EFFECTS OF STRATEGIC ALLIANCES ON PERFORMANCE OF COMMERCIAL BANKS IN KENYA: A CASE OF KENYA COMMERCIAL BANK LIMITED

As both local and foreign banks as well as micro finance institutions are placing a focus on the unbanked, it will be necessary for local banks to strategically find a way to beat the competition. The growing popularity of strategic alliances is directly proportionate to the perceived benefits of these agreements. Commercial banks entering these agreements must also be prepared for challenges they might encounter. Many of the research studies on strategic alliances have not specifically been concerned with the relationship and the interplay of specific factors and their association to strategic alliances success and failure. Based on the above information there is need to investigate the effects of strategic alliances on performance of commercial banks in Kenya with special focus on Kenya Commercial Bank. The objective of the study was to; to determine the effects of partner match on performance of commercial banks in Kenya; to assess how commitment of firms affects performance of commercial banks in Kenya; to establish the effects of strategic orientation of partnering firms on performance of commercial banks in Kenya; to determine the effects of synergy on performance of commercial banks in Kenya. The study was guided by the Information Processing Theory, Trust Based Rationalism, Relational View, Transaction Cost Economics and Multilevel Theorizing. A case study research design will be adopted. The study population composed of 486 members of staff in different managerial levels currently working at the Kenya Commercial Bank. Stratified random sampling technique was used to select a sample of 219 respondents. The research used questionnaires. The research administered a questionnaire to each member of the target population. The research carried out a pilot study to pretest and validates the questionnaire. Quantitative data collected was analyzed using SPSS (Version 20) and presented through percentages, means, standard deviations and frequencies. The information was displayed by use of bar charts, graphs and pie charts and in prose-form. Content analysis was used to test data that is qualitative nature or aspect of the data collected from the open ended questions. The study conducted a multiple regression analysis. The study found out that partner match of partner firms affect performance of commercial banks in Kenya to a very great extent; commitment of partner firms in strategic alliances affects in a very great extent performance of commercial banks in Kenya as indicated by the majority of the respondents; strategic orientation of partner firms affects to a great extent performance of commercial banks in Kenya and synergy of partner firms influence to a very great extent the performance of banks in Kenya. The study recommends that Kenya Commercial Bank should be very careful when choosing strategic partners; this will enable them avoid conflicts of any sort it will also ensure a sustainable relationship where the partners can complement each other in more synergistic manner. It also recommends that Kenya commercial banks should always strive to ensure that they increase the number of strategic alliances while at the same time ensuring that their financial leverage is kept as low as possible this will ensure their operation cost is low and thus improve their financial performance. The study further recommends that Commercial Banks of Kenya should ensure that they partner with are the right companies.