EFFECT OF STRATEGIC COLLABORATIONS ON PERFORMANCE OF BANKING SECTOR IN KENYA
Shareholders and managers of commercial banks always adopt strategic collaborations with an aim of improving their financial performance, economies, efficiency as well as their liquidity position. However, this argument is contradicting given the mixed performance of firms that have strategically collaborated in the banking sector. As a result, this study sought to determine the effect of strategic collaborations on performance of Banking Sector in Kenya. Specifically, the study looked at the effect of mergers, joint ventures, franchising and business networking on performance of Banking Sector in Kenya. A descriptive survey design was adopted where a total of 24 commercial banks that are still operational up to now and have engaged in strategic collaborations were targeted. The study targeted the CEO’s Office, heads of Finance, Human Resource, Marketing and Operations totaling to 120. A census was conducted on this group. Data was collected using both questionnaires and secondary data template and analyzed through Statistical Package for Social Sciences version 22. Descriptive and inferential statistics were both analyzed. Descriptive statistics included percentages, mean and standard deviations while inferential statistics included correlation and regression. Before conducting regression analysis, the study tested for the assumptions of classical linear regression model namely, normality, autocorrelation, heteroscedasticity, linearity and multicollinearity. The findings of the study showed that while joint ventures, business networking and mergers had a positive effect on performance of commercial banks, franchising did not. The study recommends advanced practices of mergers with both peers or other firms in different fields in order to improve synergy in cases where the competition is very stiff; strategic and operations managers of commercial banks to improve the extent of adopting joint ventures with peers through equity Joint Ventures, cooperative agreements and financing agreement; to accelerate their business networking initiatives in order to improve their performance. This can be done through supplier interaction, customer interaction and competitor interaction as well as intensify the adoption of franchising activities such as business format franchising, distribution franchising and management in order to realize its positive effects.
Key Words: Mergers, Joint Ventures, Franchising, Business Networking, Performance of Banking Sector, Kenya