implies that it is important or organizations to analyse and evaluate the underlying
sources of opportunities and formulate strategies to respond to competitive forces. Once
organizations face unfamiliar and changing business environments, they should revisit and
revise their operational strategies to match the turbulence and the unpredictable level (Ansoff
& McDonnell, 1990). Companies respond differently to the same environmental changes,
they respond with different strategies to the same opportunities (Greenstein, 2001). Strategic
responses involve large amounts of resources and decisions relating to them usually made at
corporate and business level (Byars, 1991). The Organization therefore, has to harness both
its intangible and tangible assets to maintain strategic fit in its environment and strategy.

Changing business environments influence how the business is performed. Adaptions made
to suit the firm in view of the turbulent and complex environments may be viewed as
strategic response. Effective strategic responses call for continuous scanning of both internal
and external environment in order to keep abreast of all environmental variables that
underpin current and future business operations of a firm (Thompson & Strickland, 2003).
According to Aosa (1992) firms have adapted to being „learning organization‟ in order to
effectively cope with the environment turbulence as failure to do so may jeopardize future
survival of these organizations.

Strategic responses call for change of strategy by organizations to match the environment.
Organizations are perceived as rational system and social mechanism designed for efficient
transformation of inputs to outputs (Scott, 1998). Meyer and Associates argued that
organizations are creatures of the environment, which is determined by or even more, the
technical and economic factors emphasized by use conventional theories. Organization being
environment dependent and serving must create a match that will results in exploitation of
opportunities and mitigating constraints provided by the external environment through its
capabilities. Strategic responses require firms to change their strategy to match the
environment and redesign their internal capacity to match this strategy (Grant, 2011).
Chandler (1965) asserts that structure follows strategy. The institutional theorists look at
structure as a main contributor to success of an organization. In case where the organization’s
strategy is not matched to its environment, this gives rise to strategy gap. The degrees to
which response are viable will also vary considerably depending on the region or country
involved. The implications of specific response will depend on its social, environmental and
economic context (Grant, 2011).

2.5 Empirical Reviews

Nakhoze, (2016) observed that the African continent is going through rapid socio-economic
transformation. In light of this he articulates that African insurers are now operating in
dynamic business environments that call for a diverse set of strategies in order to succeed and
stay relevant. Responding by capturing of opportunities arising from changing demographics
which create demand for new products and different distribution channels was now a key
factor in the growth of the industry. He also adds that insurers should seek positive responses
to growing threats posed by adverse circumstances such as climate change. The needs for
responsiveness through creation of a paradigm shift to create new ways of thinking that create
a more innovative and sustainable insurance sector was identified.

Studies conducted as highlighted above suggest a set of hypotheses that can be tested
empirically. The studies are consistent with results of past studies though their predictions
need to be investigated. Dynamic business environment has various variables which impact
organizations differently and strategic responses will also differ based on the context and the
timing. Most of the strategic responses studies have provided different approach adopted by
organizations in responding to the dynamic business environment. Ansoff and McDonell
(1990) contend that strategic responses involve changes to the organization behaviour and
may take many forms depending on the environment in which it operates.

According to a survey conducted by CGI, (2014) across the US, Canada and some parts of
Europe one of the top financial consumer wants is clients being rewarded for their business.
This means insurance clients being part of the financial clients want to be rewarded
accordingly for their spending irrespective of the challenges in the business environment.
And the same survey also found out that poor service is a major reason for 40% of clients
switching banks. Regardless of the business environment, clients want to be paid what is due
to them and in support of this Parasuraman, et al., (1991) point out that insurance clients
expect expertise and payment from insurers when there is claim.

Using the TOE framework, Zhu et al. (2004) found out that technological readiness was the
greatest factor in value creation for e-business and other factors like regulatory environment
were found to have a significant contribution towards the value of firms. Competition was
also found to be influencing the extent to which firms adapt to a changing environment of e-
business while they also concluded that regulatory environment also plays a major role in
developing countries like Zimbabwe. A look at these findings gave the researcher a clear
picture that organizations ought to adapt to the changing environment and it also brought out
some of the factors that may be influencing the responsiveness of Zimbabwean short-term
insurers. These factors include competition, technological strength and regulation and these
factors need not to be overlooked when one judges the responsiveness of short-term insurers
as some of them may be limiting factors.

Kaseke, (2012) found that use of plastic money has come as a form of convenience to
financial institution customers in Zimbabwe citing Singh, (2004) who postulates that
Information and Communication Technology (ICT) has increased the usage of electronic
money and transformed the way payments for goods and services are made. Balachadher, et
al., (2000) opines that e-commerce revolution has set in motion provision of payment
systems compatible with the demands of the electronic market place as financial institutions
seek to offer convenient and improved services to their clients through use of telephone
banking, personal computer banking, and internet banking.

Strategic response is not only unique in terms of the context but also the time frame.
Dynamic business environment manifests a continuous change that requires timely response
to assure survival and success of the organization. Ansoff and McDonnell (1990) observe that
organizations face unfamiliar and changing business environment and they should revisit and
revise their operational strategies to match the turbulence and the unpredictable level.
Organizations operating in a dynamic business environment cannot craft a 5-year strategy and
keep it in the self for implementation but requires conducting environmental scan to identify
new opportunities and threats and craft appropriate strategic responses.

Wairegi, (2004) as cited by Mutuku, (2014) found that life insurance companies in Kenya had
responded to the dynamic business environment through new products and distribution
channels as well as computerization of business processes. A study on Old Mutual Kenya by
Mutuku (2014) concluded that the firm was one of the most technologically advanced
companies being among the first insurance companies to integrate customer accounts with M-
PESA a mobile money transfer similar to Ecocash in Zimbabwe. These technological
developments give clients choice and convenience in terms of payment platforms, a move
which can help deal with cash crisis. Mutuku also states that the same company had adopted
online deposit platforms which is another way that firms can use among the payment
platforms they offer in this era where the economy is becoming cashless.

2.6 Research Gaps

The above studies suggest a set of hypotheses that may be tested empirically. Although these
studies are consistent with the results of past studies, their specific predictions need to be
investigated. As a metric for assessing environmental change impact on organization
strategies, we may look to the variable of perceived environmental uncertainty. Several
strategic responses studies have operationalized way of responding to the dynamic business
environment by measuring subjects' responses to changes in the environment.
The literature above is based on what was studied in other countries and it is important to
understand that the Zimbabwean market is unique as different changes in the business
environment occur at different times such that organizations ought to use different tactics in
responding to change to ensure survival. As a result of this there is therefore need for an
intense analysis of the responsiveness of Zimbabwean short-term insurers to the dynamic
business environment. Ansoff and McDonnell, (1990) as cited by Macharia, (2015) point out
that unfamiliar and changing business environments encountered by organizations call for
revisiting and revision of strategies to match turbulence and the unpredictable levels of
change. Most studies like Macharia, (2015) and Mutuku (2014) focused on responding to the
changes from an individual firm perspective and no research looking at the broad insurance
industry was identified. It is the goal of the researcher to help fill the gap through this
research.

Ansoff and McDonell (1990) note that strategic responses involve changes to the
organization behaviour such responses may take many forms depending on the environment
in which it operates. Mugabi (2003) revealed that tourist hotels responded to changes in the
environment by using restructuring, selective shrinking, marketing and cost management.
Mpungu (2005) found that AAR responded to changes in the environment by introducing
new products, restructuring and enhancing its technology.

Githii (2007) found that Rwathia group of businesses responded to changes in the
environment by price adjustments, modernization of their facilities, training, differentiation
and diversification. Wairegi (2004) found that life insurance companies responded through
such initiatives such as new product development, development of new distribution channels
such restructuring, investment in human resource development and computerization of the
core business process.

Smart, C & Vertinsky (2006) carried out a study on corporate responses to crises, this study
examined the relationship between the type of business environment in which the firm
operates and the repertoire of strategic responses the firm develops to cope with crises. The
findings suggest that an executive’s propensity to adopt a particular strategic posture depends
on his perceptions of how well his firm can control its environment and on the costs of
introducing change in the organization. Zajac and Kraaz (2007) in their study examined the
environmental and organizational forces, counter-forces, and performance consequences of
strategic restructuring in the higher education industry. The results suggest that contrary to
ecological predictions, restructuring is a predictable, common, and performance enhancing
response to changing environmental conditions.

2.7 Conclusion

This chapter looked at responding to change as defined from various theories where various
theories articulate various opinions about the relationship of an organization’s internal
environment to its external environment. The theories both had a similar point of
convergence which was to meet changes in the external environment through alignment of
the internal environment to these changes. It looked at how firms are supposed to match the
internal strengths and weaknesses to the external opportunities and threats so that at the end
firms create value. It also looked at documented evidence from past researches related to
insurers’ responsiveness to change in the business environment. The following chapter looks
at the research methodology that will be used in assessing the responsiveness of short-term
insurers to the dynamic business environment in Zimbabwe.

Broaden this LR. It is shallow. Be as comprehensive and exhaustive as possible. Each of your
objectives should be fully covered in the LR
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Introduction

Scotland, (2012) cites Crotty, (1998) who defines methodology as a strategy or plan of action
lying behind researchers choosing to use particular methods. Scotland, (2012) goes on to say
that it is concerned with answering questions like why, what, from where, when and how in
relation to data collection and analysis. In this chapter, the researcher introduces the
methodology that the study used to find how short-term insurers have been responsive to
changes in the dynamic business environment in Zimbabwe. In other words in this chapter,
the researcher describes the procedure undertaken in conducting the research. It has the
following structure; research design, population of study, data collection procedures,
instruments and data analysis methods applied in the study.

3.2 Research Design

The research adopted a case study design which is suitable in situations where questions such
as how, why and what are investigated on a certain phenomenon to give facts of the situation
as it is, without interference with by the researcher. This design is where background,
development, current conditions and environmental interactions of one or more individuals,
groups, communities, businesses or institutions is observed, recorded and analysed for stages
of patterns in relation to internal and external influences.

Research design points out what data is required, methods used for collection and analysis of
data as well as how that will answer the research problem. Atikiya et al. (2015) state that it
depicts a road map for collection, measurement and analysis of data. The study adopted a
descriptive survey research design through usage of questionnaires to collect data and
according to Kothari, (2008) as cited by Maina & Oloko, (2016) this is imperative to the
study as it ensures complete description of the situation, making sure that there is minimum
biasness in the collection of data. According to Dulock, (1993) descriptive research
determines the frequency with which something occurs and in this case the frequency with
which short-term insurers have responded to the dynamic business environment. Researchers
like Kaseke, (2012) also used the similar descriptive research design in investigating the
modes of payment used in Zimbabwe after the introduction of multi-currency. Kaseke,
(2012) also mentions that descriptive survey is suitable when seeking to extract opinions of
respondents on a specific topic and give descriptive analysis to the problem at hand. This
made the research design suitable for assessing the responsiveness of short-term insurers to
the dynamic business environment in Zimbabwe. A qualitative approach was used in
collecting non-numeric data that was then used to generate some numeric conclusions to
enable easy assessment.

3.3 Research philosophy

Saunders, et al (2009) state that research philosophy refers to the development of knowledge
adopted by researchers in their work, research strategy and methods used as part of that
strategy are crafted based on the assumptions of the researcher. There are two approaches that
exist concerning gathering and reporting of information and these are positivist (quantitative)
and phenomenological (qualitative). Scotland, (2012) states that the positivism philosophy is
also known as the scientific paradigm and he goes on to say positivists go into the world to
discover absolute knowledge about the objective reality. Here the researcher and the
researched are independent while under phenomenal it is argued that scientists cannot avoid
affecting those phenomena they study. Statements made positivism are descriptive and
factual with propositions founded on numerical data and facts that are turned into usable
statistics. On phenomenology, Scotland (2012) says it is interpretive in nature as it seeks to
understand a phenomenon from an individual’s perspective.

Under positivism, quantitative research methods such as experiments and surveys without
any explicit philosophical commitments used while phenomenology employs qualitative
methods such as unstructured interviews and participant observation (Bhattacherjee, 2012)

The research conducted was qualitative research because it enables the researcher to establish
an understanding of the responsiveness of short-term insurers to the dynamic business
environment. Haralambos & Holborn, (1996) stipulated that the approach gives a description
of the findings and is usually richer, more vital and has greater depth. The qualitative
approach also promoted more interactions between the respondents and the researcher as
compared to the quantitative approach through use of open-ended questions.

3.4 Research Strategy

Each research philosophy comes with a different set of research strategies. For the qualitative
research strategy chosen, there are surveys. A survey involves collection of data from a
sample of elements from a defined population using a questionnaire. Survey research as
defined by Check & Schutt, (2012) is the collection of information from a sample of
individuals through their responses to questions.

Advantages of a survey as a source of primary data as given by Creswell, (2014) include

confidentiality, efficiency, economic and easy administration. They enable an understanding
of what individuals do in this case strategies employed in dealing with the dynamic business
environment. The anonymity of survey studies promotes a high response from the
respondents to answer questions with a high degree of honest. In addition Kothari, (2009)
identified that surveys are both more efficient and economically well which helps in
understanding population opinions and attitude of respondents. The survey method tends to
be time conscious when carried out on a large population within a short period.

3.5 Target Population

According to Parahoo (1997:218) population is “the total number of units from which data
can be collected”, such as individuals, artifacts, events or organizations. Burns and Grove
(2003:213) population is all the elements that meet the criteria for inclusion in a study.

The population of study comprises of more than twenty (20) non-life insurance companies
registered and licensed by the Insurance and Pension Commission (IPEC) as the regulator in
Zimbabwe as at 31 March 2021. Given that the population of study is small, a census survey
was chosen where all members of the population will be considered for the research. The
population of study excluded those insurance companies that were suspended, delisted and
collapsed.

3.6 Research Instrument

This section determines the tools to use in collecting the data, which ranges from focus group
observations, discussions and interviews to questionnaires. The researcher used primary
sources of data to complete this study and a questionnaire was drafted.

3.6.1 Questionnaire

The questionnaire was the principal data collection method as it allows obtaining of
information in a short period. The study employed a direct collection of primary data through
questions that structured into both open and closed ended questions to cover issues of
responding to a dynamic business environment. The questionnaire is simply a form composed
to present questions about some attributes or relationships and provision for the respondent to
write his reactions to each statement or question (Nkwocha, 2009).

According to DeFranzo, (2014) closed questions have advantages which include being easy
and quick to answer, consistency of responses making them easy to compare and they are
easy, time efficient and less expensive to analyze. On the disadvantages these closed
questions give many options which can confuse respondents and they do not give information
on whether the respondents understood the questions. Open-ended questionnaire were chosen
to allow for gathering of respondents’ opinions in the form of categorical data regarding
certain aspects that cannot be covered by closed questionnaires.

Feverman (1997) as cited by Nyauncho and Nyamweya, (2015), points out that
questionnaires can be administered to a large number of correspondents simultaneously and
require fewer skills to administer. In addition it also helps the researcher to get responses
from different respondents concerning the variables considered by the researcher. The
questionnaires also make data analysis easier to the researcher after the research. Another
major demerit of the questionnaires is that they are normally bound to be lost in case the
respondent is given time to go and fill in the questionnaire at later time than immediately.

3.6.2 Questionnaire Construction

The researcher drafted standard questions and sent them to short-term insurance companies
for completion by managers. Relevant and easy to understand questions were used to gather
information relating to the responsiveness of short-term insurers to the dynamic business
environment in Zimbabwe. The questionnaire was divided into six sections with the first
section meant for capturing demographic data about the respondents, section 2, 3, 4 and 5
were divided among the research questions of this study and the last section was seeking
 general comments in relation to responding to the dynamic business environment from the
respondents’ perspective.

Parts of the questionnaires were drafted using Likert scale shown in Table 3.1 with response
categories such as ‘responsive and very responsive’. A Likert scale as defined by Nemoto &
Beglar, (2014) has multiple categories allowing respondents the choice of indicating their
opinions, attitudes as well as feelings about a particular issue. This type of questionnaire
allowed for easy coming up with conclusions with regard to the level of responsiveness by
short-term insurers to variables chosen for the purposes of this study.

Table 3.1: Likert Scale

Not Responsive Not Fair Responsive Very

at all Responsive Responsive

Since qualitative approach was used, open-ended questions were used to gather opinions of
respondents such that a deep understanding of the responsiveness of short-term insurers was
obtained. On the primary objective, only the Likert scale was used and on other objectives
categorical responses such as YES/NO was required from the respondents. These would then
be accompanied by open-ended questions prompting respondents to give reasons for their
response. This yielded a comprehensive understanding that helped the researcher in coming
up with concrete conclusions on interpreting the responsiveness of short-term insurers.
Closed questions enabled the researcher to quantify the results for comparisons and open-
ended questions helped to build justifications of the quantified results. Objectives were also
broken down into variables with various indicators used to broaden the set of questions.

3.7 Data Analysis

The qualitative data collected was analysed using content analysis technique. According to
Mugenda and Mugenda (2003) the main purpose of content analysis is to study the existing
information in order to determine factors that explain a specific phenomenon. According to
Kothari (2000), content analysis uses a set of categorization for making valid and replicable
inferences from data to their context.
The responses from different respondents were compared and summarized according to the
objectives of the study. Once the responses were received, the Interview Guide was edited for
completeness and consistency before processing. Thereafter, the data was coded to facilitate
categorization. The data collected on the strategic responses was analysed qualitatively on the
basis of the strategic variables highlighted.

On analyzing data, the Statistical Package for Social Science (SPSS) was used. SPSS
software version 20 was employed to analyze and present the data through the statistical tools
used for this study. According to IBM, (2017), SPSS is a statistical software used to solve
research problems through its range of techniques that make it easy to manage data, select
and perform analyses. These techniques include reporting, hypothesis testing and ad-hoc
analysis.

3.7.1 Descriptive analysis

Tables, frequency distributions and percentages were used to analyze the data to present the
descriptive statistical results. This was achieved through summary statistics, which includes
the mean values and percentages, which were computed for each variable in this study. The
results for each variable will be computed separately to see the overall responsiveness of
insurers as per objective of study. This enabled the researcher to identify the areas insurers
have been most responsive. Overall results from the entire secondary objectives were used to
conclude whether the primary objective was satisfied.

3.7.2 Chi-squared testing

This was used to determine whether there was an association between a set of selected
independent variables. Pearson (1900) say this is used to find the magnitude of discrepancy
from the hypotheses that is made based on observed frequencies. Obtained frequencies of the
selected variables of this study were compared to expected frequencies. SPSS was used to run
the tests for association at 5% level of significance between the level of responsiveness and
the trading period of short-term insurers. The other tests done were on the relationship
between the level of responsiveness and insistence on cash payments, adoption of micro
insurance and usage of Facebook in marketing respectively. The null hypothesis for each
category was that the level of responsiveness was independent from each of the selected
variables.

Rejection Criteria
The rejection criterion used for all the scenarios is as follows:

p≤0.05 (Reject Null Hypothesis [ H 0])

p˃0.05 (Accept Null Hypothesis) with p being the asymptotic significance value

3.8 Validity and Reliability

Reliability and Validity according to Tavakol and Dennick, (2011) are important concepts in
research as they are used for enhancing the accuracy of the assessment and evaluation of a
research work. Results should be valid and reliable to ensure accurate measurement.

3.8.1 Validity

According to Thatcher, (2010), this is the extent to which instruments chosen are able to
measure what they intend to measure thus results obtained should be a reflection of the
variables measured. Burton and Bartlett, (2005) describe validity as the truthfulness,
correctness of research because there is need for the researcher to portray the evidence used
to base research findings. Different measures of validity include face validity, content
validity, concurrent validity and criterion validity.

Face Validity as explained by Kumar, (2011) refers to what items of a questionnaire really
measure, rather than what the researcher wants it to measure. There should therefore be link
between each question on the questionnaire with an objective. During construction of the
research instrument for this study, the researcher took this into guidance and made sure that
all questions represented a direct link to the research objectives indicated through variables
and indicators.

3.8.2 Reliability

Reliability as given by Twycross and Shields, (2004) together with Burton and Bartlett,
(2005) is mainly concerned with consistency, stability and repeatability of results. It focuses
on minimization of errors. Identical situations must give consistent results regardless of being
in different circumstances. Kimberlin and Winterstein, (2008) give three types of reliability,
which are test-retest reliability which evaluates stability of measures administered at different
times, internal consistency which focusses on equivalence of sets of items from the same set,
and inter-rater reliability which establishes the equivalence of ratings obtained when the
instrument is used by different observers. On test-retest, standardized questions helped to
ensure that no deviations were encountered for measures administered at different times. Due
to time constraints, the researcher was not able to carry out a pilot study due to time
constraints. Supporting data with literature also helped to ensure reliability.

3.9 Limitations of the study

Limitations of this study were that the short-term insurance industry offered a small sample
size. This can be reduced if the sample size is increased like if the research were to be carried
out on the overall insurance market. The researcher encountered time constraints as the
research was carried out in a short space of time and financial constraints confined the
researcher to using less expensive data collection methods. Administration of the
questionnaire to companies without offices in Bulawayo was characterized by slow response
rate and the researcher was not able to distribute questionnaires to these through pick and
drop methods resulting in failure to attain a 100% response rate.

The research covered the entire short-term insurance market hence it may not necessarily
reflect the true position of each firm in terms of responsiveness to changes in the dynamic
business environment.

3.10 Conclusion

This chapter looked at the roadmap that was taken in the gathering of information for the
research. Primary qualitative data was collected through use of questionnaires and it was used
for analyzing results for the descriptive research chosen. It outlined the research design,
philosophy and strategy that were chosen giving justifications for the choices to use such
methods. The chapter also highlights the limitations of the study as well as ethical
considerations taken into account during the research. The researcher outlines how the results
were to be analyzed and interpreted. The following chapter presents the results from the data
that was collected.
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