Quality Management Drivers on Performance of Tier 1 Commercial Banks in Nairobi City County, Kenya
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Date
2025-12
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Kenyatta University
Abstract
The management of Tier 1 commercial banks in Kenya needed to reconsider quality management drivers and realign their strategies with shifting consumer demands as a result of declining performance. This research aimed to ascertain the impact of quality management drivers on the performance of Tier 1 commercial banks in Nairobi City County, Kenya, on the basis that there were few studies examining the relationship between quality management drivers and performance in the banking industry. The purpose of the study was to determine how innovations in processes, products, and continuous quality improvement affected the performance of Tier 1 commercial banks in Nairobi City County, Kenya. Strategic leadership was also the moderating variable of the study. Dynamic capability and Schumpeter innovation theories were used to support the study, which was grounded on resource-based theory. The study employed a cross-sectional survey approach, which made it easier to collect unaltered data. Ten Tier 1 commercial banks that were active in Nairobi City County, Kenya, were the subject of the study. Fifty-three personnel from the operations departments across the 10 Tier 1 commercial banks took part in the study as a whole. Furthermore, the Krejcie and Morgan algorithm was used to determine an appropriate sample size of 47 respondents. Structured questionnaires containing both open-ended and closed-ended questions were utilized to obtain primary data. Secondary data on the financial performance of Kenyan commercial banks were gathered via financial statements, strategic plans, and sessional papers. Reliability was assessed through Cronbach Alpha coefficients of 0.7, and validity was assessed utilizing strategic management experts and Kenyatta University lecturers. The study of qualitative data included the use of content analysis, whereby significant themes were selected from published material. Verbatim statements were thoroughly examined, leading to the formulation of conclusions. By using SPSS version 24, correlation and regression analyses were employed to analyze quantitative data. Regression analysis was performed at a 95% confidence level to evaluate the statistical significance between variables. The information under analysis was tallied and displayed as mean scores, percentages, and standard deviations. The study employed inferential statistics to assess the effect of quality management drivers on the performance of Tier 1 commercial banks in Nairobi City County, Kenya. Specifically, it examined product innovation, process innovation, and continuous improvement innovations, with strategic leadership as a moderating factor. Performance was measured by profitability and cost efficiency, while correlation, linear regression, and multiple regression analyses were applied. Correlation results showed that all quality management drivers were positively related to performance, with product innovation (r = .485), process innovation (r = .405), and continuous improvement innovations (r = .470) demonstrating significant effects. Strategic leadership had the strongest correlation (r = .585), underscoring the importance of visionary leadership and employee empowerment. Regression results indicated that the predictors jointly explained 44.6% of the variation in performance (R² = .446). Process innovation (β = 0.187, p = 0.047), continuous improvement innovations (β = 0.247, p = 0.014), and strategic leadership (β = 0.404, p = 0.001) had significant positive effects, while product innovation (β = 0.153, p = 0.188) was insignificant. The findings suggest that strategic leadership plays a crucial moderating role, enhancing the impact of process and continuous improvement innovations on bank performance, while product innovation alone is insufficient to drive significant outcomes
Description
A Research Project Submitted to the School Of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of Master of Business Administration (Strategic Management) of Kenyatta University. December, 2025
Supervisor
Henry Kegoro Ongoto