INFLUENCE OF STRATEGIC MANAGEMENT CAPABILITIES ON THE PERFORMANCE OF COMMERCIAL BANKS IN KENYA: CASE OF NAIROBI CENTRAL BUSINESS DISTRICT

This study determined the influence of strategic management capabilities on the performance of commercial banks in the Nairobi County. The study deployed descriptive research design. The study was anchored on three theories; Resource Based View Theory, Competitive Advantage Theory and Dynamic Capabilities Theory. From a total population of 42 commercial banks with 902 line managers in the head offices that is middle and senior level, a sample of 270 respondents was used. The data was analyzed using SPSS software. Descriptive statistics such as tables, Pearson’s correlation and regression were used in analyzing the data. The study found out that managerial capabilities has a weak negative relationship with the performance of commercial banks. The findings indicated that the collaborative decision making process is very important in the bank performances as well as nurturing creativity and innovation among employees. It was also apparent that the various banks use different strategies in the evaluation of the level of achievement of the set targets. In addition, it was clear that, marketing research played a big role in banks performance as the banks were able to introduce products that met customer’s needs. The key aspects of banks financial capability was proper cash management which ensured continued business with minimal interruptions and timely payment of bills. The study found out that technological capability as a strategy to reach unbanked and to ease banking queues which in turn increased sales. Effective strategic management capabilities have direct influence on the performance of commercial banks. The study recommended that commercial banks should continuously engage in updating their systems to remain relevant in the market engage in creating visions and missions statements that spell their strategic focus in the future. The study also recommended that commercial banks should have market policy framework which sensitive to the action of rival banks and activities in the financial market plan on effective performance strategies to evaluate the achievement of performance targets. From the findings, the study concluded that appropriate application of strategic organizational capabilities and accurate response to market dynamics enhances the performance of commercial banks in Kenya. Key Words: Management Capability, Marketing, Finance, Technology CITATION: Nthoki, J., Omwenga, J., & Litunya, R. (2021). Influence of strategic management capabilities on the performance of commercial banks in Kenya: Case of Nairobi Central Business District. T he Strategic Journal of Business & Change Management, 8 (3), 606 – 617.