Thesis:

Influence of dynamic strategies on organizational performance of tier commercial banks in Kenya

Organizational performance, measured through profitability, operational efficiency, and market share, is a critical determinant of competitiveness and sustainability in Tier I commercial banks in Kenya. This study examines the influence of dynamic strategies adaptive, innovative, competitive, and operational on organizational performance, emphasizing their role in addressing the challenges of a dynamic and competitive banking environment. The purpose of the study is to assess the impact of these strategies on the performance of Tier I commercial banks, offering insights into how strategy implementation enhances organizational outcomes. Specifically, the study seeks to: determine the effect of adaptive strategies, evaluate innovative strategies, establish the influence of competitive strategies, and assess the role of operational strategies in driving organizational performance. The study holds significant value for bank management, policymakers, and researchers by providing actionable insights for improving strategy formulation and execution in Kenya’s banking sector. It is grounded in the Contingency Theory, which emphasizes the alignment of strategies with environmental conditions, and the Dynamic Capabilities Theory, which highlights the importance of continuous adaptation and innovation in achieving sustainable performance. A descriptive research design is adopted, targeting managers and assistant managers from six Tier I commercial banks in Nairobi County, with a total population of 60 respondents. A census sampling approach is used to ensure comprehensive representation. Data was collected using a semi-structured questionnaire, pre-tested in a pilot study involving 5% of the population to ensure reliability and validity. Both descriptive and inferential statistics, including multiple regression analysis, was employed for data analysis. The findings was presented in tables, charts, and narrative summaries for clarity. The findings of this study revealed that strategic practices play a crucial role in influencing organizational performance. Specifically, competitive response and operational strategies emerged as the most significant contributors to positive performance outcomes. Competitive response strategies such as improving product quality, reducing operational costs, and enhancing customer value delivery were strongly associated with increased efficiency and profitability. Operational strategies, including staff competencies, market monitoring, and strategic resource utilization, also demonstrated a strong positive influence on performance. Adaptive strategies showed a negative but statistically significant impact, suggesting that while adaptability is essential, it must be well-structured and aligned with organizational goals to yield desired outcomes. Innovative strategies, on the other hand, were not statistically significant in influencing performance, indicating a potential gap in effective implementation or alignment with core business processes. The study concludes that for organizations to improve performance, there is a need to prioritize competitive and operational strategies while enhancing the effectiveness of adaptive and innovative approaches. This calls for increased investment in staff development, technological adoption, strategic planning, and process improvement. Recommendations include focusing on improving employee skills, aligning innovation with business goals, and ensuring responsive yet stable adaptation mechanisms. Future research is recommended in other sectors and geographic contexts, with the inclusion of qualitative methods and additional variables such as leadership style and organizational culture to gain deeper insights into strategic effectiveness.