Effect of Strategy Implementation on Performance of Commercial Banks in Kenya

Abstract

The Banking Industry has experienced a rapid growth in terms of profits, deposits and revenues in the recent past (Central Bank of Kenya, 2012). This trend has triggered a lot of competition among commercial banks. To weather this competition and to stand out as successful Kenyan businesses, commercial banks, just like other public and private organizations have adopted strategic management. Successful implementation of strategies is vital to any organization. However transforming strategies into action is a far more complex and daunting task to most firms’ managements which has led to a high rate of failure in strategy implementation. The purpose of this study was to determine the effect of strategy implementation on performance of commercial banks in Kenya. The specific objectives of the study were to determine the effect of operationalization of strategy on performance of the banks and to determine the effect of institutionalization of strategy on performance of the banks. To achieve these objectives, the study adopted correlational research design. The target population was the forty three commercial banks in Kenya. Given the small number of commercial banks, a census study was conducted. The data gathered was analyzed using descriptive statistics such as percentages to summarize the data. Pearson’s correlation coefficient was used to determine the nature and strength of the relationship between strategy implementation and organizational performance. To determine the effect of strategy implementation on organizational performance, a multiple regression model was developed. The results reveal that there is a moderately strong relationship between strategy implementation and organizational performance. The researcher therefore recommends that for institutions to thrive and compete they must implement strategies effectively.

Keywords: Strategic management, strategy implementation, organizational, performance