Strategic Management Practices and Organizational Culture Among Microfinance Institutions in Kenya

Abstract

Central to the strategic management process are procedures that include effective management practices that allow the company to counteract unforeseen occurrences, while also protecting its operations, minimizing risk, and providing quality services. Organization’s culture creates values and beliefs among organization employees which influences the implementations of strategic management practices for the success of the organization. Organizations should develop culture that puts more focus on creating long-term relationships among employees. Generally, culture is usually stable and hard to change, however the Covid pandemic necessitated rapid change in organization culture due to remote working and use of new technology. The purpose of this study was to establish the relationship between strategic management practices and organizational culture on microfinance institutions in Kenya. The research was based on resource-based theory and Schein's organizational culture theory. The chosen study design was a descriptive survey. The 50 microfinance institutions in Nairobi County made up the study's population. Primary data was obtained via a questionnaire. The questionnaires were given to the key managers who are involved in strategy formulation. Data analysis involved both descriptive and regression analysis. The study revealed that microfinance institutions in Kenya practice strategic management practices to a great extent. The study found that there’s a positive relationship between culture and setting of mission and vision, environmental scanning, strategy formulation, strategy implementation and evaluation and control. The study also found that setting of mission and vision, strategy formulation, environmental scanning strategy implementation and evaluation and control were among the key factors that could be used to explain organizational culture as they explained 72.3% of the variation in organizational culture. The study concludes that setting of mission and vision, environmental scanning, strategy formulation, strategy implementation and evaluation and control contributes positively to organization culture among microfinance institutions. The study recommends that microfinance institutions should invest substantially in making sure that the employees of their organization understand and align with organization culture and strategic management practices. Future studies should investigate other determinants of organization culture that were not addressed in this study.