Influence of Strategic Management Capabilities on the Performance of Commercial Banks in Kenya

Abstract

The performance of commercial banks in the past decade has attracted substantial interest among development economists and academicians. This is because of the pivoted role commercial banks play in a country‟s growth and development .The purpose of the study was to investigate the influence of strategic management capabilities on the on performance of commercial banks in Kenya. The specific objectives of the study were To establish the influence of strategic management capability to envision on performance of commercial banks in Kenya; To examine the influence of strategic management capability to strategize on performance of commercial banks in Kenya; To evaluate the influence of strategic management capability to monitor on performance of commercial banks in Kenya; and to determine the influence of strategic management capability to evaluate on performance of commercial banks in Kenya and employed a descriptive cross sectional design. The total target population was 5432 employees in the head offices that is middle and senior level managers from 42 commercial banks in Kenya. A total of 358 respondents were used as the sample size for the study. The sample size was arrived at by use of random and stratified random sampling techniques. The data collected was then analyzed by both descriptive and inferential statistical tools. Being that the current study was dealing with the relationship study, the study therefore used regression model as a tool of analysis and the results generated were presented in form of tables. The results of this study is to benefit policy makers, managers, , researchers, consultants, scholars and trainers on the performance of commercial banks. The study found out that appropriate application of each of the four strategic management capabilities positively and significantly influence the performance of commercial banks in Kenya. Of the four strategic management capabilities, it was established that strategic management capability to evaluate has a strong positive relationship with the performance of commercial banks. The findings indicated that the evaluation processes is very important in the bank performances. It was also apparent that the various banks use different strategies in the evaluation of the level of achievement of the set targets. In addition, it was clear that, evaluation of performance assisted in attainment of set goals with most anks indicating that their bank usually conducted evaluation surveys to ascertain achievement of set goals. The key aspects of bank‟s capability to evaluate were response to market changes and dynamics, availability of corrective measures to address failures and communicating assessment results to stakeholders. The study found out that management capabilities to envision as a strategy allow for critical assessment of strategic planning. The study determined that most commercial banks have monitoring strategies to enable them seize the strategic initiatives and maintain a competitive edge in the market. The study concluded that effective strategic management capabilities have direct influence on the performance of commercial banks. The study recommended that commercial banks should continuously engage in creating visions and missions statements that spell their strategic focus in the future. The study recommends that commercial banks should plan on effective performance strategies to evaluate the achievement of performance targets. From the findings, the study concludes that appropriate application of strategic management capabilities and accurate response to market dynamics enhances the performance of commercial banks in Kenya.