Effect of quality management practices and corporate culture on the operational performance of commercial banks in Nairobi City County

Ogendo, Robert Ouko
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Strathmore University
The Kenyan banking industry has been faced by myriad of operational challenges that have resulted in the closure of a number of institutions. However, the role of quality management practices within the industry has not been exhaustively reviewed. This study sought to examine how the quality management practices and corporate culture as a moderating factor on the operational performance of banks. The study specifically examines the effect of customer focus, continuous improvement and management support on operational performance of the banks. Further the moderating effect of corporate culture on the relationship between quality management practices and operational performance of the commercial banks was analysed. The study was anchored on the deming theory of quality management and the resource-based view theory. The study was guided by a positivism research paradigm with a descriptive research design being the overarching approach. The study population was the fully operational 39 commercial banks in Kenya. The study sampled 4 participants from each commercial banks. The sample size of this research was 112 participants who was drawn randomly from the commercial banks. The study adopted a structured questionnaire to collect research data using electronic Google forms and drop and pick method where applicable. The collected research data was coded into SPSS 25 for analysis. The study employed on descriptive analysis, correlation analysis and multiple linear regression analysis. The analyzed data was presented using bar charts and tables. The research instrument was pretested and the results showed that the instrument met the reliability threshold. The final survey was able to obtain a 87% response rate. The correlation results showed customer focus had a moderate positive effect on operational performance. The analysis also established a strong positive effect of continuous improvement, management focus and corporate culture on the operational performance. The regression analysis established that quality management practices had a positive relationship with operational performance of banks and explained 68.2% of the changes. The study concluded that quality management practices (customer focus, management support and continuous improvement) significantly influenced the operational performance of the banks. The findings led to the conclusion that corporate culture has positive moderating effect on the relationship between quality management practices and operational performance of commercial banks in Kenya. Based on the findings the study recommends that banks carry out extensive research to have a comprehensive understanding of customer needs and the needs of their employees to built an operationally strong institution. Further, the banks should recruit qualified managers who have the vision, expertise and technical knowhow to manage organizational change and plan for the future in these uncertain business environments. Lastly, the banks should support a more collaborative and innovative culture that if embraced can lead to operational soundness of the firms.
A Thesis submitted in partial fulfillment of the requirements for the award of the Degree of Masters of Business Administration at Strathmore University Business School
Quality management practices, Corporate culture, Operational performance, Commercial banks_Nairobi City County