Dynamic Capabilities and Performance of Commercial Banks in Nairobi City County, Kenya

Abstract

Today, the Kenyan banking industry is characterized by dynamism in terms of rapid technological changes, consumer sophistication and government regulation. It must be able to explore its complex capabilities well enough to respond to early signals emerging from its environments an organization to meet the needed existing standards. Therefore, the purpose of this study was to evaluate the consequences of dynamic capabilities on the performance of commercial banks in Nairobi City County, Kenya. The specific objectives were to assess the effect of innovation, technological knowledge, quality service and learning culture capabilities on the performance of commercial banks in Nairobi County, Kenya. The study was carried with respect to the following theories, Dynamic Capabilities Theory, Resource-Based View, Resource Dependency Theory and the Knowledge-Based Theory. A descriptive research design and a purposeful sampling technique were adopted in this research study. 84 respondents were in the survey. The research unit was the headquarters of the commercial banks, while branch managers and operations managers were the observation unit. Data collection was accomplished using self-administered questionnaires and subjected to analysis to interpret quantitative data using descriptive statistics of frequencies, percentages, and mean and inferential statistics such as correlation coefficient. The study established that innovations capability, technical knowledge capability, quality service capability and learning culture capability had significant effects on the performance of a commercial bank. Innovation capacity of a commercial bank was found to be an essential prerequisite for innovations and imagination to be effectively controlled and revolutionary technologies to be implemented. The capacity for technical knowledge is the skills and information required to perform various tasks. Techniques of knowledge understanding strengthen the diverse capacities of companies. The definition of bank environment plays a significant role in determining how to provide outstanding service efficiency, as it reflects what workers feel in terms of service delivery organizational activities and that learning culture capability encourages the production of information and expertise by employees, and overally, by the organization. An institution with a culture of learning supports continuous education and skill’s improvement of its employees. Given the findings above, the study recommended that commercial banks in Nairobi City County, Kenya should promote innovation, especially in the current era of digital competition. The commercial bank managers in Nairobi City County, Kenya should undergo professional information skills training that the banks may build and use to boost their performance. Commercial banks should carry out training, empowerment and incentives because they are the most significant factors in enhancing quality service capabilities, which determine the level of success and, in effect, contribute to implementation of service strategy and excellent service quality. Commercial banks should combine learning with talent management to help capacity development, using the preparation needed to show the importance of learning by making it worthwhile and exciting for learners and utilize integrated learning strategies to optimize experiential and analytical learning and overhaul systems in success improvement to offer coaching and growth at least equivalent weight.