The Effect of organizational culture on the innovativeness of Kenyan commercial banks

Abstract

Given the changing landscape of customer demands, regulatory changes, and general business uncertainties, Kenyan commercial banks encounter significant challenges that demand the formulation of efficient innovative strategies to boost their performance. The primary focus of the study was on how the organizational culture of Kenyan commercial banks influences their ability to innovate. The research was guided by four specific objectives: to determine the effect of market culture, to determine the impact of adhocracy culture, to determine the effect of hierarchy culture and to determine the influence of clan culture on the innovativeness of Kenyan commercial banks. The study was anchored on the Schein’s organizational culture theory and the value-based innovation theory which define different aspects of organizational culture and drivers of innovativeness respectively. A descriptive research design was employed, and data was gathered through simple random sampling technique using structured questionnaires. To ensure the validity of the questionnaire, input from experts and the study supervisor was sought, and the questionnaire's reliability was assessed using Cronbach's alpha with all variables falling within the acceptable range. Ethical approval was obtained from Strathmore University Ethics Committee before initiating data collection. The study sample included 114 employees from senior management mid-level and junior staff across various commercial banks in Kenya. Primary data was collected through closed questionnaires focused on organizational culture and innovativeness in Kenyan Commercial Banks. The collected data was analyzed using the IBM SPSS Version 26, applying both descriptive and inferential statistics such as frequency analysis, mean, standard deviation and multiple regression. The results were presented in tables and models. The study results revealed that organization culture had a significant positive effect on the innovativeness of Kenyan commercial banks with Market culture having the highest effect and hierarchy culture having the least effect. The results largely confirmed the findings of previous empirical evidence with a slight deviation on the effect of hierarchy culture whose effect was dependent on the innovation phase. This study will contribute valuable insights into the relationship between organizational culture and innovativeness within Kenyan commercial banks, offering practical implications for enhancing innovation management strategies in the banking sector.