Strategic Factors Influencing Competitiveness of Commercial Banks In Kenya

Abstract

The problem of this study is that commercial banks face serious challenges which have resulted in failure of some banks. Commercial banks play a critical role in the well being of the Kenyan economy as well as any economy.This study aims at determining factors that influence competitiveness of commercial banks.Sustained competitiveness of commercial banks is of utmost importance in the well-being of the national economy. Competitiveness often represents business comparison and rivalry among firms for market share and/or the economic strength of a business entity relative to its competitors in the market. The researchsought to establish the influence of strategic leadership, strategic planning,strategic adoption of technology, strategic innovativeness and finally, the influence of strategic human resource competences on competitiveness of commercial banks in Kenya.To conceptualize competitiveness the study was guided by the following theories: Strategic Leadership Theory, Theory of Planning, Theory of Technology, Organization, and Environment, Industrial Organizational Theory and Resource-Based Theory. The study adopted a cross-sectional survey research design. The target population comprised of the 43 commercial banks in Kenya.The banking sector’s employees as at December 2015 were 36,212. The 43 commercial banks also served as the study’s unit of inquiry as well as units of analysis.The research used census method by collecting data from all the 43 commercial banks. The study mainly relied on primary data that was obtained by administering questionnaires and interview schedules to the respondents in the 43 banks.Secondary data was also used in this research, drawn from annual reports of the CBK and commercial banks. The collected data wasanalysed using SPSS software. Descriptive and inferential statistics were used to present the results. The main results of the study were that there was a positive and significant relationship between strategic leadership, strategic planning, and strategic adoption of technology, strategic innovativeness, strategic human resource competencies, and competitiveness of commercial banks in Kenya. It is therefore recommended that commercial banks should endeavor to build, on a continuous basis, their capabilities in strategic leadership, planning, innovativeness, technology and human resource competencies.To achieve competitiveness, managements of commercial banks should put in place effective and proactive leadership, strategic planning, adopt upto date technology,embrace innovativeness andensure they have a knowledgeable,skilfuland talented workforce. There is need for further research on what other factors influence competitiveness of commercial banks. Further research also needs to be undertaken on how the Central Bank of Kenya could enhance its oversight and regulatory mandate on commercial banks to ensure their long-term survival and stakeholder satisfaction.