The role of organizational culture in the relationship between strategy and performance of commercial Banks in Kenya

This management research project examines the relationship, if any, between culture, \nstrategy and the performance of banks. Existing studies show that most organizations \nappreciate the importance of strategy to achieve business success. However, they often \ndisregard the role of culture with regards to strategy, yet the two factors are critical for \nthe success of an organization. The researcher noted that in order to study these two \nfactors and performance, the ideal population will be all the commercial banks operating \nin Kenya and Return on investment will be the measure of performance. \nThe researcher had three objectives, first, to establish the relationship between culture \nand performance. Secondly, the relationship between strategy and performance; and \nfinally, establish the effect of culture on relationship between strategy and performance \non Kenyan commercial banks. \nThe researcher carried out a survey of all the 44 banks operating in Kenya. Likert scale \nquestionnaires with questions framed on the basis of predesigned \noperational definitions of the Schneider’s four culture types, namely, control, collaboration, cultivation and competence; and Miles and Snow’s strategy types of defender, prospector, analyzer and \nreactor, were designed, and used, in collecting primary data from the bank managers \nresponsible for culture and strategy. This was aimed at collecting relevant data. \nSecondary data on bank performance were collected. The returns on investment were \nused to rank the banks from number one to thirty one as these was the total number of \nbanks responded. The primary data was analyzed using correlation analysis and tabular \nanalysis to test the relationship between culture, strategy and performance. \nThe first objective of the study was established as the researcher found that control, \ncultivation and competence cultures are positively correlated to performance. Secondly, \nthe researcher established that analyzer, defender and prospector strategies are positively correlated to performance. The third objective was also established since the researcher found that banks tend to perform better when they adopt prospector strategy with cultivation culture. However, it was noted that even though strategy and culture play a \nsignificant role in influencing performance, some other factors exist too in the banking \nindustry.