Determinants of Strategic Drift and Their Effect on Performance of Commercial Banks in Kenya

Abstract

The current business age is characterized by a constantly changing environment caused by external and market factors which drive all sorts of change impacting business performance. Hence there is need to re-evaluate strategy constantly and align it with the changes in the environment. This not only enables them to survive in the turbulent environment but also enhance organizational performance. The main objective of this study was to establish the determinants of strategic drift and their effects on the performance of commercial banks in Kenya. The study reviewed theories related to the topic as well as the relevant empirical literature focusing on the studies that have been done by other researchers guided by the specific objectives. Descriptive research design was used in the study because it gives a detailed description of events, situations and interactions between people and things with minimum bias. The target population was all the 43 commercial banks in Kenya. Questionnaires were used to collect data and contained mainly closed ended questions structured on a five-point Likert scale. Descriptive statistics was used to analyze data with the aid of Scientific Package of Social Science and MS Excel. The analyzed data was presented in frequency tables, graphs and charts. The findings indicated that the main determinants of strategic drift are strategic planning, leadership, responsiveness to change, culture, organizational climate, innovation and communication. The study concluded that the process of strategic planning should be consultative to ensure that the structure aligns with the strategy. Also, in case of strategic drift, the key is flexibility and that banks have to know how to manage change. The management has to fill the gap between what is planned and what is done. Hence, the study recommends that the management team of commercial banks in Kenya should conduct proper analysis of the environment to be able to detect slight changes and hence make necessary strategic adjustments. They have to communicate the strategy in order to enhance attainment of organizational objectives and improve the performance of the bank. In addition, the management should align their organizational structures with strategic objectives to allow for efficiency in service delivery to customers and allow for adaptability to changes in the business environment.