Effect of entrepreneurial orientation on performance of Commercial Banks in Kenya.

Abstract

In this twenty-first century where business organizations compete globally, there is a need for them to behave entrepreneurially in order to flourish and have a competitive advantage over competitors in the ever-dynamic and highly competitive business environments. The ongoing globalization, increased competition, innovation and technological changes are challenging organizations to look for the means of survival and growth. Firms are likely to benefit from pursuing and adopting Entrepreneurial Orientation, which forms the basis of this study. This study sought to examine the entrepreneurial orientation of banks based in Nairobi where a 5.4% increase in the new jobs created in 2015 was recorded. The main objective of this study was to examine the effect of entrepreneurial orientation on performance of commercial banks in Kenya. Specific Objectives were; to investigate levels of Entrepreneurial orientation amongst commercial banks in Kenya, to establish levels of performance of commercial banks in Kenya and to analyze the relationship between entrepreneurial orientation and performance of commercial banks in Kenya. A descriptive research design was used in this study. The target population comprised of all the 42 commercial banks operating in Kenya. Data was analyzed based on Pearson correlation analysis and a multiple regression model conducted on statistical package for social science (SPSS). The research findings indicated that there was a weak positive relationship (R= 0.332) between the variables. The study also revealed that 11.0% of entrepreneurial orientation of the banks licensed at the Central Bank of Kenya can be explained by the independent variables. As a recommendation, the evolving world of today, due to growing environmental uncertainty, constant changes and numerous challenges, one of the effective strategies for the organizations to be able to adapt to rapid evolutions and to survive dynamically is entrepreneurial orientation and becoming an entrepreneurial organization. Similarstudiestothiscanalsobereplicatedinafewyearstocometoassessthe effect of entrepreneurial orientation on performance at other financial sectors like the insurance companies Central Bank of Kenya. Also the effect of entrepreneurial orientation on corporate strategy is also another area of interest which can be under the area of further research and a more intense study along that area can come in handy. There should be use of marketing researches to identify the needs and wants of potential customers, competitors’ strengths and weaknesses in new market segments and optimizing service delivery activities in order to develop aggressive competition and enter new markets.