Effect of Strategic Management Determinants on Growth of Commercial Banks in Kenya

Abstract

The purpose of this study was to investigate the effect of strategic management determinants on growth of commercial banks in Kenya. The study was guided by the following objectives: to establish the effect of strategic positioning on the growth of commercial banks; to find out the effect of leadership style on growth of commercial banks; to establish the effect of corporate social responsibility on the growth of commercial banks; to determine the effect of diversification of products on the growth of commercial banks and finally to determine the effect of strategic alliance on the growth of commercial banks in Kenya. Theories and literature on the same were reviewed and a conceptual framework developed to guide the study. The study adopted a quantitative research design and a cross-sectional survey design. The study population consisted of 39 commercial banks which were in operation during the time the study was conducted since 4 banks were not in operation. From each of the 39 banks five top managers and three other employees were used to collect primary data. Thus a total sample of 312 was used. Primary data was collected using self-administered questionnaires. The collected data was analyzed by use of SPSS software program version 23.Factor analysis was done to establish the strength of the variables. Descriptive statistics were done by use of the mean and standard deviation. Inferential statistics were also contacted using Karl Pearson’s correlation coefficient. A multiple regression model was adopted to test the relationship between the variables. Hypotheses testing was done using Karl Pearson’s correlation coefficient and multiple regression. All the variables were tested at 95% level of significance where the value of P was 0.05. Analyzed data was presented by the use of tables, and figures for the purpose of giving a pictorial view of the results. The study findings established that there was a significant effect of strategic positioning on growth of commercial banks in Kenya, there was a significant effect of leadership style on growth of commercial banks in Kenya, There was a significant effect of corporate social responsibility (CSR) on growth of commercial banks in Kenya, there was a significant effect of diversification of products on growth of commercial banks in Kenya and finally there was a significant effect of strategic alliance on growth of commercial banks in Kenya. The study adds to the available literature on effect of strategic management determinants on growth of commercial banks in Kenya. The study recommends the use of strategic positioning, leadership style, corporate social responsibility, diversification of products and strategic alliance for the growth of commercial banks to the bank managers and employees who are the market drivers entrusted with strategic management. The management of banks should train employees on new innovations in the banking sector in order to sharpen their skills and improve on growth of commercial banks. CBK the regulator should be firm on policies and regulations to address ethical issues and internal controls in the banking sector. The study recommends a further study on role of CSR on growth of other organizations in Kenya.