EFFECTS OF ORGANIZATIONAL CULTURE ON STRATEGY IMPLEMENTATION IN COMMERCIAL BANKS …€¦ · · 2016-08-19EFFECTS OF ORGANIZATIONAL CULTURE ON STRATEGY IMPLEMENTATION IN COMMERCIAL

EFFECTS OF ORGANIZATIONAL CULTURE ON STRATEGY

IMPLEMENTATION IN COMMERCIAL BANKS IN KENYA

EUNICE MUTHONI

A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT

OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION OF THE SCHOOL OF

BUSINESS OF THE UNIVERSITY OF NAIROBI

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DECLARATION

I declare this project as my original work that has not been presented for award of degree

in any other University.

Signed: __________________________ Date ___________________

This project has been submitted for examination with our approval as University

supervisors

Signed: __________________________ Date ___________________

Mr. Jeremiah Kagwe

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ACKNOWLEDGEMENT

I acknowledge the assistance from Faith Mumo and the understanding of my husband

James Mungai Warui and my son Alex Warui Mungai.

Special thanks go to my supervisor Mr. Jeremiah Kagwe for his patience, guidance,

support and encouragement during this period.

I also appreciate support from my parents, sisters and brothers during this tough time of

balancing studies, work and family.

God bless you all.

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DEDICATION

This research project is dedicated first and foremost to the almighty God whose care and

grace has seen its completion. Secondly, my dedication goes to my husband and my child

for bearing with me when I had limited time to be with them. Finally I dedicate it to my

parents Mr and Mrs J. M. Nyingi, brothers and sisters who encouraged me all along.

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ABSTRACT

Commercial banks in Kenya have realised tremendous growth in the last five years and

have expanded to the East African region. The banking industry in Kenya has also

involved itself in automation, moving from traditional banking to better meet the growing

complex needs of their customers and cope with globalization challenges. There has been

increased competition from local banks as well as international banks, some of which are

new players in the country with a varied array of organisational cultures hence a

worthwhile sector to focus on in this study. Organizational culture is the shared values,

beliefs and norms within an organization, and is the foundation from which strategy

emerges. In order for strategy to receive sustained support, it must be aligned with

organizational culture. Organization’s strategy requires a culture that is supportive of

change. Strategic balancing is based on the principle that the strategy of a company is

partly equivalent to the strategy of an individual. Indeed, the performance of companies

is influenced by the actors’ behavior, including the system of leaders’ values. The study

aimed at addressing this gap by examining the cultural manifestations in commercial

banks in Kenya and their effects on strategy implementation. The study employed a

census survey design targeting all licensed commercial banks in Kenya. The target

population of this study was 43 representatives from all the 43 licenced commercial

banks with Nairobi as the focus and commercial hub. The study used a questionnaire to

collect primary data. The data was analyzed using both qualitative and quantitative

techniques using Statistical Package for Social Sciences. The study found that for

competitive advantage to be gained across Kenyan banks, strategy implementation should

be aligned with strong organizational culture.

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TABLE OF CONTENTS

Declaration ...................................................................................................................................... ii

Acknowledgement ......................................................................................................................... iii

Dedication ...................................................................................................................................... iv

Abstract ............................................................................................................................................v

List of tables ................................................................................................................................. viii

List of figures ................................................................................................................................. ix

CHAPTER ONE: INTRODUCTION ..............................................................................................1

1.1Background of the study .............................................................................................................1

1.2 Research problem.......................................................................................................................5

1.3 Research Objectives ...................................................................................................................6

1.4 Value of the study ......................................................................................................................7

CHAPTER TWO: LITERATURE REVIEW .................................................................................8

2.1 Introduction ................................................................................................................................8

2.2 Strategy implementation ............................................................................................................8

2.3 Organizational culture ................................................................................................................9

2.4 Organizational culture and strategy implementation ...............................................................11

2.5 Types of organizational culture and their effects on strategy implementation ........................13

2.6 Conceptual empirical link ........................................................................................................15

CHAPTER THREE: RESEARCH METHODOLOGY ................................................................18

3.1 Introduction ..............................................................................................................................18

3.2 Research design .......................................................................................................................18

3.3 Population of the study ............................................................................................................18

3.4 Sample design ..........................................................................................................................19

3.5 Data collection .........................................................................................................................19

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CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION ..................................20

4.1 Introduction ..............................................................................................................................20

4.2 Data Analysis ...........................................................................................................................20

4.3 Cultural manifestations and their effects on strategy implementation in commercial

banks in Kenya ...............................................................................................................................23

4.4 Discussion ................................................................................................................................32

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS ..................37

5.1 Introduction ............................................................................................................................. 37

5.2 Summary of the Findings ........................................................................................................ 37

5.3 Conclusion .............................................................................................................................. 41

5.4 Recommendations ................................................................................................................... 42

5.5 Limitations of the study .......................................................................................................... 43

REFERENCES ..............................................................................................................................45

APPENDICES ...............................................................................................................................48

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LIST OF TABLES

Table 3.1 Targets and achievements…………………..……........………………………16

Table 4. 1: Response Rate ................................................................................................. 20

Table 4. 2: Cultural Manifestations on Strategy Implementation ..................................... 24

Table 4. 3: Effect of Adaptability Culture on strategy implementation ........................... 27

Table 4. 4: Effect of Bureaucratic culture on strategy implementation ............................ 28

Table 4. 5: Effect of Mission culture on strategy implementation ................................... 29

Table 4. 6: Effect of Entrepreneurial culture on strategy implementation ....................... 30

Table 4.7: Regression Model Summary ………………………………………………...31

Table 4.8: Coefficient ……………………………………………………...……………31

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LIST OF FIGURES

Figure 4. 1: Response Rate ............................................................................................... 20

Figure 4. 2: Number of Branches of the Banks ................................................................ 21

Figure 4. 3: Scope of banks’ operation ............................................................................. 22

Figure 4. 4: Bank Ownership ............................................................................................ 22

Figure 4. 5: Period of Bank’s operation in Kenya ............................................................ 23

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CHAPTER ONE: INTRODUCTION

1.1 Background of the study

Strategy implementation does not occur in a vacuum. It occurs within the internal and

external environment of an organization. The environment is composed of various

factors among them the prevailing organizational culture. The prevailing organizational

culture can either support or undermine implementation of strategies hence the need for

strategy-cultural fit in any organization. Today’s organizations are not static; they keep

changing inorder to remain relevant. Some changes are not predictable and it is only

organizations that are able to adjust spontaneously that will successfully implement their

strategies.

Commercial banks in Kenya have experienced many challenges including rapid changes

such as competition, technology, customer requirement and many external and internal

unknowns. There is also the requirement by Central Bank for banks in Kenya to build a

minimum core capital of Kshs.1 billion by December 2012 which may force some of the

existing banks to merge in order to comply. The global financial crisis experienced in

late 2008 continues to affect the banking industry in Kenya especially with regard to

deposit mobilisation, reduction in trade volumes and the performance of assets. This has

necessitated formulation and implementation of strategies aimed at addressing the

changes and attaining competitive advantages. Commercial banks therefore are a good

focus of the study because for them successful strategy implementation is key to their

performance.

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1.1.1 Strategy implementation

Implementing strategy involves translating strategic thought into organizational action.

Implementation and execution of strategy is an operation-oriented make things happen

activity aimed at performing core business activities in a strategy supportive manner

(Thomson 2007). The question of successful strategy implementation however still

remains an unaddressed challenge in many organizations (Mehdi 2010). Koske (2003)

argues that a brilliant strategy that cannot be implemented creates no real value. Strategy

implementation has become the most significant management challenges which all kinds

of corporations face at the moment.

1.1.2 Organizational culture

According to Schein (2009) organizational culture is a collective behaviour of people

that are part of an organization. It is formed by the organization values, visions, norms,

working language, systems, and symbols, beliefs and habits. It is also the pattern of such

collective behaviours and assumptions that are taught to new organizational members as a

way of perceiving, and even thinking and feeling. Organizational cultures affect the way

people and groups interact with each other, with clients, and with stakeholders.

Organizational Culture is a strength that can be a weakness. It is a strength because it

eases and economizes communication, facilitates organizational decision making and

control and may generate higher levels of cooperation and commitment to the

organization which are necessary for strategy implementation. However it can be a

weakness when important shared beliefs and values interfere with the need for business,

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its strategy and the people working on a company’s behalf. This is a major weakness

because it is hard to change the content of a culture (Pearce 2003).

1.1.3 Organizational culture and strategy implementation

Healthy organizational culture can be an important prerequisite for successful strategy

implementation. Peters (1982) observed that organizations succeed through strong,

unified cultures that are produced and reproduced by physical artifacts, symbols,

ceremonies, stories, slogans, dress and setting. Many organization oblivious of the

cultural diversities within which they exist find themselves unable to successfully

implement strategies (Harison 2004). Thomson (2007) noted that long standing attitudes,

vested interests, inertia and ingrained organizational practices do not melt away when

managers decide on a new strategy. Oliver (1992) identified cultural fit as one of the

forms of fit that affects an organization’s adaptation processes. A tight culture strategy fit

is required for an organization to be able to successfully implement strategy. Comerford

(1985) argue that a culture that is grounded in strategy-supportive values, practices and

behavioural norms adds to the power and effectiveness of a company’s strategy execution

effort. Among the areas that have had limited research is the effect of organizational

culture on strategy implementation which this study seeks to establish.

1.1.4 The banking industry in Kenya

The banking Act (CAP 488) of the laws of Kenya, defines a bank as a company which

carries on or proposes to carry banking business in Kenya and includes the Cooperative

Bank of Kenya Limited but excludes the Central Bank. According to the Act banking

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business means accepting deposits from members of the public repayable on demand or

at the expiry of a fixed period, acceptance of money on current account and payment and

acceptance of cheques and employing money held by lending or investment.

According to the Financial Institutions Supervision Department (FISD) of the Central

Bank, 2011 report the banking industry in Kenya comprised of 43 registered commercial

banks, 1 mortgage finance company, 6 deposit taking microfinance institutions, 118

FOREX bureaus, 2 credit reference bureaus and 4 representatives offices of foreign

banks. Commercial banks which are the focus of this study are therefore one component

of the banking industry. They are financial institutions that provide services such as

accepting deposits, giving business loans, mortgage lending and basic products like

saving accounts and certificates of deposits.

According to the Financial Institutions Supervision Department (FISD) of the Central

Bank, 2011 report, the banking industry has thrived within a challenging macroeconomic

environment where there is increasing inflation, high interest rates and exchange

volatility. Customer deposits grew from 1.24 trillion in 2010 to 1.49 trillion in December

2011. The sector is expected to maintain its growth underpinned by increased regional

presence and adoption of innovative and cost effective methods of offering services,

automation of a large number of services and a move towards emphasis on the complex

customer needs rather than traditional ‘off-the-shelf’ banking products.

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The Financial Institutions Supervision Department (FISD) of the Central Bank 2011

report states that there were 27 local private commercial banks with 62.8% of the

industry’s total assets, 13 foreign banks with 30.2% of the total assets and 3 local public

commercial banks with 7.0% of the assets. The branch net work grew from 1063 in 2010

to 1161 in 2011 indicating increased access to banking products and services. As at

December 2011 there were 43 commercial banks in Kenya. They are the focus of this

study.

According to Pricewaterhouse Coopers report (2011), the banking industry is faced with

new regulations, for instance, the Finance Act 2008, which took effect on 1 January 2009

that requires banks and mortgage firms to build a minimum core capital of Kshs 1 billion

by December 2012. The implementation of this requirement poses a challenge to some of

the existing banks and they may be forced to merge in order to comply. The global

financial crisis experienced in late 2008 is expected to affect the banking industry in

Kenqa especially with regard to deposit mobilization, reduction in trade volumes and the

performance of assets. These and other challenges facing the sector make strategy

implementation a core determinant of success. It also makes banking institutions an

important focus for this study.

1.2 Research problem

Studies on the effect of various factors on strategy implementation have been undertaken.

For example Arabi (2002) examined the factors affecting strategy implemention and

identified factors such as technology, human resource, organizational structure and

leadership. Another study by Mbago (2004), examined factors such as organizational

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structure, change management, leadership and cultural issues and their effect on strategy

implementation. Mushtaq (2008) concluded that there is sufficient evidence linking

cultural traits and organizational effectiveness. He found that mission is the most

important cultural trait that today’s organizations need to focus on. The other cultural

traits that are important include involvement, adaptability and consistency in order of

importance. A study carried out by Schein, (2009) revealed that organizational culture

carries critical forces that need to be considered in strategy implementation.

These studies were however based on general discussion of the factors affecting strategy

implementation with no specific reference to organizational culture. The studies

examined hardly reveal an evaluation of the effect of organizational culture on strategy

implementation particularly in the banking sector. The fact that many studies discuss

organizational culture in combination with other factors suggests that it’s effects on

strategy implementation are overshadowed thus creating the need for this study.

The study aimed at addressing this gap by examining the cultural manifestations in

commercial banks in Kenya and their effects on strategy implementation. The subsets of

organizational culture studied were adaptability culture, mission culture, bureaucratic

culture and entrepreneurial culture.

1.3 Research Objectives

The objectives of the study were;

i. Establish the organizational culture manifestations within commercial banks in

Kenya

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ii. Establish the effects of organizational culture on strategy implementation in

commercial banks in Kenya

1.4 Value of the study

The study was of value to theory development, management and practice.

By finding out different organizational cultures in place, the study acted as a source of

information for banks. Strategy managers will find information on various cultural

practices that have been successful. Such information helps them improve strategy

implementation in these institutions.

Since strategy implementation occurs in almost every organization, the findings of this

study are going to be beneficial to other strategy managers who might want to borrow or

improve their strategy implementation.

The study expectations are to contribute to the existing body of knowledge on strategy

implementation. Through a critical analysis of the effects of organizational culture, the

study identified gaps left in previous studies on strategy implementation. Future

researchers will use this study as a point of reference.

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CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter discusses the relevant literature on the effects of organizational culture on

strategy implementation in organizations. It covers the following headings; organizational

culture, the concept of strategy implementation, effects of organization culture on

strategy implementation, types of organizational culture and their effect on strategy

implementation and the conceptual empirical link between organisational culture and

strategy implementation.

2.2 Strategy implementation

Strategy is a plan established by a firm to help accomplish its objectives, (Pearce, 2003);

(Jauch, 1988). Strategy is a pattern or a plan which integrates goals, policies and

operational activities of an organization as a whole (Barnat, 2005). Strategy is a macro

future oriented plan for responding to competitive environment aiming optimization of

goal attainment (Robinson, 2005). Other strategy theorists, such as Thompson, (1994);

Johnson, (2003) view strategy as the direction taken by an organization over the long

term. Thompson, (1994) defines strategy as a clear direction for the organization and a

means of getting there.

According to Barnat, (2005), essential questions in strategy implementation include;

which decisions and activities can be accomplished by managers, who can organize

decisions for parallel logic, activities, and defined contingencies? When these two

questions are answered, decisions have to be made based on variable factors in the centre

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of the implementation process. Barnat adds that managers should think about

implementation when they are planning, because implementation of strategies should not

cause trouble for them in future. Of course, all decisions and executing activities cannot

be performed completely, but implementing assumptions or limitations should be chosen

properly in order to make a great imagination of formulating and implementing. The

implementation of organization strategy involves the application of the management

process to obtain the desired results.

Higgins, (2005) pointed out that, "almost all the management functions - planning,

controlling, organizing, motivating, leading, directing, integrating, communicating, and

innovation - are in some degree applied in the implementation process. According to

Strickland (2001), strategy implementation is a step wise process with each activity

having special tasks in pursuit of a common goal.

2.3 Organizational culture

Cole, (1995) describes organizational culture as the sum of dominant values, visions,

perspectives, standards and modes of behaviour that typify an organization. He argues

that the dominant culture affects the stakeholders of the organization. McNeal, (2009)

argues that organizational culture forms in response to the need for external adaptation

and survival as well as internal integration. External adaptation and survival involve

finding a niche to enable the organization to cope with the changing environment.

Internal integration entails development of language and concepts, group and team

boundaries, power and status as well as rewards and punishment in order to establish and

maintain effective working relationships among the members of an organization.

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According to McNeal, (2009) various aspects of culture exist at different levels or layers

within an organization. Shared assumptions and philosophies form the inner most layer.

The next layer is organizational cultural values which are the collective beliefs,

assumptions, and feelings about what things are good, normal, rational and valuable. The

next layer is the shared behaviours which include the norms; they are more visible and

easier to change than values. The top most layer has the cultural symbols which are the

words, gestures, pictures and other physical objects which carry meaning with a culture;

they are the most visible and most superficial.

Strickland (2001) argues that there are various steps involved in strategy

implementations. He advocates that strategy managers have to innovate motivation and

remunerations in close relationship with objectives and strategies. The strategy managers

have also to focus on forming an organizational culture to adjust to strategies though

creating common values, defining ethical criteria, creating a workplace which supports

strategies and creating high achievement motives in the culture of organization. The

strategy implementation process also entails performing leadership strategies that will

lead the process of value formulation, culture development and empowering

implementation, developing and saving innovations, responsibility to environment and

using opportunities, considering political aspects of strategies, confronting power

conflicts and creating consensus, posing ethical criteria and behaviour innovating

modifications for improving implementation of strategies.

While people are critical in strategy implementation, their level of motivation might be a

driving force towards the success of the process. The basic cultural requirement to earn a

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living must therefore be integrated into the motivational innovations aimed at driving

people towards implementation of strategies and creating operational & administrational

systems which can empower strategies.

2.4 Organizational culture and strategy implementation

Strategy implementation does not occur in a vacuum. There are several factors that come

into play when implementing strategy. Peters, (1982), in the 7s framework argue that

effective organizational change is the relationship between strategy, structure, systems,

style, skills, staff and shared values (super ordinate goals). Pascale, (1981) describe

strategy, structure and systems as ‘hard’ meaning that they are easily measurable, explicit

and predictable while shared values, management style, staff and skills are seen as soft

because they are less tangible, predictable and implicit.

The root of culture/performance link can be traced back to the Hawthorne Studies that

discovered the presence of an informal social system and shared assumptions and beliefs

amongst the workers. The studies revealed the presence of “organizational culture” even

though not termed so during the investigation (Marietta, 1996). Denison, (1990) suggests

in his general management framework that effectiveness is a function of values and

beliefs (culture) held by organization members, policies and procedures (behaviour),

translating the core values and beliefs into policies and practices in a consistent manner

and the interrelation of core values and beliefs, organisational policies and practices and

the business environment of the organization.

A culture that is grounded in strategy supportive values, practices and behavioural norms

adds to the power and effectiveness of a company’s strategy execution effort. For

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example if a firm wants to execute a low cost leadership strategy then a culture of

frugality and thrift would be useful; a culture built around pleasing customers would

entail fair treatment, operational excellence and employee empowerment which facilitate

execution of strategies aimed at high product quality and superior customer service

(Arabi, 2002). Companies that have innovation and technological leadership strategies

would require a culture of taking initiative, challenging status quo, exhibiting creativity,

embracing change and willingness to collaborate (Comerford, 1985).

There should be a good alignment between cultural norms and the behaviours needed for

good strategy execution; if there is misalignment then culture becomes a hindrance

because the behaviours and actions are contrary to the set strategy. Culture bred

resistance to actions and behaviours needed for good execution if widespread pose a

formidable hurdle that has to be cleared for strategy execution to succeed. A tight culture

strategy fit furthers an organization’s execution of strategy, provides clear guidance on

‘how we do things around here’, produces significant peer pressure to conform to the

acceptable norms and promotes strong employee identification with and commitment to a

company’s vision, performance targets and strategy (Comerford, 1985).

Strategies are normally formed within the existing organization culture; it therefore has to

be adjusted to fit into the new strategies. Owing to diversity in terms of race/tribe, origin

and religion within today’s organizations, the major task in strategy implementation is to

create common values, define ethical criteria, and create workplace support strategies and

a high achievement motive in the culture of the organization.

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2.5 Types of organizational culture and their effects on strategy

implementation

There are many types of organizational culture. However the ones which are believed to

have immense influence on strategy implementation in commercial banks are adaptability

culture, mission culture, bureaucratic culture and entrepreneurial culture.

2.5.1 Adaptability culture

This is culture characterized by strategic focus on the external environment through

flexibility and change to meet customer needs. The culture encourages entrepreneurial

values, norms, and beliefs that support the capacity of the organization to detect,

interpret, and translate signals from the environment into new behaviour responses. In

adaptability the culture of risk taking is valued and rewarded. Harison (2004) sees an

adaptive organization as one whose roles are open to continual redefinition and where

coordination is achieved by frequent meetings and considerable lateral communications.

Barnat (2005) describes an adaptive cycle where managers solve three fundamental

organizational problems, i.e. entrepreneurial, engineering, and administrative.

2.5.2 Bureaucratic culture

Bureaucratic culture emanates from bureaucratic organization whose features were

described by German Sociologist; Max Weber (1964 -1920). In analysing bureaucratic

organizations, Weber delineated the essential elements of bureaucratic organizations and

devoted considerable attention to the cultural values and modes of thought that gave rise

to modern bureaucracies. Bureaucratic structures and processes reflected what Weber

took to be the dominant cognitive orientation of modern societies i.e. rationality (Bruce

2007). For example, failure or success of a strategy is not attributed to spirits of success

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or some sort of supernatural believes but rational causes such as adequate communication

and flexible approach to change. The culture of rational approach being an important

element in bureaucratic culture could therefore be useful in enabling an organization to

achieve strategic goals (Barnat 2005).

2.5.3 Mission culture

Mission describes an organizations’ reason for existence, (Hughes 2005). Nazir and

Mushtaq (2008) found that mission is the most important cultural trait that today’s

organizations need to focus on. In organizations embracing mission culture, strategic

leaders concentrate on establishing and communicating a clear mission and purpose for

the organization and allowing employees to design their own work activities with this

mission. Leaders play the role of coaches in giving general direction, but encourage

individual decision-making to determine the operating details to execute the plan.

2.5.4 Entrepreneurial culture

In the entrepreneurial culture, one strong leader takes bold, risky action on behalf of his

organization. Strategy making is dominated by active search for new opportunities.

Power is centralised in the hands of the Chief Executive. Strategy moves forward in the

entrepreneurial organization by taking large bold decisions. Growth is the dominant goal

of enterprenuerial organization (Mintzberg 1988). According to Brown (2004)

entrepreneurial culture presents more work than a job. It is a lifestyle. Employees are

more like a team in most companies, and in some cases, they are even like a family.

Salama (2011) highlighted ways in which organizations can exercise entrepreneurial

culture by indicating that the focus should be on treating people with respect, a simple

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premise which threads through each and every complicated issue that can arise within an

organization. Respect and trust provide the necessary base for a vibrant and sustainable

corporate culture.

2.6 Conceptual empirical link

The concepts of adaptability, bureaucratic, mission and entrepreneurial culture are key

constructs presumed to have a strong link with strategy implementation in the present

study. Empirical evidence indicates that to some extent different cultural aspects within

an organization are indeed forces to reckon with if organizations have to succeed in

strategy implementation. In a study by Denison (1990) for a US consulting firm,

adaptability culture of an organization makes a huge difference when it comes to

delivering positive results (Deborah 2002.) The study found that companies with best

adaptability culture led in shareholder value as well as rate of their growth and

productivity. Studies have obviously defined adaptability and the importance of cultural

adaptability ensuring the organizations have successful change towards the environment.

However, there is limited discussion and studies based on the effects of adaptability

culture on strategy implementation.

Bureaucratic culture has empirically been found to attract criticism and support in equal

measure. Critics of bureaucratic culture indicate that it serves goals that are not just

irrational but unethical, immoral and criminal. History has provided plenty of examples

of rationality being used for barbaric ends, Nazi German being a particular repellent case

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(Lawrence 2001). Arguments in favour of bureaucracies indicate that it is the most

efficient, effective, and predictable (Malone 2004).

According to Carter (2007) the effects of bureaucracy are primarily more to be

considered disadvantages than advantages. He argues that bureaucracy theoretically

provides a service, but the profit motive is removed from this process. This inevitably

results in inefficiency within the bureaucratic organization partially because of the

misallocation of resources, based on rationales that are random, non-economical, often

ideological, and often entirely unrelated to the task at hand. As a bureaucracy ages its

primary functional objective becomes its own survival, long after the original objective

for its creation has been fulfilled, or is effectively being provided by cheaper, faster, more

efficient organizations. It is in these final stages that a bureaucracy becomes a negative,

destructive force in society, working openly against public welfare (Beer 2000).

According to Chimhanzi,(2004), the effectiveness of mission culture on strategy

implementation depends on among other factors, the purpose and aims of the

organization, the organization’s primary stakeholders; i.e clients/customers, shareholders

and how the organization provides value to these stakeholders. Arabi ( 2004 ) asserts that

mission culture has a number of advantages which establish an organization wide unity

of purpose. It however works best where an organization has resources to absorb the cost

of building and maintaining the value system.

Mission culture according to American Medical Informatics (2005) only works with

informed and intelligent people, it consumes enormous amount of time to install and can

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foster such strong sense of organizational identity among employess that it becomes a

handicap. This approach has strong overwhelming doctrinal air about it and fosters

homogeinity and inbreeding. Though mission culture, can play an important role in

strategy implementation, studies covered hardly bring out a detailed outlook on the extent

to which this kind of culture affects strategy implementation. While Chimhanzie,(2004)

says that effective organizational mission is a critical component in strategy

implementation, he has similarly to other authors such as Barnat (2005 ) and Arabi

(2004) not revealed the extent to which mission culture facilitates or acts as a barrier to

strategy implementation epecially in commercial banks.

An entrepreneurial organizational set up seeks to open doors for communication

(Minkova, 2011). Minkova noted that organizations that create an environment where

people can interact with each other, support and recognize each others efforts and provide

positive rewards, makes employees aware of the direction of the company they are

working for and facilitates strategy implementation. He further noted that treating

employees with respect enables them to do their jobs to the best of their abilities. By

challenging people to raise the bar, providing them with fun activities, keeping people

informed and humanizing management, an organization gets a culture that allows the

company to grow and flourish.

The conceptual and empirical review of concepts of organizational culture reveals that

the cultural models discussed in this study reveal an existence of diverse opinions as far

as cultural aspects of an organization and strategy implementation is concerned. There is

however limited empirical link between these culture aspects and strategy

implementation in commercial banks, a gap that this study seeks to fill.

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CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction

This chapter presents in a sequential flow the plan of activities undertaken by the

researcher to accomplish the study. The chapter has been sectioned into; research design,

population of the study, sample design, data collection, data analysis and targets and

achievement.

3.2 Research design

The study was a survey aimed at examining the effects of organizational culture on

strategy implementation in commercial banks in Kenya. A survey was used to enable the

researcher to establish the cultural manifestations in the relatively small population of

commercial banks in the country recognizing the effects culture could be having on

strategy implementation was likely to vary from one bank to another.

3.3 Population of the study

The target population for this study was all commercial banks that are licensed by the

Central Bank of Kenya. According to the Bank Supervision Annual Report of the Central

Bank of Kenya (2011), there were 43 commercial banks in Kenya. Out of the 43 banks,

40 responded to the study constituting 93% of the total population.

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3.4 Sample design

A census survey was carried out because the population was small and manageable for

the researcher.

3.5 Data collection

Primary data was collected using structured questionnaires consisting of both closed and

open-ended questions. The questionnaire was administered through ‘drop and pick later

method’ a variation of the mailed questionnaire. This type of questionnaire has been

used in other studies for example, Gathoga (2001), Goro (2003), and Ohaga (2004). The

questionnaire was divided into two parts, Part A and Part B. Part A was meant to capture

the background information while Part B intended to capture data relevant to the

objectives of this study.

3.6 Data Analysis

Data was analysed both qualitatively and quantitatively. Qualitative data analysis

involved explanation of information obtained from the empirical literature. Quantitative

analysis involved use of numeric measures to the scores of various responses on the

effects of organizational culture on strategy implementation. The degree of relationship

between various cultural manifestations and strategy implementation was determined

through correlation analysis. The output of the analysis was presented in tables and charts

and interpretations made based on the research objectives.

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CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION

4.1 Introduction

This chapter presents the study findings on the effects of organizational culture on

strategy implementation in commercial banks in Kenya. The study findings are discussed

in three segments; background information of the respondents, cultural manifestations in

commercial banks in Kenya and the effects of organizational culture on strategy

implementation.

4.2 Data Analysis

4.2.1 Response Rate

Table 4. 1: Response Rate

Frequency Percent

Valid

Responded 40 93.0

Did not respond 3 7.0

Total 43 100.0

Figure 4. 1: Response Rate

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Out of the 43 respondents sampled to participate in the study, 40 of the respondents

answered the research questionnaire while 3 did not respond. This formed a response rate

of 93.02%.

4.2.2 Background of the Respondents

Background information for this study represents the respondent’s information and

response on the number of branches the commercial banks have, scope of operation, the

type of ownership and the period the banks have operated in Kenya.

4.2.3 Number of branches of commercial banks in Kenya

Number of branches

Figure 4. 2: Number of Branches

Most of the banks which responded to the research questionnaire have more than one

branch. 50% percent of these banks have more than 20 branches in operation as shown in

figure 4.2. Banks with 16-20 branches were represented by 15%, 1-5 branches by 12.5%,

6-10 branches by 10%. 7.5% of banks have 11-15 branches.

22

4.2.4 Scope of banks’ operation

Figure 4. 3: Scope of banks’ operation

62.5% of the banks were both international and local. Those that are purely local are

37.6%.

4.2.4 Bank Ownership

Figure 4. 4: Bank Ownership

72.5 % of commercial banks in Kenya are privately owned, 17.5% are government

owned while 7.5% are in the category of other ownerships such as foreign ownership.

23

4.2.5 Period of Bank’s operation in Kenya

Figure 4. 5: Period of operation in Kenya

87% percent of the commercial banks in Kenya have been operating for a period of more

than 10 years. 7% have been in operation for 5-10 years while 5% have operated for 0-5

years.

4.3 Cultural manifestations and their effects on strategy implementation in

commercial banks in Kenya

24

4.3.1 Cultural manifestation in commercial banks in Kenya

Table 4. 2: Cultural Manifestations in commercial banks in Kenya

Cultural Manifestations Count Subtotal N %

Our culture is flexible and allows changes to take place

Strongly Agree 18 45.0%

Agree 15 37.5%

Undecided 5 12.5%

Disagree 0 0.0%

Strongly Disagree 2 5.0%

Total 40 100.0%

We can easily adjust to changes in the work environment


Agree 21 52.5%

Undecided 4 10.0%

Disagree 0 0.0%


Total 40 100.0%

I find it easy to adjust to structural changes in our work

environment


Agree 24 60.0%

Undecided 2 5.0%

Disagree 5 12.5%


Total 40 100.0%

Coping up with challenges is facilitated by cultural

flexibility and adaptability


Agree 14 36.8%

Undecided 4 10.5%

Disagree 0 0.0%


Total 38 100.0%

We have a culture that is responsive to dynamic work

environment


Agree 17 42.5%

Undecided 6 15.0%

Disagree 0 0.0%


Total 40 100.0%

We have well defined tasks for our employees


Agree 13 32.5%

Undecided 2 5.0%

Disagree 0 0.0%


Total 40 100.0%

Employees are known by their roles but not as individuals


Agree 15 37.5%

Undecided 6 15.0%

Disagree 2 5.0%


Total 40 100.0%

Employees are known by their roles but not as individuals


Agree 15 37.5%

Undecided 6 15.0%

Disagree 2 5.0%


Total 40 100.0%

25

Cultural Manifestations Frequency Percentage %

We have a well formed structural framework


Agree 13 33.3%

Undecided 9 23.1%

Disagree 2 5.1%


Total 39 100.0%

Our culture is that of a family


Agree 11 28.9%

Undecided 3 7.9%

Disagree 2 5.3%


Am more interested in upholding our organizational

cultural values than work


Agree 12 31.6%

Undecided 4 10.5%

Disagree 8 21.1%


Total 38 100.0%

Our culture is that of dynamism, entrepreneurship and

creativity at work


Agree 22 55.0%

Undecided 2 5.0%

Disagree 6 15.0%


Total 40 100.0%

We focus on results and job creation more than anything

else


Agree 9 22.5%

Undecided 4 10.0%

Disagree 6 15.0%


Total 40 100.0%

Majority of banks held that, their organizational culture is flexible and allows change to

take place. This was represented by 45% who strongly agreed and 37.5% who agreed

with the statement. Only a minor percentage of 5% strongly disagreed with the statement.

52% of commercial banks operating in Kenya agreed that they have the capability to

adjust to changes in the work environment. This was further supported by a response of

32% who strongly agreed with the statement. 10% of them can either adjust to changes

in the work environment as shown by those who were undecided about the statement.

Flexibility to structural changes in work environment was agreed upon; 60% agree and

17.5% strongly agree. However, 17.5% of the banks cannot easily adjust to structural

26

changes in the work environment as shown by those who disagreed and strongly

disagreed with the statement. Over 85% of the respondents had agreeing opinion that

coping up with challenges is facilitated by cultural flexibility and adaptability. Minority

of them expressed their opinion as undecided in response to the statement.

In a statement seeking to establish commercial banks with a culture that is responsive to

dynamic work environment, 42.5% agreed with the statement and 37.5% strongly agreed

with the statement. Quite a small percentage of 15% held an undecided view and 5%

strongly disagreed with the statement.

Over 90% of banks have well defined tasks for their employees. This was represented by

a response of 57.5% and 32.5% of those who strongly agreed and agreed with the

statement. However, a small percentage of 10% represented by undecided and strongly

disagree opinions don’t have well defined tasks for their employees. Of these commercial

banks, 75% recognize employees by their roles as opposed to individual recognition. 66%

of commercial banks have a well formed structural framework that supports strategy

implementation. This is revealed by majority of the respondents who expressed their

opinions as strongly agree and agree. 23.1% however, are undecided to have a well

formed structural framework while 10.2% don’t have well formed structural frameworks.

Response of 81.5% revealed that they have mission culture. 10.6% disagreed and

strongly disagreed that they have organizational culture. Majority of respondents are

more interested in upholding their organizational cultural values than work. This was

represented by 31.6% of those who agreed and 18.4% who strongly agreed. Conversely,

39.5% who presented disagreeing opinion did not support the statement.

27

75% of the commercial banks uphold a culture of dynamism, entrepreneurship and

creativity at work. 5% were undecided, 15% disagreed and 5% strongly disagreed that

their culture is of dynamism, entrepreneurship and creativity at work. Of the commercial

banks in Kenya, 65% focus on results and job creation more than anything else while

25% don’t focus greatly on results and job creation.

4.3.2 Effects of organizational culture on strategy implementation

Table 4.3 Effect of adaptability culture on strategy implementation

Adaptability culture Frequency Percentage %

Our adaptive culture has facilitated fast execution of tasks


Agree 27 71.1%

Undecided 0 0.0%

Disagree 0 0.0%


Total 38 100.0%

By easily adopting to changes in environment we are able to

teamwork and implement strategies efficiently


Agree 23 60.5%

Undecided 2 5.3%

Disagree 1 2.6%


Total 38 100.0%

Finding it easy to adjust has facilitated innovativeness in

strategy implementation process


Agree 21 55.3%

Undecided 6 15.8%

Disagree 1 2.6%


Total 38 100.0%

Flexibility of our culture has facilitated coping up with

strategy implementation challenges


Agree 13 34.2%

Undecided 3 7.9%

Disagree 2 5.3%


Total 38 100.0%

By adjusting to the environment we are able to easily

implement strategies.


Agree 15 39.5%

Undecided 1 2.6%

Disagree 0 0.0%


Total 38 100.0%

28

In statements gauging the relationship between the adaptability organizational culture and

implementation strategy, all banks agreed that their adaptive culture has facilitated fast

execution of tasks. This was shown by 71.1% of those with agreeing opinion and 28.9%

who strongly agreed. 92.1% agreed with the statement that by easily adopting to changes

in environment they are able to teamwork and implement strategies efficiently.

Adaptability organization culture which necessitated many banks to find it easy to adjust

has facilitated innovativeness in strategy implementation process. This was supported by

majority of the respondent’s equivalent to 92% from those who strongly agreed and

agreed with the statement. Only a minimal percent held contrary opinion by expressing

an opinion of undecided (5.3%) and disagreeing opinion of 2.6%. Further, flexibility of

organizational culture adopted by banks has facilitated coping up with strategy

implementation challenges as agreed upon by 86.8%. Ability to easily implement

strategies by adjusting environment was supported by majority of the banks with 97.4%.

Table 4. 3: Effect of Bureaucratic culture on strategy implementation

Frequency Percentage

%

Well defined employee roles has facilitated efficiency

in strategy implementation


Agree 20 50.0%

Undecided 0 0.0%

Disagree 1 2.5%


Total 40 100.0%

Knowing employees by the roles highly reduces

motivation to implement new strategies


Agree 8 22.2%

Undecided 2 5.6%

Disagree 8 22.2%


Total 36 100.0%

Having a well defined structural framework makes

strategy implementation easier


Agree 13 34.2%

Undecided 1 2.6%

Disagree 4 10.5%


Total 38 100.0%

29

Majority of the respondents tallying to 92.5% agreed that, having well defined employee

roles has facilitated efficiency in strategy implementation. On the other hand, in a

statement seeking to establish whether knowing employees by the roles highly reduces

motivation to implement new strategies, majority of the respondents disagreed with the

statement. This was presented by respondents with strong disagree opinion (44.4%) and

disagree opinion (22.2%). Those who supported the statement were 27.8% by expressing

their opinion to strongly agree and agree.

Having well defined structural framework makes strategy implementation easier as

shown by most of the respondents who held their opinion as 81.6%. In regard to the

statement, only 15.8% held converse opinion of disagreeing and the minority of the

respondents (2.6%) having undecided opinion.

Table 4. 4: Effect of Mission culture on strategy implementation

Count Subtotal N

%

Interest to uphold cultural values has negatively

affected strategy implementation

Strongly agree 6 16.2%

Agree 13 35.1%

Undecided 4 10.8%

Disagree 5 13.5%

Strongly disagree 9 24.3%

Total 37 100.0%

In organizations embracing mission culture, strategic leaders concentrate on establishing

and communicating a clear mission and purpose for the organization and allowing

employees to design their own work activities with this mission. From the study, mission

culture characterised by the interest to uphold cultural values has negatively affected

strategy implementation. This statement was agreed upon by majority of the respondents

who strongly agreed (16.2%) and agreed (35.1%). On the other hand, 13.5% disagreed

30

with the statement as 24.3% strongly disagreed. Minority response of 10.8% was

received from the respondents who had undecided opinion.

Table 4. 5: Effect of Entrepreneurial culture on strategy implementation

Frequency Percentage %

Dynamism, entrepreneurship and creativity has resulted to

successful strategy implementation


Agree 16 42.1%

Undecided 1 2.6%

Disagree 0 0.0%


Total 38 100.0%

Only strategies that focus on results and job completion are

successfully implemented in our organisation


Agree 12 31.6%

Undecided 2 5.3%

Disagree 2 5.3%


Total 38 100.0%

Majority of the commercial banks that have adopted entrepreneurial culture accepted that

dynamism, entrepreneurship and creativity have resulted to successful strategy

implementation by 92%. Organizations can exercise entrepreneurial culture by indicating

that the focus should be on treating people with respect, a simple premise which threads

through each and every complicated issue that can arise within an organization. Respect

and trust provide the necessary base for a vibrant and sustainable corporate culture.

Banks that support successful implementation of only strategies that focus on results and

job completion are 81.6% according to the respondents who expressed their opinion as

strongly agree and agree. 13.2% however, don’t agree with the statement while 5.3% had

undecided view as per the statement.

31

4.3.3 Regression analysis on effects of organizational culture on strategy

implementation

A multiple linear regression was undertaken to examine the overall relationship between

different cultural practices and strategy implementation on commercial banks.

Table 4.7 Regression model summary

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .496a .246 .149 .43108

a. Predictors: (Constant), Adaptability culture , Beauracratic culture , Mission

culture , entrepreneurship culture

The overall model summary established that the overall correlation value for different

cultural manifestations and strategy implementation indicate an R value of 0.496,

indicating a moderate relationship with strategy implementation.

Table 4.8: Coefficient

Coefficients

Model Unstandardized Coefficients Standardized

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 1.917 .249

7.689 .000

Adaptability culture .031 .129 .043 .241 .812

Bureaucratic culture .100 .088 .187 1.134 .265

Mission culture .006 .100 .011 .057 .955

Entrepreneurship culture .168 .060 .470 2.798 .009

a. Dependent Variable: Strategy implementation

The Beta coefficient reflects the strength of the influence of different cultural

manifestations on strategy implementation. Entrepreneurship culture has the highest

coefficient value of 0.470 indicating a moderate influence. This is followed by

bureaucratic culture which has a coefficient of 0.187 reflecting a weak influence on

32

strategy implementation. Similarly adaptability and mission cultures show a weak

influence with beta coefficient values being 0.043 and 0.011 respectively.

4.4 Discussion

4.4.1 Background information

Background information of this study presents the respondents information and responses

on the number of branches the commercial banks have, scope of operation, the type of

ownership and the period the banks have operated in Kenya.

Out of the 43 respondents sampled to participate in the study, 40 of the respondents

answered the research questionnaire while 3 did not respond. This formed a response rate

of 93.02% which is adequate to investigate the effects of organizational culture on

strategy implementation in commercial banks, according to the recommendation of

Mugenda (2003) of 50% against the above response rate.

Most of the banks which responded to the research questionnaire have more than one

branch. The number of branches and decisions on location made by each bank’s

management team are based on individual company and market characteristics, including

bank strategies, product offerings, management depth, and level of competition. More

important is the understanding of organizational culture in line with multi-branch strategy

implementation.

The banks examined were found to operate under local and international scope. This

information reveals that, the banks have a wider experience in dealing with different

clients all over the world and are knowledgeable enough on the effects of their

33

organizational culture on strategy implementation. Strategies are normally formed within

the existing organization culture; it therefore has to be adjusted to fit into the new

strategies. Owing to diversity in terms of size, origin and race within today’s

organizations, the major task in strategy implementation is to create common values,

define ethical criteria, and create workplace support strategies and a high achievement

motive in the culture of the organization.

Varied types of ownership present different types of organization culture manifested by

the banks which pose different effects on strategy implementation. This phenomenon

further amplifies the fact that organizational culture is the sum of dominant values,

visions, perspectives, standards and modes of behaviour that typify an organization and

that the dominant culture affects or depends on the stakeholders of the organization.

The period of operation of these banks indicate the level of experience on different

aspects of organization culture and their effects on strategy implementation. According

to many experts, the number of years of existence provides an avenue to learn many

processes and cultural changes happening in a business as it pursues different strategies.

4.4.2 Cultural manifestation in commercial banks in Kenya


take place. Flexible culture encourages entrepreneurial values, norms, and beliefs that

support the capacity of the organization to detect, interpret, and translate signals from the

environment into new behaviour responses. A culture that is grounded in strategy

supportive values, practices and behavioural norms adds to the power and effectiveness

of a company’s strategy execution effort.

34

Over half of the commercial banks operating have the capability to adjust to changes in

the work environment. A few of them can either adjust to changes in the internal work

environment or external work environment. There is also evident on flexibility to

structural changes in the work environment as indicated by majority response. However

some banks cannot easily adjust to structural changes in work environment. Cultural

flexibility and adaptability was found to facilitate coping up with challenges among

commercial banks. Most commercial banks in Kenya have adopted cultures that are

flexible in dynamic work environments.

Majority of banks manifest beuracractic culture. They have well defined tasks for their

employees, recognize employees by their roles as opposed to individual recognition, and

have a well formed structural framework that supports strategy implementation. A tight

culture strategy fit furthers an organization’s execution of strategy, provides clear

guidance on roles, responsibilities and procedures that promotes strong employee

identification with and commitment to a company’s vision, performance targets and

strategy.

Mission culture is eminently practiced as revealed by majority response. Respondents

revealed that they are more interested in upholding their organizational cultural values

than work. There is also an indication that many commercial banks uphold a culture of

dynamism, entrepreneurship and creativity at work. Companies that have innovation and

technological leadership strategies would require a culture of taking initiative,

challenging status quo, exhibiting creativity, embracing change and willingness to

collaborate.

35

4.4.3 Effects of organizational culture on strategy implementation

Adaptability culture was found to facilitate fast execution of tasks through adapting to

changes in environment. Adaptability culture made it easy for many banks to adjust

during the strategy implementation process. Further, flexibility of organizational culture

adopted by banks has facilitated coping up with strategy implementation challenges.

Ability to easily implement strategies by adjusting to the environment was supported by

majority of the banks. Adaptable culture includes risk taking which is valued and

rewarded. This confirms the importance of adaptive cycle where managers solve

fundamental organizational problems that include; entrepreneurial, engineering, and

administrative.

Having well defined employee roles has facilitated efficiency in strategy implementation.

Well defined structural framework makes strategy implementation easier. Respondents

highlighted the fact that failure or success of a strategy is not attributed to spirits of

success or some sort of supernatural believes but rational causes such as adequate

communication and flexible approach to change. The culture of rational approach being

an important element in bureaucratic culture could therefore be useful in enabling an

organization to achieve strategic goals.

In organizations embracing mission culture, strategic leaders concentrate on establishing

and communicating a clear mission and purpose for the organization and allowing

employees to design their own work activities with this mission. From the study, mission

culture characterised by the interest to uphold cultural values has negatively affected

strategy implementation. It is therefore evident that leaders play the role of coaches in

36

giving general direction, but encourage individual decision-making to determine the

operating details to execute the plan.



implementation. Organizations can exercise entrepreneurial culture by indicating that the

focus should be on treating people with respect, a simple premise which threads through

each and every complicated issue that can arise within an organization. Respect and trust

provide the necessary base for a vibrant and sustainable corporate culture. Banks support

the fact that successful implementation of strategies focuses on results and job

completion.

4.4.4 The relationship between cultural manifestations and strategy implementation

The overall model summary established that there is a moderate relationship between

organizational culture and strategy implementation. The Beta coefficient reflects the

strength of the influence of different cultural manifestations on strategy implementation.

Entrepreneurship culture has the highest coefficient indicating a moderate influence

followed by bureaucratic culture, adaptability culture and mission culture all of which

have a weak influence on strategy implementation.

37

CHAPTER FIVE: SUMMARY, CONCLUSION AND

RECOMMENDATIONS

5.1 Introduction

Chapter five provides a summary, conclusion and recommendations to the study, effects

of organizational culture on strategy implementation in commercial banks in Kenya

5.2 Summary of the Findings

5.2.1 Background information

Out of the 43 respondents, 40 answered the research questionnaire while 3 did not

respond forming a response rate of 93.02%. Most of the banks which responded to the

research questionnaire have more than one branch. Fifty-five percent of these banks have

more than 20 branches in operation as shown in figure 4.2. Banks with 16-20 branches

were represented by 15%, 1-5 branches by 12.5%, 6-10 branches by 10 percent. The least

category represented by 7.5% shown that their banks have 11-15 branches.

Majority of the banks represented by 62.5% operate under the scope of both international

and local. Those operating purely on local scope are 37.6%. Privately owned commercial

banks in Kenya are the majority amounting to 72.5%. Those owned by government are

17.5% while those with other ownerships such as foreign ownership are 7.5%. Eighty-

seven percent of the commercial banks in Kenya have been operating for a period of

more than 10 years. Seven percent have been in operation for 5-10 years while the

minority of the banks of 5% has operated for 0-5 years.

38

5.2.2 Cultural manifestations in commercial banks in Kenya


take place. This was represented by 45% who strongly agreed and 37.5% who agreed

with the statement. Only a minor percentage of 5% who strongly disagreed with the

statement. Fifty-two percent of commercial banks operating in Kenya agreed that they

have the capability to adjust to changes in the work environment. This was further

supported by a response of 32% who strongly agreed with the statement. 10% of them

can either adjust to changes in the work environment as shown by those who had

undecided opinion on the statement. Flexibility to structural changes in work

environment was agreed upon 60% of those with agree opinion and 17.5% who held their

opinion as strongly agree. However, 17.5% of the banks cannot easily adjust to structural

changes in work environment as shown by those who disagreed and strongly disagreed

with the statement.

In a statement seeking to establish commercial banks with a culture that is responsive to

dynamic work environment, majority (42.5%) agreed with statement as 37.5% strongly

agreed with the statement. Quite a small percentage of 15% held an undecided view and

5% strongly disagreed with the statement. This indicates that, many of the commercial

banks in Kenya have adopted the cultures that are flexible in dynamic work

environments. Over 90% of banks have well defined tasks for their employees. This was

presented by a response of 57.5% and 32.5% of those who strongly agreed and agreed

with the statement. However, a small percentage of 10% represented by undecided and

strongly disagree opinions don’t have well defined tasks for their employees. Of these

39

commercial banks, 75% recognize employees by their roles as opposed to individual

recognition.

Sixty-six percent of commercial banks have a well formed structural framework that

support strategy implementation. This is revealed by majority of the respondents who

expressed their opinions as strongly agree and agree. 23.1% however, are undecided to

have a well formed structural framework while 10.2% don’t have well formed structural

frameworks. Response of 81.5% revealed that, their organization culture is that of a

family. Contrary, 10.6% comprising of those who disagreed and strongly disagreed have

no family-like organizational culture. Majority of respondents are more interested in

upholding their organizational cultural values than work. This was represented by 31.6%

of those who agreed and 18.4% who strongly agreed. Conversely, 39.5% who presented

disagreeing opinion did not support the statement.

Banks that uphold culture of dynamism, entrepreneurship and creativity at work are the

majority counting to 75%. Undecided banks ranged to 5% while 15% disagreed and 5%

strongly disagreed that their culture is of dynamism, entrepreneurship and creativity at

work. Of the commercial banks in Kenya, majority of them equivalent to 65% focus on

results and job creation more than anything else while 25% have no great focus on results

and job creation.

5.2.3 Effect of aadaptability cculture on strategy implementation

In statements gauging the relationship between the adaptability organizational culture and

implementation strategy, all banks agreed that their adaptive culture has facilitated fast

execution of tasks. This was shown by 71.1% of those with agreeing opinion and 28.9

40

who strongly agreed. 92.1% agreed with the statement that by easily adopting to changes

in environment they are able to teamwork and implement strategies efficiently.

Adaptability organization culture which necessitated many banks to find it easy to adjust

has facilitated innovativeness in strategy implementation process. This was supported by

majority of the respondent’s equivalent to 92% from those who strongly agreed and

agreed with the statement. Only a minimal percent held contrary opinion by expressing

an opinion of undecided (5.3%) and disagreeing opinion of 2.6%. Further, flexibility of

organizational culture adopted by banks has facilitated coping up with strategy

implementation challenges as agreed upon by 86.8%. Ability to easily implement

strategies by adjusting environment was supported by majority of the banks with 97.4%.

5.2.4 Effect of bureaucratic culture on strategy implementation

Majority of the respondents tallying to 92.5% agreed that, having well defined employee

roles has facilitated efficiency in strategy implementation. Having well defined structural

framework makes strategy implementation easier as shown by most of the respondents

who held their opinion as 81.6%. In regard to the statement, only 15.8% held converse

opinion of disagreeing and the minority of the respondents (2.6%) had undecided

opinion.

5.2.5 Effect of mmission culture on strategy implementation

Mission culture characterised by the interest to uphold cultural values has negatively

affected strategy implementation. This statement was agreed upon by majority of the

respondents who strongly agreed (16.2%) and agreed (35.1%). On the other hand, 13.5%

disagreed with the statement as 24.3% strongly disagreed. Minority response of 10.8%

was received from the respondents who had undecided opinion.

41

5.2.6 Effect of entrepreneurial culture on strategy implementation



implementation by 92%.

Banks that support successful implementation of only strategies that focus on results and

job completion are 81.6% according to the respondents who expressed their opinion as

strongly agree and agree. 13.2% however, don’t agree with the statement while 5.3% had

undecided view as per the statement.

5.3 Conclusion

The size and location and bank network is based on individual entity and market

characteristics, including bank strategies, product offerings, management depth, and level

of competition. Majority of the banks in Kenya have a wider experience in dealing with

different clients all over the world and are knowledgeable enough on the effects of their

organizational culture on strategy implementation. The many years of existence attests

many processes and cultural changes happening in a business in pursuit of different

strategies.


take place. A culture that is grounded in strategy supportive values, practices and

behavioural norms adds to the power and effectiveness of a company’s strategy execution

effort. 52% percent of commercial banks operating in Kenya agreed that they have the

capability to adjust to changes in the work environment. Many of the commercial banks

in Kenya have adopted cultures that are flexible in dynamic work environments. 60% of

42

commercial banks have a well formed structural framework that supports strategy

implementation.

75% of the commercial banks uphold a culture of dynamism, entrepreneurship and

creativity at work. Adaptable organizational culture which necessitated many banks to

find it easy to adjust and has facilitated innovativeness in strategy implementation

process as supported by 92% of the respondents. Adaptable culture includes risk taking

which is valued and rewarded. Having well defined structural framework makes strategy

implementation easier as shown by most of the respondents. From the study, mission

culture characterized by the interest to uphold cultural values has negatively affected

strategy implementation. Majority of the commercial banks have also adopted

entrepreneurial culture which is full of dynamism, entrepreneurship and creativity hence

successful strategy implementation in the banking sector. In the entrepreneurial culture,

one strong leader takes bold, risky action on behalf of his organization.

5.4 Recommendations

5.4.1 Recommendation for policy and practice

It is fundamental for organizational culture to be aligned with multi-branch strategy

implementation. With diversity in terms of size, origin and race within giant Kenyan

banks, the major task in strategy implementation is to create strategic policies that

promote common values, define ethical criteria, and create workplace support strategies

and a high achievement motive in the culture of the organization. Banks should have a

tight culture strategy fit that facilitates execution of strategy, provides clear guidance on

43

roles, responsibilities and procedures that promotes strong employee identification with

and commitment to a company’s vision, performance targets and strategy.

Commercial banks that have innovation and technological leadership strategies would

require a culture of taking initiative, challenging status quo, exhibiting creativity,

embracing change and willingness to collaborate. An adaptive cycle enables managers to

solve fundamental organizational problems. The culture of rational approach being an

important element in bureaucratic culture could be useful in enabling an organization to

achieve strategic goals. Focus should be directed at leaders in different capacities as they

play the role of coaches in giving general direction, but further encourage individual

decision-making to determine the operating details. Organizations can exercise

entrepreneurial culture by indicating that the focus should be on treating people with

respect and trust that provide the necessary base for a vibrant and sustainable corporate

culture.

5.4.2 Recommendations for further research

The present study revealed that organizational culture has a strong link with strategy

implementation. However further research should be undertaken in other industries in

order to find out how organizational culture affects strategy implementation. A similar

study should also be done with experts in organizational culture and strategy

implementation to bring out objective opinions.

5.5 Limitations of the study

The information provided in the study was based on respondent perception on what they

believed was the effect of organizational culture on strategy implementation in their

44

banking institutions. Therefore the conclusions and recommendation deduced from the

study were based on their subjective opinion of the aspects examined in the study. Some

banks considered the study intrusive and therefore were either reluctant to provide

information or took longer time than expected to respond to the questionnaire.

45

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APPENDICES

Appendix I: Introduction letter

EUNICE MUTHONI

P.O Box 6408 – 00300

NAIROBI

5th

October 2011

The Bank Manager

PO Box……………

Nairobi

RE: PERMISSION TO COLLECT DATA FOR ACADEMIC RESEARCH

Dear Sir / Madam,

I am a Masters of Business Administration student at the University of Nairobi. As a

requirement for my degree, I am supposed to carry out a research study intended to solve

a problem within my area of specialization. I therefore intend to carry out a study on the

effects of organizational culture on strategy implementation. Your organization has been

identified as a suitable case for this study mainly because of the rapid growth in the

banking industry and the need to use of new strategies to gain competitive advantage.

The information provided will solely be used to accomplish this academic goal.

I therefore request you to allow me to gather information in your organization through

issuing of a questionnaire.

Yours Faithfully,

Eunice

49

Appendix II: Questionnaire

RE: INTRODUCTION

Dear Respondent

This questionnaire is aimed at providing information on the effects of organizational

culture on strategy implementation in commercial banks in Kenya. You are kindly

requested to fill in the questions depending on the instructions given. The information

you provide will be used to accomplish an academic goal and will be treated with utmost

confidentiality. Do not include your name anywhere on the questionnaire. Note that there

are no right or wrong answers.

PART A: Background information

Please answer the following items. Tick (√) in the appropriate space.

1. How many branches does your bank have in Kenya

………………………………………………………………………………………

……………………………………………………………………………………..

2. What is the scope of your banks operations

a. International

b. Local

3. Kindly state the ownership of your bank

a. Government

b. Privately owned

c. Others (Please specify) ……………………………………………………

…………………………………………………………………………….

4. How long has your bank been operational in Kenya

a. 0-5 years

b. 6-10 years

c. Over 10 years

50

PART B: Effects of organizational culture on strategy implementation

5. Please indicate your degree of agreement with the following cultural

manifestations within your bank .Use Use 1- Strongly agree 2- Agree 3-

Undecided, 4- Disagree, and 5- Strongly disagree.

Organizational culture 1 2 3 4 5

a. Our culture is flexible and allows changes to take place

b. We can easily adjust to changes in the work environment

c. I find it easy to adjust to structural changes in our work

environment

d. Coping up with challenges is facilitated by cultural flexibility and

adaptability

e. We have a culture that is responsive to dynamic work environment

f. We have well defined tasks for our employees

g. Employees are known by their roles and not as individuals

h. We have a well formed structural framework

i. Our culture is that of a family

j. Am more interested in upholding our organizational cultural values

than work

k. Our culture is that of dynamism, entrepreneurship and creativity at

the work place

l. We focus on results and job creation more than anything else

51

PART B: Effects of organizational culture on strategy implementation

6. Please indicate your degree of agreement with the relationship between the

following statements on organizational culture and strategy implementation in

your bank.

Use 1- Strongly agree 2- Agree 3- Undecided, 4- Disagree, 5 - Strongly

disagree.

Organizational culture 1 2 3 4 5

a. Our adaptive culture has facilitated fast execution of tasks

b. By easily adopting to changes in environment we are able to

teamwork and implement strategies efficiently

c. Finding it easy to adjust has facilitated innovativeness in strategy

implementation process

d. Flexibility of our culture has facilitated coping up with strategy

implementation challenges

e. By adjusting to the environment, we are able to easily implement

strategies

f. Having well defined employee roles has facilitated efficiency in

strategy implementation

g. Knowing employees by the roles highly reduces motivation to

implement new strategies

h. Having a well defined structural framework makes strategy

implementation easier

i. Interest to uphold cultural values has negatively affected strategy

implementation

j. Dynamism, entrepreneurship and creativity at work place has

contributed to successful strategy implementation

k. Only strategies that focus on results and job completion are

successfully implemented in our organization

52

7. In your opinion, what would you suggest to be done to your organizational culture

to facilitate successful strategy implementation

i. ……………………………………………………………………………

ii. ……………………………………………………………………………

iii. …………………………………………………………………………

End

Thank you

53

APPENDIX III: Banking sector market share

Documents

EFFECTS OF ORGANIZATIONAL CULTURE ON STRATEGY IMPLEMENTATION IN COMMERCIAL BANKS …€¦ · · 2016-08-19EFFECTS OF ORGANIZATIONAL CULTURE ON STRATEGY IMPLEMENTATION IN COMMERCIAL