Effect of organizational learning dimensions on performance of banking institutions: A survey of commercial banks in selected counties in Kenya

Abstract

Organizational learning in the global world has become very important since it is believed to be the basis for competitive advantage. Current environmental challenges have forced upgrades in organizations due to competitions as well as purpose of continuity and being relevant in the business environment. The study focused on the banking institution in Kenya as it is a vibrant sector that has been forced to adapt to the major changes in the global world and local environment in order for them to survive and remain competitive in viable organizations. The purpose of this study was to determine the effect of organizational learning dimensions on performance of banking institutions at commercial banks in Nakuru and Kisii Counties, Kenya. The specific objectives were to determine the effect of individual learning, team learning, organizational systems and knowledge sharing on organizational performance of the banking institutions. The study was informed by single and double loop, behavioural and cognitive theories. The study design employed was a cross-sectional with a total of 257 employees who were sampled from a population of 776. A two stage sampling procedure was used to pick the respondents: stratified sampling to select the banks and simple random sampling to select the respondents. Data collection was carried out using questionnaire and the obtained data coded and processed using Statistical Packages for Social Science (SPSS) version 22.0. Validity was attained by subjecting the questionnaire to the subject matter experts who had wider experience and overall reliability score of 0.783 achieved using the Cronbach alpha test. Descriptive statistics such as measures of central tendencies and measures of variations were utilized in this study and also inferential statistics such as Correlation analysis and regression analysis which established the relationship between the performance of commercial banks and the independent variables. The results indicated that all the organizational learning dimensions studied had a positive association with performance in the banking institutions. The individual independent variables were found to explain variations in the dependent variable (Organizational Performance) as follows: individual learning (R2= 0.678) 67.8%, team learning (R2= 0.254) 25.4%, organizational systems (R2= 0.430) 43% and knowledge sharing (R2= 0.351) 35.1%. In total all the Independent variables collectively explained 73.4% (R 2= 0.734) of the variation in the dependent variable. The remaining 26.6% is attributed to other variables outside the model. Regression coefficients along with the P-values showed that the organizational learning dimensions on individual learning (β1=0.701, p=0.000), team learning (β2=0.217, p=0.000) and organizational systems (β3=0.059, p=0.003) had a strong positive relationship with organizational performance apart from knowledge sharing (β4= -0.072, p=0.002) which had a strong negative relationship. Based on the β-values it can be concluded that all organizational learning dimensions studied except knowledge sharing contributed positively to improved performance within the banking institutions. The study recommends that human resource development personnel should capitalize on individual learning which would enable them promote innovative performance, there is need for job enlargement in the organization, strategic management systems should be embraced in the banking institutions, a common database for sharing information and re-deployment of employees. The study further suggest that similar study should be done on other sectors in Kenya for instance the public sector and findings be compared to establish if there is consistency on the effect of organizational learning dimensions on performance.