Abstract:
Organization performance has been acknowledged in strategic management literature
as the key driving force in all organizations; nevertheless, aspects that support
achievement of the same, have remain insufficiently examined. The study sought to
determine the effect of competitive strategies on organizational performance of
commercial banks in Kericho County and establish the moderating role of managerial
capabilities on the relationship. The study was directed by four specific objectives: to
determine the relationship between cost leadership strategy and organization
performance; to establish the relationship between differentiation strategy and
organization performance; to establish the relationship between focus strategy and
organization performance; and to evaluate the moderating role of managerial
capabilities on the relationship between competitive strategy and organization
performance. The investigation was grounded on Resource Based view theory in
addition to Value Chain Analysis model and Organization Performance models.
Michael Porter’s competitive strategies model was adopted as the standard to analyze
competitiveness at commercial banks in Kericho County. The study employed
explanatory research design. Target population of the study consisted of 139
commercial banks employees, comprising of both managers and non-management
staff, in Kericho County. A sample size of 103 was drawn using multistage sampling
technique. Primary data was collected by use of structured questionnaires. The
questionnaires collected from the banks were coded, and transcribed into the
Statistical Package for the Social Sciences (SPSS), Version 23.0, for data analyses.
Classification, analysis and interpretation of data were carried out using descriptive
and inferential statistics. Descriptive statistics, for instance, frequencies and means
were used to describe, summarize, and organize the data. Hierarchical multiple
regression was used to test both the direct and indirect effects in the study whereas
data was presented using tables, graphs, frequencies and percentages. Internal
consistency of the study constructs was measured by Cronbach’s Alpha values, which
ranged from 0.760 to 0.819, showing that they were reliable. Results showed that
cost leadership strategies had a significant and positive effect on organization
performance of commercial banks in Kericho County (B=0.228, t= 6.266, p<.0001).
Similarly, focus strategies had a significant and positive effect on organization
performance of commercial banks in Kericho County (B=1.185, t= 18.663, p
<0.0001). However, differentiation strategy had no significant effect on organization
performance of commercial banks in Kericho County (B = -0.037, t= -0.743, p =
0.459). Managerial capabilities did not directly affect organization performance but
were found to strongly moderate the relationship between cost leadership strategy
(B=0.463, t= 8.509, p<0.0001) and focus strategy (B=0.813, t= 6.599, p<0.0001) and
organization performance. Results showed that cost leadership strategy or focus
strategy only increase organization performance when managerial capabilities are at
the highest level. However, managerial capabilities were found not to significantly
moderate the relationship between differentiation strategy and organization
performance (B=-0.031, t= -0.271, p = 0.787). The study therefore recommends that
commercial banks identify cost and focus strategies that would assist in generating
sustainable organization performance. It also recommends that managerial capabilities
must be at the highest level for a successful implementation of a cost leadership
strategy or focus strategy, especially for the former. The study suggests that future
researchers can look into the occurrence of organization performance across other
various sectors.