Strategic Leadership and Competitive Advantage of Commercial Banks in Kenya

Abstract

Organizational competitiveness is an important parameter that determines the long-term sustainability and the entity's ability to meet its obligations to internal and external stakeholders. Consequently, the understanding the factors that will influence the competitiveness of the entity is of importance. The aim of the study was to examine how strategic leadership affects the competitive advantage of commercial banks in Kenya. The strategic leadership dimensions that were investigated include capacity to anticipate business changes, capacity to question the status quo, ability to interpret information correctly, decision making capacity and ability to align stakeholder interest. The study adopted a cross-sectional descriptive study design on a target population of 40 commercial banks and a census of all commercial banks in Kenya was performed. To collect the data, a questionnaire was the main instrument whereby in total 34 questionnaires were distributed. The findings reveal that the banks had formed a broad alliance network with customers and competitors to handle cases that are of mutual benefit. In addition, the bank leadership was found to be good on handling crisis as well as encouraging divergent views that will result in better analysis of prevailing problem. The findings also show that the ability of a firm leadership to study patterns of trends and be able to make best decision out of the same was a key component of a firm competitiveness. In terms of the bank leadership to make decisions, it was found that they beforehand decide participants in the decision-making process, and continuously are able to compromise between short-term and long-term interests of the bank. The results also show that there is a positive correlation between strategic leadership and competitive advantage of commercial banks (r=.616) while variations of performances of the commercial banks was explained to the extent of 38% by the level of strategic leadership present in the organization (R2). The regression model turned out to be a good predictor because its p value of 0.015 is less than 0.05. In addition, the findings reveal that the capacity of the bank leadership to challenge existing status-quo and decision making capacity significantly affected the level competitiveness. On the other hand, the capacity of the bank to anticipate changes, interpret information and to align stakeholders were found to be insignificant. The research recommends that the banks enhance their top leadership decision making process through training and development process.