Effect of Organisational Culture on Organisational Performance: A Case of Commercial Banks in Nairobi County, Kenya

Abstract

Banking, like any other industry, has a basic structure or a set of principal economic and technical characteristics which contribute to competitive forces. In the current turbulent business environment, organisational culture is a key player in providing the glue that binds several parts of the organisation together towards attaining the desired goal. The study aimed to determine the effect of organisational culture (organisation’s mission, consistency, adaptability and employee involvement) on the organisational performance of commercial banks in Nairobi County, Kenya. The study was based on Dynamic Capability and Resource-Based View Theories. This study used a cross-sectional research design. A Census sampling technique was used to select the target population of 43 commercial banks. The respondents were the Operations Managers based at the headquarters of each of the 43 commercial banks. Primary data was collected using questionnaires. The data were processed using the Statistical Package for Social Sciences (SPSS). Data were analysed using descriptive and inferential statistics. Descriptive statistics were in the form of means and standard deviations, while inferential statistics, namely, Pearson Correlation analysis and multiple regression analysis. Multiple linear regression analysis was used to test the study hypotheses at a 0.05 significance level. The results were presented using tables. The results of Pearson’s correlations analysis showed that the organisation’s mission (r = 0.379, p < 0.05), consistency (r = 0.487, p < 0.05) and employee involvement (r = 0.705, p < 0.05) had a positive significant association with organisational performance while adaptability (r = 0.260, p > 0.05) had an insignificant positive association with organisational performance of commercial banks. The multiple linear regression analysis results revealed that organisational culture (organisational mission, consistency, adaptability, and employee involvement) was a significant predictor of the organisation performance of commercial banks (F = 10.685, p < 0.05). The study recommends that the top management of commercial banks, in consultations with stakeholders should implement organisational mission, consistency, adaptability and employee involvement in organisational culture simultaneously as conceptualized by Danson’s model of organisational culture.

Keywords:Organisational culture, organisational performance, commercial banks, Nairobi county, organisation’s mission, consistency, adaptability and employee involvement.

DOI: 10.7176/EJBM/14-23-03

Publication date: December 31^st 2022