Strategic Resources and Performance of Commercial Banks in Kenya: Case of Equity Bank Limited
Abdiaziz, Issack Mohamed
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Firms always strive to gain competitive advantage over their rivals in the industry. Banks have faced a decline in their performance over the last 10 years in Kenya and globally due to immense competition of other lenders, unfavorable government policies like the interest cap policy in Kenya, unregulated market, political interference and poor risk management. The general objective of this study was to establish the effect of strategic resources on firm performance among commercial banks in Kenya. The study was guided by the following specific objectives; to determine the influence of management capability on firm performance, to establish the effect of organizational systems and processes on firm performance of Equity Bank Limited, Kenya, to establish the influence of product innovation on performance of Equity Bank Limited, to examine the relationship between capital outlay and performance of Equity Bank Limited. The study was guided by the following theories: resource-based theory, 7’s Theory, and other performance theories. A descriptive research design was used to gather the information needed to achieve the objectives. The target population was 261 management employees at Equity Bank Limited, Kenya in the Central, Eastern and Nairobi regions. Qualitative and quantitative techniques was used. A self-administered questionnaire was used to collect the data. The data was analysed using descriptive and inferential statistics and presented in tables, charts, means and percentages. The study found out that management capability significantly influenced organizational performance of Equity bank. System processes significantly influenced organizational performance of Equity bank. Product innovation significantly influenced organizational performance of Equity bank. Capital outlay significantly influenced organizational performance of Equity bank. The study concludes that the banks management staff had full control of the running of the firm. The company embraced continuous learning culture for all the management staff to be equipped with more knowledge. The organization had efficient systems and processes and the company systems were valuable. The systems in place were rich in managerial value and the company systems were historically bound. The company had improved on existing products to increase performance. The bank had advanced transaction technology systems and had a high expenditure on product innovation. The capital outlay had increased firm stock prices, the bank had a high capital expenditure and capital outlay had improved shareholders’ wealth. The study further concludes that the bank intended to increase capital outlay. The study recommends that the banks management staff ought to have full control of the running of the firm. The company ought to embrace continuous learning culture for all the management staff to be equipped with more knowledge. The company’s processes ought to be hard to copy. The organization ought to have efficient systems and processes, the company systems ought to be valuable. The bank ought to came up with new products to remain competitive in the market. The company ought to improve on existing products to increase performance. The company capital outlay ought to lead to high stock returns and the company capital expenditure ought to increase corporate earnings. The capital outlay ought to increase firm stock prices, the bank ought to have a high capital expenditure.