Strategic Alliances and the Financial Performance of Commercial Banks in Nairobi City County, Kenya
DOI:
https://doi.org/10.47941/jbsm.735Keywords:
Brand Marketing Alliances, Agency Alliances, Innovation Alliances and Technological Alliances, Financial PerformanceAbstract
Purpose: In the Kenyan banking industry, the banks have adopted several strategies aimed at improving their competitive position in a highly competitive market. In reference to the aforementioned the general objective, this study specifically sought to examine how strategic alliances impact financial returns among Nairobi-based commercial banks. The current study specifically examined how brand marketing alliances, agency alliances, innovation alliances and technology alliances affect bank performance.
Methodology: This study was based on Transactional Cost, Control Power and Resource Based View theories. The study utilized descriptive research design, that targeted all 39 fully operational commercial banks in Nairobi. The unit of observation was the operations/ relationship manager and the finance manager across each commercial bank. The sample population consisted of 78 respondents. Census sampling was adopted to enhance representation of the respondents. Primary and secondary sources of data provided data which was then be analyzed in SPSS 23 using both descriptive and inferential statistics. The study employed means, standard deviation, correlation and regression methods of analysis, with results being presented using figures, tables and other infographics.
Results: An 85% response rate was received. The correlation results showed a positive and significant effect of brand marketing, agency, innovation and technological alliances on banks' profitability. The regression findings revealed that jointly brand marketing, agency, innovation and technological alliances predict 38.3% of shifts in profits generated by the banks. The study concluded that brand marketing alliances, agency alliances and technology alliances had a significant effect on profitability, while innovation alliances had an insignificant effect.
Unique contribution to theory, practice and policy: The study recommends that banks should constantly review their agency banking to ensure they are aligned to their financial goals. Lastly, commercial banks should strive to spur their research and development which can help drive their technological innovations.
Downloads
References
Al-Jabri, I. M. (2012). Mobile banking adoption: application of diffusion of innovation theory,. Journal of Electronic Commerce Research, , Vol 13, No 4, pp 40-62.
Asiedu, E. (2016). A Study of Use and Impact of Market Segmentation Practices on Bank Performance. With Special Reference to Commercial Banks in Colombia. . Journal of Business & Financial Affairs, 5(162), 2167-0234.
Beamish, P. W., & Banks, J. C. (1987). Equity joint ventures and the theory of the multinational enterprise. . Journal of international business studies, 18(2), 1-16.
CBK. (2020). The Kenya Financial Sector Stability Report. Nairobi, Kenya: Central Bank of Kenya.
Charles, N., & Gapaya, S. (2018). Effect Of Technological Alliance On The Performance Of Microfinance Institution In Rwanda. . European Journal of Business and Social Sciences, , 7(03), 19-36.
Cherotich, K. M., Sang, W., Shisia, A., & Mutung'u, C. (2015). Financial innovations and performance of commercial banks in Kenya. . International Journal of Economics, Commerce and Management , (5), 1242-1265.
Drucker, P. (2013). Empirical studies of innovation activity. In Handbook of the Economics of Innovation and Technological Changes. Paul Stoneman, ed. Cambridge; Blackwell.
Goyal, S., Chawla, D., & Bhatia, A. (2016). Innovation: Key To Improve Business Growth Of Banking Industry. International Journal of Advances in Engineering & Technology, , 9(3), 331.
Hennart, J. F. (1988). A transaction costs theory of equity joint ventures. . Strategic management journal, 9(4), 361-374.
Hoffman, W. (2007). Strategies for managing a portfolio of alliances. . Strategic Management Journal, , 28: 827-856.
Hsu, H. H., & Tang, J. W. (2010). A model of marketing strategic alliances to develop long-term relationships for retailing. . International Journal of Business and Information,, 5(2).
Kambua, D. B. (2015). The effect of agency banking on financial performance of commercial banks in Kenya. . MBA Thesis University of Nairobi.
Kiptis, K. K., & Wanyoike, D. (2016). Influence of Bancassurance on Financial Performance of Commercial Banks in Nakuru Town, Kenya. . International Journal of Research in Business Management,, 4(4), 19-30.
Kogut, B. (1988). A study of the life cycle of joint ventures. . Management International Review, 28(4), 39-52.
Kumar, R. (2014). Managing ambiguity in strategic alliances. University of California, Berkeley, , 56(4), 82-103.
Letangule, S., & Letting, N. (2012). Innovation Strategies at Standard Charted Bank Kenya,. International Journal of management and Business Studies, , 2(3): 75-78.
Lin, H. (2012). Strategic alliances for environmental improvements. . Business & Society, 51(2), 335-348.
Mahtab, N., & Abdullah, M. (2016). Marketing of Financial and Banking Products: An Example from Bangladeshi Bank. Journal of Accounting and Marketing, 5:159. doi: 10.4172/2168-9601.1000159.
Makau, D. (2012). Strategic alliances and organizational competitiveness among commercial banks in Kenya: A case study of Kenya Commercial Bank. . University of Nairobi.
McGahan, A. M. (2021). Integrating insights from the resource-based view of the firm into the new stakeholder theory. . Journal of Management, 0149206320987282.
Mwania, M., & Muganda, N. (2011). An Investigation on the Relationship Between Information Technology Conceptualization and Bank Performance. School of Computer Science & Information Technology, Kimathi University College.
Mwega, F., & Murinde, V. (2012). Regulatory Reforms and their Impact on the Competitiveness and Efficiency of the Banking Sector: A Case Study of Kenya. In Bank Regulatory Reforms in Africa. Palgrave MacMillan.
Ndambuki, D. (2016). The effect of agency banking on profitability of commercial banks in Kenya. . PhD diss., University of Nairobi.
Ngugi, K., & Karina, B. (2013). Effect of innovation strategy on performance of commercial banks in Kenya. . International Journal of Social Sciences and Entrepreneurship, 1(3), 158-170.
Nyatakyi, E., & Mouhamadou, S. (2015). The Banking System in Africa: Main Facts and Challenges: . Africa Economic Brief, , 6(5).
Ombati, R., Magutu. S.M., Nyamwange, N., & Nyaoga, P. (2011). Technology and Service Quality in the Banking Industry: Importance and Performance of various factors considered in Electronic Banking Services, . African Journal of Business & management, , 1(4): 151-164.
Onje, F., & Oloko, D. (2017). Influence of strategic alliance on financial performance of commercial banks in Kenya. PhD Dissertation JKUAT.
Pricewaterhouse Coopers. (2015). Retail Banking 2020. .
Quinn, D. (2010). Bank Efficiency and Competition in Low-Income Countries: The Case of Uganda. International Monetary Fund Working Paper, WP/05/240.
Ranft, A., & Marsh, S. (2008). Accessing knowledge through acquisitions and alliances: An empirical examination of new market entry. . Journal of Managerial Issues, , 20: 51-67.
Samiee, S. (2008). Global marketing effectiveness via alliances and electronic commerce in business-to-business markets,. Industrial Marketing Management , 37(1), 3-8.
Saxena, K., & Bharadwaj, S. S. (2009). Managing business processes through outsourcing: a strategic partnering perspective. . Business Process Management Journal,, 687-715.
Singh, D., Singh, H., & Sandhu, N. (2017). New Market Entry Strategies: Public and Private Sector Banks in India. . SCMS Journal of Indian Management, , 14(1).
Ukpabio, M. G., Olaposi, T., & Siyanbola, W. O. (2016). Technology acquisition and technology learning in banking industry: Lessons from Nigerian banking sector. . African Journal of Business Management, , 10(20), 511-521.
Veilleux, S., Haskell, N., & Pons, F. (2012). Going global: how smaller enterprises benefit from strategic alliances. . Journal of Business Strategy, , 33(5), 22-31.
Wambari, P. (2009). Mobile Banking in developing countries: A case study of Kenya,. Unpublished Masters' Thesis, Vaasan Ammattikorkea Koulu.
Wandia, W. M., & Ismail, N. O. (2018). Effects Of Strategic Alliances On Performance Of Commercial Banks In Kenya: A Case Of Kenya Commercial Bank Limited. International Journal of Business Management & Finance , 1(58): 986-1001, 2018.
Wilson, J., Casu, B., Girardone, C., & Molyneux, P. (2010). Emerging themes in banking: Recent literature and directions for future research; . The British Accounting Review, 42 (2010).
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2021 Janepher Dzine Mwamuye, Dr. Mary Ragui
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
