LINKING STRATEGIC MANAGEMENT PRACTICES TO ORGANIZATIONAL PERFORMANCE: INSIGHTS FROM TIER III COMMERCIAL BANKS IN NAIROBI CITY COUNTY, KENYA
LINKING STRATEGIC MANAGEMENT PRACTICES TO ORGANIZATIONAL PERFORMANCE: INSIGHTS FROM TIER III COMMERCIAL BANKS IN NAIROBI CITY COUNTY, KENYA
Alice Addy Gakumu - Master’s Student, Department of Business Administration, Kenyatta University, Kenya
Dr. Anne Muchemi (PhD) - Senior Lecturer, Department of Business Administration, Kenyatta University, Kenya
ABSTRACT
Commercial banks in Kenya have an important function in propelling the nation's economy, fostering business development by providing loans and enhancing financial inclusion. Nonetheless, recent statistical information reveals that many commercial banks are encountering various obstacles concerning their market share, profitability, turnaround time, and client satisfaction index. Therefore, this research explored the effect of strategic management practices on performance of commercial banks Tier III in Nairobi City County, Kenya. The study objectives were to assess the strategy formulation, strategy implementation, and monitoring and evaluation strategy effect on organizational performance of commercial banks Tier III in Nairobi City County, Kenya. The McKinsey 7-S Framework, balance scorecard model and resource-based view acted as the leading theories for the research. A descriptive research design was utilized for this research. Twenty-one Tier III commercial banks serve as the study's unit of analysis. A total of 147 employees at the managerial level constitute the observation unit. Stratified random sampling was utilized in selecting 105 participants as sample size. Semi-structured questionnaire was utilized in the research to gather primary data. The analysis of quantitative data made utilization of both descriptive statistics (percentages, frequencies, standard deviations, and mean) and inferential statistics (correlations and regression analyses). Charts and tables were utilized to exhibit the outcomes. The findings revealed that monitoring and evaluation recorded the strongest relationship with organizational performance (r = 0.714, p = 0.000), followed by strategy formulation (r = 0.649, p = 0.000), while strategy implementation demonstrated a moderate but significant relationship (r = 0.573, p = 0.000). These results confirm that all the study variables have a statistically significant effect on organizational performance at the 0.01 level of significance. The research concluded that strategy formulation, strategy implementation, and monitoring and evaluation are essential strategic management practices that collectively contribute to improved organizational performance of Tier III commercial banks. The study recommends that bank management should prioritize the institutionalization of robust monitoring frameworks, invest in capacity building for effective strategy execution, and promote inclusive and well-structured strategy formulation processes.
