Pricing capability, regulatory intensity, and market competition as determinants of financial sustainability in private schools in Lusaka Province, Zambia

Abstract

Pricing capability and affordability management, together with the moderating influences of regulatory intensity and market competition, constitute theoretically important but empirically underexplored determinants of financial sustainability in private schools. This study investigates the direct influence of pricing capability and affordability management on financial sustainability, and the moderating roles of regulatory intensity and market competition on the financial sustainability of private schools in Lusaka Province, Zambia. Grounded in the Tuckman and Chang financial vulnerability model and Bowman's financial capacity framework, the study employed an explanatory sequential mixed-methods design (QUAN→qual). Quantitative data were collected from 272 valid survey questionnaire responses drawn from school owners, principals, bursars, and accountants at 594 registered private primary and secondary schools across the six districts of Lusaka Province, using two-stage stratified random sampling guided by Yamane's (1973) formula. Qualitative data were gathered through 15 purposively selected semi-structured telephone interviews conducted to theoretical saturation. A Financial Sustainability Index (FSI) was computed via Principal Component Analysis, with a mean FSI of 0.53 (SD = 0.202) reflecting moderate financial fragility across the sector. Pearson correlation analysis, supported by bias-corrected bootstrap estimation with 5,000 resamples, revealed a very weak and statistically insignificant direct relationship between pricing capability and affordability management and the FSI (r = -0.023; p = 0.702; BCa 95% CI: -0.14–0.11), indicating that H2 is not supported. The pricing items recorded neutral mean scores ranging from 2.88 to 3.00, reflecting widespread awareness of pricing imperatives without systematic strategic implementation. However, PROCESS Macro moderation analysis (Model 2; R² = 0.29; F(7,264) = 15.36; p < .001) revealed important contextual findings: market competition had significant positive direct effects on financial sustainability (B = 0.25; SE = 0.03; t = 9.96; p < .001), but regulatory intensity and market competition did not significantly moderate the pricing–sustainability relationship. Moderation analysis of other financial sustainability determinants revealed that market competition significantly amplified the effect of revenue diversification on financial sustainability, while both regulatory intensity and market competition significantly moderated the governance–sustainability relationship. Qualitative findings provided critical contextual explanation for the pricing null finding, with participants describing uniformly reactive, informally determined, and competitively benchmarked pricing practices that are fundamentally disconnected from institutional cost structures and strategic financial planning. The study makes original contributions by documenting the first empirical evidence of the pricing–sustainability null finding in Zambian private schools. This study concludes that by demonstrating important moderating boundary conditions imposed by regulatory and competitive environments across multiple financial sustainability determinants provides a rich qualitative account of the mechanisms through which these effects operate in practice. This study recommends that the Ministry of Education should assess the financial sustainability implications of the free education policy for the private school sector and develop complementary support mechanisms that reduce the competitive pressure on private schools to maintain fees below cost-adequate levels.