Application of Dynamic Capability Approaches in Commercial Banks in Kenya

Abstract

The business environment has become very competitive; the managerial competences need to change constantly. The banking industry in Kenya is not an exception to this regard. Dynamic capabilities explain how firms adapt to environmental dynamism by modifying their underlying resources and capabilities. With the dynamic capabilities concept, the value an organization may hold is the ability to alter its resource base. Thus, its competitive advantage can be increased by the creation, integration, recombination and realization of resources. The objective of the study was to establish the application of dynamic capabilities in commercial banks in Kenya. A census cross-sectional survey was adopted in this particular research so as to include all the banks views of such innate factors as a firm's dynamic capabilities, with a target population of 41. In light of this therefore, a survey was deemed as the best design to fulfill the objective of the study. The study made use of primary data which was collected through a questionnaire by the researcher. The data obtained from the questionnaire was analyzed using descriptive quantitative analysis. This method of analysis was adopted because of the quantitative nature of the response acquired. This study was guided by various theoretical and literature reviews. The study found out customer demands, market trends, company mission and vision as the main factors affecting the application of dynamic capability approaches at the commercial banks. Knowledge management and the emphasis on research and development activities had major impact on firms' performance as dynamic capabilities approaches. In light of the findings the study recommends that since most of the commercial banks in Kenya have been successful in the application of dynamic capability approaches so far, there is need to focus on how their expansion strategy is affecting their performance, and how globalization is affecting their competitive advantage. This will enable these banks to attain the full benefit of the application of dynamic capability approaches. Given the dynamic nature of the financial sector in the country in which the commercial banks are operating, the study recommends strict adherence to sound financial strategies.