School of Business and Economics
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Item Effect of Competitive Strategy on Financial Performance of Commercial Banks in Kenya. A Case Study of Nairobi County, Kenya(KeMU, 2023-08) Njue, Leonard MugendiCompetitive strategies are critical in the bank’s financial performance. The banks that have effective competitive strategy are likely to achieve better competitiveness in terms of financial and non-financial performance. The study sought to determine the effect of competitive strategy on the financial performance of commercial banks in Nairobi County Kenya. The specific objectives were; to determine the effects of product differentiation strategy on the financial performance of commercial banks in in Nairobi County Kenya, to establish the effect of innovation strategy on the financial performance of commercial banks in Nairobi County Kenya; to analyze the effect of the post-COVID-19 recovery strategy on the financial performance of commercial banks in Nairobi County Kenya; and to establish the effect of human capital strategy on the financial performance of commercial banks in in Nairobi County Kenya. The study was guided by porter's generic competitive strategies theory resource-based theory, knowledge-based view, and agency theory. The study adopted a cross-sectional survey design, targeting the branch managers of licensed commercial banks operating in Nairobi County. A total of 564 banking branch managers were targeted. A sample of 234 branch managers were selected using random sampling. Data was collected using an online questionnaire administered through the Qualtrics survey portal. The data was analyzed using Statistical Package for the Social Sciences version 29. The data was presented in tables and graphs. The pilot study was conducted in Murang’a County, using 20 branch managers in commercial banks. The ordinal logistic regression was used to analyze the relationship between the variables. The result of the regression indicated a positive statistical relationship between product differentiation, COVID-19 recovery strategy, human capital strategy and innovation on financial performance. It was also established that the overall competitive strategy had a statistically significant effect on the bank’s financial performance. It is recommended that the banks should establish strategies aimed at improving the product quality and review strategies to improve product quality to meet the customers’ expectations and focusing on refinancing and restructuring of loans to assist the customers who are unable to pay the loans on time due to the financial challenges. The recommendation for future research includes using the qualitative approach, comparative analysis across different regions in Kenya and using the longitudinal approach.Item Innovation Orientation and Firm Performance: The Role of Organizational Commitment among Commercial Banks in Meru County, Kenya(KeMU, 2023-08) Kamau, AnnOrganizations have come to the realization of the important role played by employees in creating and sustaining competitive advantage and in that regard, strive to maintain a committed workforce. The research sought to better understand how organizational commitment influences both innovation orientation and commercial banks' performance in Meru County. Specific objectives included determining: influence of innovation orientation on performance; organizational commitment’s effect on innovation orientation; organizational commitment’s effect on performance; and the mediating effect of organizational commitment between innovation orientation and performance. The study's components were derived using three theoretical frameworks: resource-based theory, social exchange theory, and social technical theory. The study used cross-sectional descriptive design and target population was 261 workers from all commercial banks in Meru Town. The simple random sampling procedure was used to choose 158 employees as the sample size. Questionnaires were used to collect data. Reliability analysis was done using Cronbach alpha coefficient. The validity of the instrument was measured using content validity test. Descriptive statistics including mean, standard deviation and proportions were used to examine the data. Linear regression model showed the sequential relationship between variables at various stages of mediation test. Statistical tests including t-test and F-test formed the basis of testing the formulated hypotheses. Findings indicated that innovation orientation had a favorable and substantial influence on firm performance (β=0.59, p<0.05); and organizational commitment had a favorable and substantial influence on firm performance (β=0.189, p<0.05). Further, results showed that when combined, innovation orientation (β=0.589, p<0.05) and organizational commitment (β=0.187, p<0.05) had a favorable and substantial influence on firm performance. However, innovation orientation (p>0.05) had no substantial influence on organizational commitment. The study came to the conclusion that organizational commitment did not significantly mediate the relationship between innovation orientation and output of commercial banks since the second condition of mediation was broken. The study advised bank management to improve their initiatives to promote innovation. The programs should specifically focus on key aspects including employee innovativeness, customer, competitor and markets information innovation. The bank management should also strengthen their organizational commitment policy. The key areas to be streamlined include affective, normative and continuance commitment. Further, the bank management should develop programs and systems that can link innovation orientation and organizational commitment. These aspects when properly combined have the potential to enhance overall firm performance. The study significantly advances theory, practice, and policy in the area of corporate managemenItem Effect of Restructuring on Financial Performance of Commercial Banks in Meru County, Kenya(KeMU, 2023-08) Jepleting, Kipkorir JanetBanking industry is section of financial sector. Its role in economy development cannot be overemphasized. Globally, it facilitates financial intermediation process. In Africa however, the commercial banks have been decreasing owing to tightening regulations, mergers, acquisitions, liquidations and collapses. On the same vein, profitability trend of commercial banks in Kenya have been fluctuating for the past eight years .This could be linked to raising inflationary pressure, emerging risks, concerns of public debt sustainability, fragile economic recovery among others. However, in an effort to enhance performance, commercial banks have been restructuring but it is not clear which restructuring strategy is most successful in doing so. The subject study therefore sought to examine effect of restructuring on financial performance of commercial banks in Meru County. It assessed the effect of technology adoption, downsizing of employees, business process reengineering and outsourcing on financial performance of commercial banks. The study was anchored on financial intermediation theory, resource-based view, technology adoption model and transaction cost theory. It employed descriptive research design, target population of sixty branch management staff and adopted census approach. It made use of structured questionnaire which was reliable for use in actual data collection since Cronbach's Alpha coefficient for each variable was greater than 0.7. The content validity of the questionnaire was enhanced by ensuring questions were formulated based on the objectives. Criterion validity was utilized to test how well results were relevant to measuring the effect of restructuring on financial performance. Additionally, it utilized both qualitative and quantitative data. Pilot testing was carried out in Fina Bank, Nanyuki branch, Laikipia County and Ecobank Kenya Karatina branch, Nyeri County to enhance reliability of questionnaire. Data was coded using SPSS and analyzed using descriptive statistic correlation and multiple regressions. Further, it was presented using charts and tables. The study discovered that downsizing, technology adoption, outsourcing and BPR positively and significantly affected the financial accomplishments of commercial banks in Meru County. The study concluded that downsizing of employees constructively and significantly influenced financial achievements of commercial banks. In addition, technology adoption is essential on financial performance of commercial banks. Likewise, outsourcing of services positively and significantly influenced fiscal performance of commercial banks. Furthermore, it was inferred that BPR enhanced financial accomplishments of commercial banks. Therefore, the study recommended that commercial banks should establish training programs to boost morale and instill commitment spirit among the employees left behind after downsizing process. In addition, they should employ entertaining language to capture the potential market available in social media. They should also outsource services that are expensive to nurture and has declining function. Last but not least, future researchers should consider exploring impact of innovation related risks on financial performance of commercial banks; challenges and opportunities posed by outsourced fintech services on financial performance goals of commercial banks; relationship in between BPR, organizational culture and organization performance. Eventually, the study may be replicated by future researcher in savings and credit societies in Kenya to establish whether the results realized would holdItem Effects of Strategic Innovation on Performance of Commercial Banks in Kenya (A Survey of Tier I Commercial Banks In Nairobi County)(KeMU, 2022-08) Peter, Mburu Ng’ang’aBanking industry in Kenya experience a very stiff completion which sees banks outdoing each other in terms of end products, employee’s retention, their service delivery among other products. When it comes to new technologies like mobile banking, online banking, and mobile application use, Kenya's top-tier commercial banks have been the pioneers. There is still a scarcity of academic research into how strategic innovation affects the performance of Kenya's tier-one commercial banks. Against this backdrop, the present study on how tier one commercial banks in Kenya are affected by strategic innovation market innovation strategies; and product innovation examine the effect of innovation strategies process. Kenya’s tier one commercial banks performance; on innovation strategies assess technology innovation strategies effects on theory performance. This research adopted descriptive survey research design. The intended audience included 494 junior, middle, and senior managers from the 8 largest commercial banks in the country. The sample size of 221 was obtained by a stratified random sampling procedure. Primary data was gathered by administering questionnaires to top-level managers at Nairobi's commercial banks. But for the years 2014-2019, secondary information was gathered from sources including financial reports and scholarly journals. Statistics such as percentages, frequencies, means, and standard deviations were applied. Correlation analysis and regression determined how the two variable relate with each other. Tables were used to for data presentation. According to the study, when market innovation strategies were increased tier one banks performance recorded was a 0.190 when all the variables remained the same. The variable was significant since 0.000<0.05. Research also showed that, while controlling for other factors, a 0.32% improvement in performance was shown among Kenya's top commercial banks when product innovation tactics were boosted. As 0.000 is less than 0.05, this variable was statistically significant. In addition, the study found that the performance scores of Kenya's top commercial banks rose by 0.264 points for every unit of process innovation methods that was implemented. The procedure for developing innovative methods yielded statistically significant results (p0.00005). To sum up, it was clear that the performance score of Kenya's top commercial banks increased by 0.076 points when the unit score for their technology innovation initiatives was raised by one point. A p-value of 0.087 or lower indicates that this variable is not statistically significant. Product innovation initiatives were found to have the biggest impact on the performance of Kenya's top commercial banks. The next was process innovation strategies, market innovation strategies followed. Performance of tier one commercial banks was minimally affected by technology innovation strategies. This study recommended that Central Bank which is the banks regulator to ensures tier one commercial banks strongly implement innovations for productivity, increase the number of their products, change and improve their products, create awareness and position all their brands. This will enhance growth, improve on investments and more revenue will be accumulated.