Although knowledgemanagement has been frequently cited as a prime source of organization competitiveness, moreover, the mechanism through which this is achieved remains an area for investigation. However, it has been difficult to draw conclusions from the extant of the relationship between effective knowledgemanagement and firms’ competitiveadvantage because there is a dearth of empirical research that investigated relationships between the two constructs. Even though to gain competitiveadvantage, organizations must consider how to enhance knowledgemanagementamong employees (Wang & Noe, 2010) and the transfer of expertise or knowledge from experts who have it to novices who need to know (Hinds et al., 2001). Therefore, the study will seek to establish the effect of knowledgemanagement on firms’ competitiveadvantageamongCommercialBanks in Kenya putting in consideration the competitiveness and dynamic nature.
processes for acquiring knowledge about their customers and competitor within and outside their domain. Knowledge is important to the success of Organizations in raising its quality of service and competitiveness. Competitive edge is abundance of company’s suggestion attractiveness from the costumer’s point of view in comparison with other rivals” (Lismen et al., 2004). KM implies adaptive actions by quickly detecting complaint and establishing customer satisfaction. With regard to learning from failure, KM uses complaints as learning instances and improving opportunities. 65.2% respondents were not sure whether their banks acquire information from external sources. The dissemination of knowledge is dominated by the system used in the organization. In other words, the information technology uses the local network or the Internet. In collecting information not all of it is useful. This represents a setback of an information system due to the overload of information since they may need just part of it, not all of it. The organization then has to select the best information to use so as to achieve an effective respite, capturing and avoiding as much as possible inefficiency in the decision making process (Barney, 2002). It was apparent that most banks did not encourage employees to attend fairs and exhibitions regularly. This is whereby 56.5% respondents chose neutral option. According to Salomann et al. (2006), some managers would encourage an organization culture whereby employees are willing and are motivated to create knowledge, share knowledge with others and make use of knowledge provided by others as well. Based on case studies, some authors found that while some managers pay attention to information gathering and sharing, there is a tendency among other managers to overemphasize information acquisition and to under-emphasize information interpretation that is conducive to knowledge creation (Chao Ton Su et al 2006). Such attitude is not congruent with productive KM.
The third specific objective sought to determine the relationship between knowledge application and performance. The research null hypothesis formulated from this objective proposed that knowledge application has no relationship with performance. The results of regression analysis in Table 4.14 confirmed that knowledge application is statistically significant at β=0.904; t = 14.488; p = 0.000, therefore at 95% confidence level, knowledge application has a positive effect on performance. In this case, a unit increase in knowledge application causes an increase of 0.904 in performance. Therefore, the conclusion of this study is that there is a relationship between knowledge application and performance of CommercialBanks in Kenya. These results corroborate empirical findings by other researchers such as Mohrman et al., (2003), Yusoff and Daudi (2010) and Fattahiyan et al., (2013) to the effect that application of knowledge positively influence corporate performance. Moreover, the findings confirm that amongst the three dimensions of KM considered, knowledge application is the strongest predictor of performance. The results also underscore the theoretical argument of RBV that considers organizational effectiveness as the ability of the organization in either absolute or relative terms, to obtain scarce and valued resources and successfully integrate and manage such resources.
This study examines the effect of knowledge conversion and knowledge application on performance of CommercialBanks in Kenya. The four modes of knowledge conversion process comprising of socialization, externalization, combination and internalization are utilized in this study. knowledge application was measured using indicators comprising of problem solving, elaboration, efficient processes, IT support, and infusion In addition, performance was measured using non-financial indicators comprising new products, speed of response to market crises, product improvement, customer retention, and new processes. The study adopted explanatory and cross-sectional survey design. The target population of this study comprised of all the 43 CommercialBanks in Kenya. The unit of observation was the functional area in each bank. Five areas were identified in each bank comprising human resource, finance, marketing, information communication technology, and operations in each bank. This study used primary and secondary data. Primary data was collected using a semi- structured questionnaire. The questionnaire was administered using the drop-and-pick later method. Secondary data was collected using document review and was used to validate information collected from the questionnaire. The response rate in this study was approximately seventy three percent which was considered sufficient for making inferences and drawing conclusions. Quantitative data was analysed using descriptive and inferential statistics. Descriptive statistics included percentages, frequencies, means, and standard deviations while inferential statistics involved regression analysis. Results from quantitative data analysis were presented using figures and tables. Qualitative data was analysed on the basis of common themes and presented in narrative form. The findings of the study established that knowledge conversion and knowledge application positively influence performance. Management of CommercialBanks should encourage interaction between employees and customers. Moreover, bank’s processes should be used to enhance understanding and translation of knowledge (explicit) into application (tacit knowledge). Keywords: KnowledgeManagement, Knowledge Conversion, Knowledge Application and Organizational Performance
The first of Porters generic competitive strategy is cost leadership where a company sets out to be the low- cost producer (Porter, 1998). The strategy asserts that a company has a broad scope, serves many industry segments, and may even operate in related industry. By producing high volumes of standardized products, the firm hopes to take advantage of economies of scale and experience curve effects. The product is often a basic no-frills product that is produced at a relatively low cost and made available to a very large customer base (Porter, 1998). Porter (1998) posits that minimum premium as a strategy is one at an initial large market share that will give a management-controlled dominant insurer a persuasive threat to providers. This large share can, through the minimum premium share contribution process be used to extract a discount, and which can be used to support a premium lower than that which is financially feasible for any other insurer. The lower premium in turn permits the large market share to be sustained as the discount announced by a dominant insurer thus becomes a self-fulfilling prophecy (Porter, 1998). This strategy usually requires a firm to have considerable market share advantage or preferential access to raw materials, components, labor, or some other important input. Without one or more of these advantages, the strategy can easily be copied by competitors. However, cost advantage can be achieved through obtaining raw materials at lower prices than competitors, producing more efficiently, being located in an areas where labor cost is low, getting advantages of lower cost distributions, reducing costs in operational areas which have great impact on price and going where competitors have a lower market share and consequent higher costs (Johnson & Scholes 2002).
The standard deviation gives the variations of the responses from the mean. It provides an indication of how far the individual response to each factor varies from the mean. Linyiru (2015) stated that a standard deviation of more than one (1) indicates that responses are moderately distributed while less than one (1) means there was no consensus on the responses obtained. The average of 1.3047 on all the statements indicates that the responses were moderately distributed. These study findings were consistent with the findings of Otwori (2013)who lauded that several types of risks example credit risks, liquidity, operational influences profitability and hence performance. According Mwiya (2010), without proper risk management framework in the institutions profitability is unthinkable. These findings are also consistent with the corporate risk management theory developed by David Pyle in 1975. He lauded that to ensure survival of a financial institution there should be a proper risk management framework. Arunkumar and Kotreshwar (2005) lauded that bank with efficient risk management systems survived financial crisis and had competitive edge in the market in the long run.
Competition in the banking sector has been heightened by the fact that, the cost of banking technology, once prohibitive, is no longer a barrier to entry into the industry. Because of developments in technology and general erosion of entry barriers into banking, it is easier for non-bank financial institutions to move into banking than banks to diversify out of financial services. The study examined how information and communication technology is adopted and managed to enhance service innovation practices and competitiveadvantageamongcommercialbanks. The objectives included to ascertain whether information and communication technology adoption by commercialbanks in Kenya enhances service innovation practices; establish whether service innovation practices enhances competitiveadvantageamongcommercialbanks in Kenya; examine whether information and communication technology adoption is a strategic key in the attainment of comparative advantage; ascertain whether Commercialbanks ICT strategic plan has supported business strategic plan in improving customer service and product offerings. The broadened understanding about service innovation as a critical organizational capability through which information and communication technology adoption can influence the competitiveadvantage of a firm. The study was limited to commercialbanks within Kenya only and did not cover other financial institutions like investment banks, mortgage firms, and Micro-finance firms. A survey was conducted on commercialbanks in Mombasa. In the context of commercialbanks, the study examined the effect of Information and communication technology adoption on competitiveadvantage through service innovation practices. A research framework and the associated questions were proposed. An empirical survey was conducted
performance of deposit taking institutions in Nigeria. ROE was used as a proxy of performance in this study. Olalekan and Adeyinka (2013) concluded that capitalization is an indicator of bank risk management efficiency and cautions against losses that emanate from economic shocks. As such the firm with a higher capital adequacy will record positive returns all through even during economic shocks and may not collapse as it has adequate capital to absorb any losses emanating from economic shocks. This is especially given that banks are bound to lose massively during economic shocks as borrowers are not able to repay their loans as per schedule. The study also agreed with the findings of Kamande et al. (2016) whose findings indicated a strong positive effect of capital adequacy on profitability (ROA) of commercialbanks in Kenya. Barus et al. (2017) also established a significant positive influence of capital adequacy on return on assets. The second hypothesis established a significant negative influence of NPL ratio on ROE but an insignificant negative influence on ROA. These were mixed findings. The findings on the considerable negative influence of NPL ratio on ROE assented to those of Qin and Pastory (2012) whose results indicated a negative effect of NPL ratio on performance of banks. Nyongesa (2017) also established a negative effect of asset quality (NPL ratio) on performance. The results also corroborated with those of Muhmad and Hashim (2015) whose findings pointed to a negative link between NPL ratio and performance. The study used a CAMEL framework for analysis. The study concluded that increased rate of NPL has a negative effect on interest income and leads to a number of debts being written off. This has a negative implication Table 3: Random effect regression results using ROE as a proxy of performance
Licensed under Creative Common Page 254 responsibility of balancing his interest and those of the principal. The agent, in this case, is the top management executives of the firm who have the responsibility of controlling the resources of the firm. According to Laffont & David (2008), the decisions and the actions taken by the agent has an effect on the overall firm including the principal. According to Shankmann (2009), top management executives should provide adequate support in terms of financial resources and facilities to ensure that employees and the entire firm work towards the set goals and targets, as this impact positively on financial performance. The firm consists of explicit and implicit contracts that integrate the top management executive and the other stakeholders who include the customers, the employees, and the trade unions. The agency theory insists on the importance of having synergy between the top management executives and the f irm’s stakeholders in working together towards set goals and objectives; this leads to sharing of ideas, knowledge, and information about strategies that contribute positively towards profitability. The top management is expected to make financial plans and decisions that will contribute positively towards improved profitability of the firm. Top management executive should involve their employees by considering their opinion in building a shared vision that unites and drives them towards achieving similar goals (Shankmann, 2009). This theory is relevant to this study because the goal to grow profits is quite interlinked with the goal to maximize the operational efficiency and effectiveness and hence to grow the resources of the company which in turn grows the shareholder wealth.
This study provides important managerial implications for talent management and competitiveadvantage. The results of this study indicate that talent management represents one of the most important functions affecting competitiveadvantage achievement, Hence organizations must work on linking talent management as a strategy with corporate and business strategy, as well as coordination of different function .so that a high degree of competitiveadvantage can be achieved. Talent management and knowledge are integrated into firm strategy, so talent management activities and knowledge integration activities can be viewed as a source of competitiveadvantage. knowledge integration has become useful tool to gain competitiveadvantage .evaluation of the level to which talent management is evolved in competitiveadvantage achievement and integrated into strategic management of the firm is based up on the ability of top managers to provide a strategic integration of knowledgemanagement practices ,the second set of findings revealed that knowledge integration is more influential than talent management and all control variable as knowledge integration has direct and indirect effect on competitiveadvantage .firms with highly knowledge integration not only possess effective talent management and high degree of competitiveadvantage, but also strengthen the relationship between talent management and competitiveadvantage .talents and competitiveadvantage develop in the same direction when firms are highly knowledge integrated .production of knowledge , gathering and conversion of existing knowledge into most appropriate form , certainly reflect positively on speed in respond to market ,product /service quality ,and innovation speed ,which gives the firm a distinct competitive positive position .this study demonstrated that knowledge integration has a direct influence on competitiveadvantage,(speed in respond to market product /
The Ansoff (1957) Product-Market Growth Matrix is a marketing tool created by Igor Ansoff. The matrix allows managers to consider ways to grow the business via existing and/or new products, in existing and/or new markets –there are four possible product/market combinations. This matrix helps companies decide what course of action should be taken, given current performance. The matrix illustrates, in particular, that as the element of risk increases the further the strategy moves away from known quantities -the existing product and the existing market. Thus, product development (requiring, in effect, a new product) and market extension (a new market) typically involve a greater risk than penetration (existing product and existing market) and diversification (new product and new market) generally carries the greatest risk. For this reason, amongst others, most marketing activities revolve around penetration. Thus, for a firm to develop competitive intelligence strategies, the Ansoff’s Growth matrix remains as a very important tool.
The findings indicate that the respondents agreed thatEquity Bank is well located in major towns in Kenya (Mean =4.01), the respondents also agreed that the company uses horizontal strategic alliances with peer companies in banking (Mean = 3.48), the results also agreed that the management team of the strategic alliance partners of Equity bank have a good understanding and experience of the markets (Mean = 4.15). In addition, the respondents neither agreednor disagreed that Equity bank engages in downstream vertical strategic alliances with marketing firms ( Mean = 3.37) while agreeing that the bankengages in strategic alliances which stimulate generative knowledge flow ( Mean = 3.53). The respondents also indicated that Equity Bank engages in strategic alliances involving joint ventures (Mean = 3.59). On average the respondents generally agreed on the statements that strategic positioning affects the competitiveadvantage of the bank (Mean = 3.69). The standard deviation also indicated that there was a small variation in the responses given by the respondents.
Therefore, the essence of formulating competitive strategy is to relate a company to its environment. Knowledge of these underlying sources of competition pressure highlights the critical strengths and weaknesses of the company, animates its positioning in its industry, clarifies the areas where strategic changes yield the greatest pay off and highlights the areas where industry trends promise to hold the greatest significance as either opportunities or threats (NegriţoiuMişu, 2013). For competitiveness and sustainable advantage, organizations should endeavor to create value for customers which are only possible by responding with faster answers to the ever changing business environment driven majorly by technological changes. Porter however, does not include technology and government as forces that may influence competition in an industry which can be understood in isolation of the five forces (Porter Michael, 2012). This theory instigates the first research objective: To determine the effect of positioning strategy on performance of commercialbanks in Kenya.
Competitive dynamics theory is credited to the works of Smith, Ferrier and Ndofor (2001). It is utilized to break down the practices and responses among contending organizations in a particular market. Aggressive Dynamics is worried about the causes and results of between firm contention (Thomas & Pollock, 1999; Young et al., 1996). A progression of activities (moves) and responses (countermoves) among firms in an industry make aggressive elements. These activity/response progression mirror the typical and creative development of firms in quest for benefits. Understanding the nature and results of the aggressive flow among firms is a key target of the vital administration field. Competitive dynamics has risen as an effective hypothesis in key administration that is worried about clarifying and foreseeing focused cooperation amongst rivals and the effect of these connections on firm execution (Ketchen et al., 2004). Competitive dynamics embarks to grow its scope to advertise circumstances where the dyadic connection between a central firm and its primary adversary isn't adequately instrumental for clarifying the company's aggressive conduct (Hsieh & Chen, 2010; Zuchhini & Kretschmer, 2011).The dynamic capacities system dissects the sources and techniques for riches creation and catch by private venture firms working in conditions of fast mechanical change. The upper hand of firms is viewed as laying on particular procedures (methods for organizing and joining), formed by the company's (particular) resource positions, (for example, the association's arrangement of hard to-exchange learning resources and corresponding resources), and the advancement path(s) it has received or acquired (Teece et al. 2008). Competitive dynamics research contributes to this understanding because it offers a conceptual framework of competition, mainly by explaining and predicting how opponents engage each other.
Ogoye (2013) in a study on influence of Quality Management Systems Implementation on Organizational Performance: (Case Study of South Nyanza Sugar Company Limited Migori County, Kenya) found effect of promotion in retail business. He found out that the use of promotions in retailing has increased rapidly in recent times, yet more often than not promotions are being implemented with an inadequate understanding of which mechanisms are most effective, for which products and for which shoppers segments. He reports that the use of promotions in the Kenya has increased significantly over the past decade, particularly in retailing where competition between retailers has intensified. This has resulted in both Kenyan supermarkets and branded suppliers becoming increasingly dependent on promotional activity to drive sales growth. Hence, price promotions often resulting to large sales effects for a promoted item, but this influence does not necessarily mean that the sales increase is truly beneficial for retailers.
Customer satisfaction has emerged as a crucial strategy that a business organization can use to obtain competitiveadvantage. According to Porter (2008), the relationship between customers and business firms has strongly developed to a direction where the customers have a dictating position in the sense of bargaining power. With such power, customers have become more demanding towards service providers. Lee, Park, Chung, and Blakeney (2012) argue that in the banking industry, consumer behavior is task-oriented; customers may select from several channels as discussed earlier. Khan and Haseeb (2015) assert that there is a correlation between customer satisfaction and firm performance. Further, customer satisfaction measurement should consider an understanding of the gap between customer expectations and performance perceptions.
Some firms find it easy to choose their positioning strategy. For example, a firm well known for quality in certain segments will go for this position in a new segment if there are enough buyers seeking quality. But in many cases, two or more firms will go after the same position (Berrigan & Finkbeiner, 1992). Each firm must differentiate its offer by building a unique bundle of benefits which appeals to a substantial group within the segment. Kotler (2001) identifies three steps in process of positioning. Foremost identifying a set of possible competitive advantages upon which to build a position. The key to winning and keeping customers is to understand their needs and buying processes better than competitors do and to deliver more value. If a company can position itself as providing superior value to selected market segment, then it gains competitiveadvantage.
A talent management program that includes effective goal management enables organizations to create a true competitiveadvantage. It aligns the workforce so that employees understand how their goals connect to and support to overall organizational goals, enabling the entire team to pull in the same direction (Cobb, 2012). Such goals may focus on enhancing customer service as a key pillar of firm’s competitiveadvantage. Talent management programmes encompass a wide variety of Human Resource functions including but not limited to: HR Planning, HR Procurement, HR retention, HR training and development and employee succession planning. This enables the organization to put the right persons into positions that allow them to utilize their talents without limitations (Newhall, 2012). The ability to recruit, train and retrain employees according to organisation’s needs create opportunities for real-time collaboration between employers and employees. This supports the workforce with better analytical skills as one of the strategic talent management processes that drives true business success (Harris, Craig, & Light, 2011)
Strategic resources possess four characteristic attributes that provide a firm with the potential for sustainable competitiveadvantage: the resource must be valuable such that it exploits the opportunities and/or neutralizes threats in the firm’s environment, it must be rare among rivals and industry of operation, the resource must be imitable for competitors and the resource must have no equivalent substitutes and hence unique (Dess, Lumpkin & Eisner, 2011). Unique resource is the one which cannot be imitated by rivals, helps a firm to carry out some activities or functions better than competitors and this enables the firm to be distinguished for its excellent performance (Collis, 2013). Ensuring sustainable competitiveadvantage through product differentiation establishes brand reputation of a product and this attracts customer loyalty (Thompson, Strickland & Gamble, 2010), this results in customer satisfaction and eventually helps the firm to retain its customers thereby creating entry barriers (Auka, 2014).
Rapid change in economic and business environments has resulted to firms competing for profits, customers, and products that are perceived to be of value by customers (Dirisu, Iyiola & Ibidunni, 2013). Also liberalization of the economy and opening of global markets has increased the rate of global competition among business entities (Khandekar, & Sharma, 2005). The intense competition has resulted in firms constantly implementing defensive and offensive strategies (Yannopoulos, 2011). The firm’s main concern is to defend its high market shares and reacting aggressively to the competitors moves by trying to build its own strengths (Porter, 1980). Profitability and high market share can only be achieved when a firm is in a position to create and sustain competitiveadvantage (Rothaermel, 2008).