Effects of Corporate Governance on Strategic Planning Practices Within Equity Bank in Kenya

Abstract

Corporate governance is a critical area in every organization that influences the strategic planning practices adopted by a firm. Good corporate governance helps in the formulation of strategic decisions such as strategic planning which are effective and thus leads to performance of the business. This study therefore envisioned to establish the effect of corporate governance on strategic planning practices. To find out the effect of corporate governance on strategic planning practices the researcher collected primary data using questionnaire method which added up to 94.2 % response rate. Data collected was on strategic planning practices which were the dependent variable, corporate governance and organizational culture which were the dependent variables. This data was collected from Equity bank branches that are within Nairobi County due to accessibility and cost. The study conducted descriptive and inferential analysis to the data collected. The descriptive analysis indicated that the bank is doing very well in adopting strategic management practices given that its overall mean ranged between 3.57 and 4.04, although, the results indicated that improvement is required for better performance. Descriptive statistics indicated that the strategic planning practices adopted can be attributed to the corporate governance whose performance was found to be good, indicated by an overall mean ranging between 3.43 and 4.08. The organizational culture which was the second independent variable indicated a lower performance than corporate governance which implied that it was less practiced compared to corporate governance. Its overall performance of organizational culture was slightly above average as the means of statements under organizational culture ranged between 3.01 and 4.2. The study as well conducted regression analysis and revealed that the model account 68.1% of the changes in the strategic planning practices indicated by R squared value of 0.681. Adjusted R squared is slightly below the coefficient of determination with a value of 0.675 indicating presence of some few elements in the model that did not help to improve the model. The effect of corporate governance was discovered to be statistically significant on strategic planning practices as shown by a p-value of less than 0.05. The regression coefficients indicated that the effect of corporate governance on strategic planning practices was statistically significant but the p- value of organizational culture was 0.085 which was greater than 0.05 indicating a statistically insignificant impact on strategic planning practices.