Organization Culture, Strategy Operationalisation and Performance of Commercial Banks in Kenya

Abstract

Given the highly competitive banking sector, banks must design, adopt and successfully implement superior strategies. Successful implementation of strategies remains a challenging task to organizations. While empirical literature indicates that a relationship exist between organizational culture and organization performance, there is insufficient research on how strategy operationalisation affects this relationship. The purpose of this study was to examine the mediating effect of strategy operationalisation on the relationship between organization culture and bank performance. The purpose of this study was to assess the relationship between organisational culture and performance and to examine the effect of strategy operationalisation on the relationship between culture and performance of commercial banks in Kenya. While, Trompenaar’s organisational culture framework comprising incubator, Eiffel tower family and guided missile culture was used to underpin organisational culture, the balanced scorecard framework was used in to measure performance. A descriptive census survey was conducted using structured questionnaire to collect primary data from three employees from each of the 43 commercial banks in Kenya. Secondary data was collected from the banks records and from the Central Bank of Kenya reports. Descriptive statistics were used to assess the status of organisational culture type, strategy operationalisation and performance of the banks while the relationship between these variables was studied using correlation analysis. Further, multiple linear regression and the Baron and Kenny’s procedure for mediation were used to respectively test direct effects of culture on performance and the mediation effect of strategy operationalisation on the relationship between organisational culture and performance. The findings were that 64% (R2 = 0.674, F = 21.894, p < 0.05) of variations in banks performance (Return on assets) was explained by the organisational culture. There was also significant mediation of the relationship the between bank culture and performance. Guided missile culture had the most significant influence on performance of banks at p < 0.001 < 0.05. Based on these findings, it is recommended that banks develop a culture that is task oriented, and which support organization communication. Further strategy operationalisation should be strengthened because it significantly mediated the relationship n between organisational culture and bank performance.