Effect of organisational culture on organisational performance: A case of commercial banks in Nairobi County, Kenya

Abstract

Banking, like any other industry, has a basic structure or a set of principal economic and technical characteristics which contribute to competitive forces. In the current turbulent business environment, organisational culture is a key player in providing the glue that binds several parts of the Organisation together towards attaining the desired goal. The study aimed to determine the effect of organisational culture on the organisational performance of commercial banks in Nairobi County, Kenya. Specifically, the study sought to establish the effect of the Organisation’s mission, consistency, adaptability and involvement on the Organisation performance of commercial banks and the combined effect of the four variables on the organisational performance of commercial banks in Nairobi County, Kenya. The study was based on Dynamic Capability and Resource-Based View Theories. This study used a cross-sectional research design. A Census sampling technique was used to select the target population of 43 commercial banks. The respondents were the Operations Managers based at the headquarters of each of the 43 commercial banks. Primary data was collected using questionnaires. The data were processed using the Statistical Package for Social Sciences (SPSS). Data were analysed using descriptive and inferential statistics. Descriptive statistics were in the form of means, standard deviations, and percentages, while inferential statistics, namely, Pearson Correlation analysis and multiple regression analysis. Simple and multiple linear regression analysis was used to test the study hypotheses at a 0.05 significance level. The results were presented using tables and graphs. The results of Pearson’s correlations analysis showed that organisation’s mission (r = 0.379, p < 0.05), consistency (r = 0.487, p < 0.05) and employee involvement (r = 0.705, p < 0.05) had positive significant association with organisational performance while adaptability (r = 0.260, p >0.05) had insignificant positive association with organisational performance of commercial banks. The multiple linear regression analysis results revealed that organisational mission, consistency, adaptability, and employee involvement were significant predictors of the Organisation performance of commercial banks (F =10.685, p < 0.05). The study recommends that the top management of commercial banks, in consultations with stakeholders, implement all four components of organisational culture simultaneously as conceptualized by Danson’s model of organisational culture.