Unlocking Stable Performance in Insurance Companies: Examining the Relationship Between Strategic Orientations, Legal Environment, and Stable Performance in Ethiopian Insurance industry

Nathenael Fentaw Ayele

SAGE Open, 2025, vol. 15, issue 3, 21582440251383065

Abstract: Empirical literature on the Ethiopian insurance sector has largely overlooked the impact of non-financial strategic orientations and the moderating effect of the legal environment on firm performance. This paper examines the impact of six orientations—customer focus, internal processes, learning, technology, diversification, and social and environmental issues—on stable performance. It investigates the moderating influence of the legal environment. With an explanatory design, information from 450 workers in 10 large Ethiopian insurance companies was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The Findings indicate that all six orientations were significant predictors of stable performance, accounting for 62.4% of its variance ( R 2  = .624), with internal processes being the most critical predictor (β = .253). The legal environment moderated the effect of customer orientation and social/environmental issues positively, but did not affect the relations for technology, diversification, and learning and development. Moreover, stable performance in Ethiopia’s insurance industry is a matter of an integrated strategy. As a supportive legal environment is hypothesized to enhance customer-oriented and social strategies, internal motivation, such as technology, presently seems to be less regulation-dependent. This work introduces a tested performance framework that expands the balanced scorecard, dynamic capabilities, and contingency frameworks to the insurance sector in an emerging economy.

Keywords: stable performance; insurance companies; customer orientation; internal process; sustainability; technology; and innovation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:15:y:2025:i:3:p:21582440251383065

DOI: 10.1177/21582440251383065

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