The Effect Of Partnership Strategies On Performance Of Commercial Banks In Kenya

Abstract

In Kenya, the financial industry is among the dynamic and growing sectors. Specifically, the banking sector has come a long way in the way business is run which in essence affects their performance. Commercial banks in particular need to put more effort in finding ways to mitigate their limited resources. Today’s many commercial banks have established a strategic partnerships with various organizations to enhance their performance and penetrate areas which otherwise are not their core businesses but improve their output. This study is intended to establish the impact of strategic partnerships on the performance of commercial banks in Kenya. A total of 42 commercial banks were studied. The study applied the questionnaires survey approach to collect data and the study achieved an 88% response rate. The respondents were human resource managers of the banks. Data was analysed using simple linear regression. For establishing a relationship, the study considered performance of commercial banks as the dependent variable while strategic partnership was treated as the independent variable. The findings were such that 54.7% of the variation in the performance of commercial banks is determined by the variation in strategic partnerships while 45.3% is determined by other factors not analysed in this study. 65.9% of change in performance is also attributable to a unit change in partnership strategy. The study is anchored on the resource-based theory that supports the fact that resources are limited within the organisation hence the need for commercial banks to partner with other institutions, improving their performance. Agency theory also expounds the reason commercial banks have created agents as partners, a strategy to capitalise on others resources and placement within the industry. The results showed that strategic partnership provides a positive and meaningful impact on performance of commercial banks in Kenya.