INFLUENCE OF ADHOCRACY CULTURE ON PERFORMANCE OF THE LISTED BANKS IN KENYA

Abstract

The banking industry plays an important role in the development of a country. For sustainable economic
growth, a country must have a strong banking sector. However, there have been challenges in
robustness of banks’ performance as a result of the current operating environment. This has resulted
to loss of jobs, locking in of customer’s deposits, erosion of shareholder’s wealth as well as a slowdown
in economic growth of their countries. To enable optimal operation of banks’ within the current changing
environment, it is prudent for management of the banks’ to study their strengths which may be
a competitive advantage. Adhocracy culture has been selected for this study as one of the strengths
that an organization can utilize to exploit the opportunities in the environment and therefore boost
its performance in line with stakeholders’ expectations. This study therefore sought to determine the
influence of adhocracy culture on performance of the listed banks in Kenya. The study is of great
significance to the management of the Banks in that they will know whether adhocracy culture can
give them an edge to enhance their performance. The relationship between culture and performance
has been studied by previous scholars. From the existing literature, organizational culture has been
operationalized in different ways. This study adopted a different paradigm of the Competing Values
Framework (CVF). Therefore, the independent variables for the research was one of the CVF culture
namely adhocracy culture. On the other side, the dependent variable for the research was the organization
performance which was measured in both qualitative and quantitative ways using return on assets,
customer experience ratings and staff satisfaction index. Strategic leadership was taken as the moderating
variable between the relationship of adhocracy culture and performance. This study adopted a
descriptive research design. The population of the study was composed of all the licensed and listed
commercial banks in the Nairobi Securities Exchange (NSE). For the study, multi-stage sampling was
deployed and convenience and purposive sampling designs were used to come up with a sample of 100
respondents who were interviewed using questionnaires. Secondary data on the financial results was
collected using data collection sheets. The data was analyzed for descriptive statistics and inferential
statistics. Adhocracy culture emerged as a strong predictor of the banks’ performance. Strategic leadership
was found not to have a significant moderating effect on the relationship between adhocracy
culture and performance. In overall, the study findings concluded that the adhocracy culture variable
was statistically significant in explaining the performance in banks. The study recommends that banks
should invest more on technology and innovative solutions that provides convenience, accessibility and
reliability of banking services as that will give them a competitive edge as banking services shift from
brick and mortar to technology based services.