Authors: Nelly Nthenya Musau
Abstract: Strategic capabilities are increasingly important to the performance and competitiveness of commercial banks operating in dynamic and highly competitive environments. This study examined the relationship between strategic capabilities and the performance of commercial banks in Kenya, focusing on network capability, service quality capability, human capital capability, and market sensing capability. The study adopted a desktop research methodology, involving a systematic review and synthesis of relevant theoretical and empirical literature. The theoretical review was anchored on the Resource-Based View and Dynamic Capabilities Theory, complemented by the Balanced Scorecard and SERVQUAL models. Empirical studies from Kenya and other geographical and organisational contexts were reviewed to establish the relationship between the identified strategic capabilities and organisational performance. The review indicates that strategic capabilities provide commercial banks with important organisational resources and competencies for responding to changing customer needs, strengthening service delivery, accessing external resources, developing employee expertise and identifying emerging market opportunities. The reviewed empirical evidence generally indicates positive associations between the four strategic capabilities and organisational performance, although contextual and conceptual gaps remain within the Kenyan commercial banking sector. The study concludes that commercial banks can enhance their performance by developing and effectively integrating strategic networking, service quality, human capital and market sensing capabilities. The study contributes to strategic management literature by consolidating evidence on these capabilities within the Kenyan commercial banking context and provides a basis for future empirical research and managerial decision-making on capability development and sustained organisational performance.
