DYNAMIC CAPABILITIES AND PERFORMANCE OF COMMERCIAL BANKS IN NAIROBI CITY COUNTY, KENYA
Abstract
This research intends to determine the effect of dynamic capabilities on the profitability of commercial banks in Nairobi City County, Kenya. Specifically, the study confirmed the influence of innovative capability, technical knowledge ability, learning culture ability, and service quality ability on the performance of commercial banks in Nairobi City County, Kenya. The study was supported by four frameworks: Dynamic Capabilities Theory, Resource-Based View Theory, Organizational Learning Theory, and the Balanced Scorecard Theory. This research employed a descriptive research design along with a purposeful sampling method. The intended audience consisted of 38 commercial banking institutions located in Nairobi City County, Kenya. A total of 228 staff working at these commercial banks participated in the survey. The group included 102 employees. Semi-structured questionnaires were employed for data. Face and content validity were assessed by obtaining expert opinions, while reliability was evaluated using Cronbach's alpha, with a threshold of 0.7 deemed acceptable. The information was examined using descriptive statistics and multiple regression methods, with the results presented in tables, charts, and graphs. The capacities for innovation, technical knowledge, service quality, and learning culture were identified as having a significant positive impact on the performance of commercial banks in Nairobi City County, Kenya. The research finds that innovative abilities allow banks to automate repetitive tasks, which decreases the time and resources needed for operations. Technical expertise allows banks to utilize data analytics to comprehend customer preferences and behaviors. Cultural competence allows bank employees to engage effectively with clients from various backgrounds, building trust and rapport. Excellent service quality results in enhanced customer satisfaction, which subsequently promotes loyalty. The research suggests that banks ought to improve and advance their mobile and online banking systems to ensure smooth customer experiences. Financial institutions ought to conduct workshops and seminars facilitated by industry specialists to address new trends, regulatory updates, and technological progress in banking. The banks ought to conduct regular training sessions for staff to enhance their abilities in customer service, product expertise, and communication.
Key Words: Innovation Capability, Technical Knowledge Capability, Learning Culture Capability, Service Quality Capability
CITATION: Gathambo, M. N. & Muchemi, A. W. (2025) Dynamic capabilities and performance of commercial banks in Nairobi City County, Kenya. The Strategic Journal of Business & Change Management, 12 (1), 291 – 313. http://dx.doi.org/10.61426/sjbcm.v12i1.3188
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i1.3188
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