LEARNING ORGANIZATION DIMENSIONS AND ORGANIZATIONAL

PERFORMANCE OF COMMERCIAL BANKS IN KENYA: SURVEY OF

COMMERCIAL BANKS IN ONGATA RONGAI TOWNSHIP.

RUTH NYOKABI MBUTHIA

D53/NYI/PT/27591/2013

RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS

ADMINISTRATION (STRATEGIC MANAGEMENT), SCHOOL OF BUSINESS,

KENYATTA UNIVERSITY

MAY, 2018

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DECLARATION

This research project is my original work and has not been presented for award of a degree in

any other University or for any other award.

Signature …………………………................... Date ........…………….........

Ruth Nyokabi Mbuthia

D53/NYI/PT/27591/2013

This research project has been submitted for examination with my approval as the

University Supervisor.

Signature …………………………................... Date ........…………….........

Dr. Anne Muchemi

Department of Business Administration

School of Business

Kenyatta University

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DEDICATION

I dedicate this study to my late dad Moses Mbuthia and mum Lydia Mbuthia for their great support

and encouragement throughout my academic journey. I also dedicate it to my brother Mani. Your

support and motivation sustained me throughout my studies. I’ll forever value and highly regard

you people.

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ACKNOWLEDGEMENTS

My gratitude goes to the almighty God for all the blessings he showered on me and for being with

me throughout the study. The good health and the necessary resources were all God’s doing. I am

deeply obliged to my supervisor Dr. Anne Muchemi for her exemplary guidance and support

without whose help, this proposal would not have been a success. I wish you God’s blessings as

you continue to make a contribution in the advancement of knowledge in this field. On the other

hand, profound knowledge and timely wit came as a boon under the guidance of my friends Joel

and Francis. Their valuable instructions and suggestions during the course of work are greatly

acknowledged. Lastly, it’s my pleasure to acknowledge all my classmates for the knowledge shared

during this study period and to my relatives and friends for their encouragement and support that

gave me the drive to complete this study

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TABLE OF CONTENTS

Declaration..................................................................................................................................... ii

Dedication ..................................................................................................................................... iii

Acknowledgements ...................................................................................................................... iv

List of Tables .............................................................................................................................. viii

List of Figures ............................................................................................................................... ix

Operational Definition of Terms ..................................................................................................x

Abbreviations and Accronyms.................................................................................................... xi

Abstract ........................................................................................................................................ xii

CHAPTER ONE ............................................................................................................................1

INTRODUCTION..........................................................................................................................1

1.0Introduction ............................................................................................................................ 1

1.1Background of the Study ....................................................................................................... 1

1.1.1 Learning Organization Dimensions ............................................................................... 3

1.1.2 Organizational Performance of Commercial Banks ...................................................... 5

1.1.3 Commercial Banks in Ongata Rongai ............................................................................ 7

1.2 Statement of the Problem ...................................................................................................... 8

1.4 General Objectives ................................................................................................................ 9

1.4.1 Specific objectives ......................................................................................................... 9

1.4.2 Research Hypotheses ................................................................................................... 10

1.5 Significance of the study ..................................................................................................... 10

1.6 Limitations of the Study...................................................................................................... 11

1.7 Scope of the Study .............................................................................................................. 11

CHAPTER TWO .........................................................................................................................12

LITERATURE REVIEW ...........................................................................................................12

2.1 Introduction ......................................................................................................................... 12

2.2 Theoretical Review ............................................................................................................. 12

2.2.1 Organizational Learning Theory .................................................................................. 12

2.2.2 The Theory of Constraints ........................................................................................... 14

2.3 Empirical Review................................................................................................................ 16

2.3.1 Continuous Learning and Organizational Performance ............................................... 16

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2.3.2 Inquiry and Dialogue and Organizational Performance .............................................. 18

2.3.3 Team Learning and Organizational Performance ........................................................ 20

2.3.4 Employee Empowerment and Organizational Performance ........................................ 22

2.3.5 Learning Organizations and Organization Performance .............................................. 24

2.4 Summary of Literature Review and Gaps ........................................................................... 25

2.5 Conceptual Framework ....................................................................................................... 28

CHAPTER THREE .....................................................................................................................30

RESEARCH METHODOLOGY ...............................................................................................30

3.1 Introduction ......................................................................................................................... 30

3.2 Research Design.................................................................................................................. 30

3.3 Target Population ................................................................................................................ 30

3.4 Sample Population .............................................................................................................. 30

3.5 Validity and Reliability of the Research Instrument........................................................... 33

3.5.1 Validity of Research Instrument .................................................................................. 33

3.5.2 Reliability of Research Instrument .............................................................................. 33

3.6 Data Collection ................................................................................................................... 33

3.6.1 Data Collection Instruments ........................................................................................ 34

3.6.2 Data Collection Procedure ........................................................................................... 34

3.7 Pilot Testing of the Research Instrument ............................................................................ 34

3.8 Data Analysis and Presentations ......................................................................................... 34

3.9 Ethical Consideration .......................................................................................................... 35

CHAPTER FOUR ........................................................................................................................37

DATA ANALYSIS, INTERPRETATIONS AND DISCUSSIONS .........................................37

4.1 Introduction ......................................................................................................................... 37

4.2 Response Rate ..................................................................................................................... 37

4.3 Bio Data .............................................................................................................................. 38

4.3.1 Gender of the Respondents .......................................................................................... 38

4.3.2 Age of the Respondents ............................................................................................... 38

4.3.3 Level of education........................................................................................................ 39

4.3.4 Years of Experience ..................................................................................................... 39

4.4 Effects of Continuous Learning on Organizational Performance ....................................... 40

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4.5 Effects of Inquiry and Dialogue on Organizational Performance ...................................... 41

4.6 Effects of Team Learning on Organizational Performance ................................................ 42

4.7 Effects of Employee Empowerment on Organizational Performance ................................ 43

4.8 Organizational Performance of Commercial banks in Ongata Rongai ............................... 45

4.9 Hypothesis Testing and Results Interpretation ................................................................... 46

4.9.1 Diagnostic Test Results................................................................................................ 46

4.9.2 Inferential Analysis ...................................................................................................... 48

4.9.3 Interpretation of results ................................................................................................ 57

CHAPTER FIVE .........................................................................................................................60

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS .............................................60

5.1 Introduction ......................................................................................................................... 60

5.2 Summary of Findings .......................................................................................................... 60

5.3 Conclusion .......................................................................................................................... 62

5.4 Recommendations ............................................................................................................... 63

5.5 Suggestions for Further Research ....................................................................................... 63

REFERENCES .............................................................................................................................65

APPENDICES ..............................................................................................................................71

Appendix I: Letter of Introduction ............................................................................................ 71

Appendix II: Research Authorization Letter............................................................................. 72

Appendix III: Research Permit ................................................................................................. 73

Appendix IV: Questionnaire ..................................................................................................... 74

Appendix V: Commercial Banks within Ongata Rongai Township…………………………..81

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LIST OF TABLES

Table 2.1: Summary of Gaps ..........................................................…..........................................25

Table 3.1: Target Population and sampling chart……………………..........................................32

Table 4.1: Distribution of Respondents……………………………………………………….....37

Table 4.2: Gender of Respondents…….……………………………………...………………….38

Table 4.3: Age of the Respondents……………………………………………. .....…………….38

Table 4.4: Level of Education……………………………………………………………………39

Table 4.5: Years of Experience in the Institution…………………………………………..........39

Table 4.6: Effects of Continuous Learning……………………………………………………....40

Table 4.7: Aspects of Continuous Learning on the Organizational Performance………………..40

Table 4.8: Aspects of Inquiry and Dialogue ……………………………………………………..41

Table 4.9: Aspects of Inquiry and Dialogue on the Organizational Performance……………..…42

Table 4.10: Effects of Team Learning…………………………… ..…………………………....42

Table 4.11: Aspect of team Learning on the Organizational Performance ……………………..43

Table 4.12: Effects of Employee Empowerment………………………………………………...44

Table 4.13: Aspects of Employee Empowerment on the Organizational Performance……….…44

Table 4.14: Extent to which performance has improved from last year………………………....45

Table 4.15: Aspects of General Performance…………………………………………………….45

Table 4.16: Correlation of Independent Variables………………………………………………47

Table 4.17: Effects of Continuous learning on the Organizational Performance…………….......49

Table 4.18: Effects of Inquiry and Dialogue on the Organizational Performance……………….50

Table 4.19: Effects of Team Learning on the Organizational Performance……………………..52

Table 4.20: Effects of Employee Empowerment on the Organizational Performance….............54

Table 4.21: Model Summary………………………………………………………………….. ..56

Table 4:22: Model Summary…………………………………………………………………….56

Table 4.23: Regression Model Estimates………………………………………………………..57

Table 4.24: Hypothesis Testing……………………………………………………….…….…...59

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LIST OF FIGURES

Figure 2.1: Diagram of conceptual framework.......................................................................29

Figure 4.1: Distribution of residual errors...............................................................................47

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OPERATIONAL DEFINITION OF TERMS

Commercial bank: It’s a financial institution that provides various financial service

such as accepting deposits and issuing loans.

Continuous Learning: The ability to continually develop and improve one’s skills and

knowledge in order to perform effectively and adapt to changes in

the workplace.

Employee Empowerment: A process of increasing people‘s right and will to decide and

develop them by empowerment, help, share, train and cooperation.

Responsibility is distributed close to decision making so that people

are motivated to learn toward what they are held accountable to do

Inquiry and Dialogue : An argument or discussion that allow two agents to share knowledge

to jointly construct arguments for a specific claim that none of the

individual participants may construct from their own personal

beliefs alone.

Learning organization: Refers to an organization where people continually expand by their

capacity to create the results they truly desire, where new and

expansive patterns of thinking are nurtured, where collective

aspiration is set free, and where people are continually learning how

to learn together.

Organizational

Performance: Refers to the general performance of an organization. Performance

of commercial banks in Kenya is measured by the growth in bank

accounts, customer deposits, the loan book and also profitability.

Team Learning: The process of working collectively to achieve a common objective

in a group. Team members tend to share knowledge and

complement each other's skills.

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ABBREVIATIONS AND ACCRONYMS

ATM Automated Teller Machine

CBK Central Bank of Kenya

GDP Gross Domestic Product

NIM Net Interest margin

NSSF National Social Security Fund

TOC Theory of Constraints

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ABSTRACT

Learning organization concept is learning with a much broader purpose commonly hailed as

panacea for organizational success in a dynamic global economy. This focus on learning gives rise

to a cognitive approach in which undivided beliefs and insights are viewed as critical influences

on organizational effectiveness. This study sought to determine the effects of learning organization

dimensions on the organizational performance of commercial banks within Ongata Rongai

Township. The study was guided by four specific objectives which were to determine the effect of

continuous learning, inquiry and dialogue, team learning and employee empowerment on the

organizational performance of the commercial banks in Ongata Rongai. The study was guided by

the organization learning theory and the theory of constraints. The study adopted a descriptive

survey research design targeting 13 commercial banks operating in the region. The target

population was 194 bank personnel. Stratified random sampling technique was used to select the

sample studied. Two strata were identified; the management level staff stratum and the lower level

stratum. From each stratum 30% of the respondents was taken as a sample hence a sample size of

58 personnel was used. Self-administered questionnaires were used as the main instrument for

collecting of data. Validity of the instruments was achieved by pre testing the instruments while

their reliability was achieved at coefficient value of 0.823 using Cronbach alpha test at cut off

point of 0.8. Data was analyzed though descriptive statistics and the relationship between the

variables was established using multiple regression analysis. The Statistical package for social

sciences (SPSS) was used to help the researcher describe the data and determine the extent of

relationships between the learning organization dimension variables and the organizational

performance of commercial banks. From the study, continuous learning, inquiry and dialogue and

employee empowerment were found to be statistically significant in predicting the organizational

performance of commercial banks. Continuous learning was significant at R value of 0.572 and P

value of 0.032, inquiry and dialogue was significant at R value of 0.537and P value of 0.001 and

employee empowerment was significant at R value of 0.576 and P value of 0.013. On the other

hand, team learning was not statistically significant at R value of 0.373 and P value of 0.688 in

predicting the organizational performance and it was concluded that there was no relationship

between team learning and organizational performance hence team learning was removed from

the regression model. The study concluded that dimensions of learning organizations had a

significant effect on the organizational performance of commercial banks. The study

recommended that commercial banks should invest in resources to facilitate continuous learning

of its members so as to continuously improve on the general performance. Organizations should

encourage people to treat each other with respect as well as listening to other people’s before

speaking. Further to that organizations should recognize people’s initiative geared towards

improving its performance. Inviting staff to contribute to the organization’s mission, encouraging

equal distribution of responsibilities and giving people choices in their work assignments play a

key role hence need for strengthening.

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CHAPTER ONE

INTRODUCTION

1.0 Introduction

This chapter aims to give a background to the area of study which is followed by the Statement of

the problem discussion, objectives of the study, research questions, significance of the study, the

scope of the study, and finally but not the least limitations of the study.

1.1 Background of the Study

In an unpredictable and competitive world necessitated by technological development and the shift

towards a knowledge grounded economy, organizations have no choice but adapt in order to

survive and thrive (Joo, 2007). Many organizations strive for a culture of learning organization,

by creating, acquiring, and transferring knowledge while adapting its patterns to mirror the

acquired information and concepts (Garvin, 1993).

Learning organizations achieve notable heights of performance while at the same time it gratifies

and rewards the people involved (Karash, 1995). In this setting, employees are not viewed as a

collection of passive, hired hands but co-partners to the achievement of the firm’s mission and

objectives. On the other hand, a learning organization strives to advance its own operations by

intentionally innovating new skills of drawing learning from within and other’s experiences

(Taylor, 1998).

Commercial banks and telecommunication companies have in recent years made noteworthy

investments in technology oriented distribution channels. This has been aiming at reaching new

customers and capture benefits of a wider network. According to Financial Sector Deepening

Trust Kenya, amid the years 2005 and 2014, banks increased their access points by opening up

more branches and ATMs (Gubbins, 2015). In comparison, during the same period there was

growth in agent network and mobile money at an average annual rate of 86 percent per year. With

the increase in the number of mobile money and banks agents set up to take services closer to the

people the importance of brick and mortar branches was significantly dwarfed (Gubbins, 2015).

Significant developments were noted in the banking industry, in response to the dwarfed

significance of the brick and mortar bank branch. This was a major test of the ability of banks to

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adopt new technology and the increasing importance given to human capital as strategy to take on

telecommunication companies in their quest to reach that prized customer (Kariuki 2015).

Focus on training within the banking industry has been triggered by the augmented competition

witnessed within the industry. More and more attention is being paid to motivational aspects of

human personality, particularly the need for self-esteem, group belonging and self-actualization

(Torrington & Hall 2010). This is crucial because banks in Kenya have been compelled to adopt

knowledge management aspects into their human capital departments aimed at enhancing a more

efficient and adaptable workforce that can deliver high competitiveness (Gubbins, 2015). There is

significant emphasis on adopting technology while at the same time building capacity to deliver

personalized services. Commercial banks are digitizing their systems to make banking faster,

smoother and better, they are promising customers enhanced customer experience and benefits of

continuous improvements. Commercial banks therefore have no choice but to be learning

organizations so as to fulfill this promise to customers.

Organizations are considered successful and efficient depending on their ability to foresee the

direction of change and its forthcoming disparities and are able to dispose the disparities in order

to make a better future (Akhawan, 2010). The current business environment has compelled banks

to focus on offering products and services that are attuned to the needs of their target market. This

is seen by many executives, directors, and managers as critical in attaining competitive advantage

in an increasingly complex and unpredictable business environment (DiBella & Nevis, 2009;

Marquardt, 2012; Watkins & Marsick, 2013).

Given the success of targeting lower income consumers and adopting mobile money, commercial

banks seized the opportunity to use mobile phones as a channel to drive growth. This is in addition

to emphasis on enhanced customer experience and giving customers the benefits of continuous

improvements in service delivery (Kariuki, 2015). It is this background that sets the stage for

growing interest in learning organization among commercial banks. To what extent then can

commercial banks be considered learning organizations in terms of their business practices i.e.

flatter and more flexible organizational structures, increased use of technology to improve the

speed and capability of communication and service delivery within organizations, the expansion

of the knowledge economy, and increased attention and spending on employee training and

education (Marsick, 2013).

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1.1.1 Learning Organization Dimensions

A learning organization has been described as one that learns continuously and transforms itself.

(Watkins & Marsick 2013). Senge (1990) defined a learning organization as “a place where people

continually expand their capacity of creating results, where patterns of thinking are broadened and

nurtured, where collective aspiration is free and where people are continually learning to learn”

(p.1). A learning organization has a readiness to unlearn and relearn; open communication;

willingness to identify, accept and learn from errors; concern for all stakeholders; learning-

encouraging culture; flexible structure; and facilitative leadership (Davis & Daley, 2008). The term

learning organization was coined nearly three decades ago and since then it has received

considerable attention from the scholarly community and practitioners across various disciplines

(Song et al., 2013).

Learning organizations have a greater capacity to spot opportunities and sense trends and events

in the market which consequently leads to better products/services, customer satisfaction and

improved market performance (Watkins & Marsick, 2003). This study focused on Watkins and

Marsick’s dimensions of learning organizations namely; continuous learning, inquiry and

dialogue, team learning and employee empowerment

The necessity for continuous learning at all echelons of the job is attributable to reasons relative

to business and organization. The widening global economy as well as global competition, new

developments and innovations, rapidly changing and updating technology, customer expectations,

quality management, changes in demographics, skills demands depicts challenge for the flexibility

of an organization operating in this scenario. Organizations have to change and embrace fresh

ways to continue being competitive. To survive in a fast changing and competitive environment

continuous learning has becomes essential (Mayo, 2010; Howard, 2011 and Adler, 2009). An

understanding of dynamics that contribute to continuous learning and their impact on

organizational performance are essential.

Organizations learn when their employee learn, hence there is a good case for individuals to double

efforts and to achieve the workplace targets. This translates to better individual performance and

which in turn improves organizational performance (Adler, 2009). Continuous changes of

knowledge and skill needs in work places and the quest for better careers necessitates continuous

learning (Hall and Mirvis, 2011). It is also significant for avoiding skill obsolescence among the

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unemployed. Pursuing further training/education can lead to reemployment (Wanberg, Hough, and

Song, 2012). Continuous Learning is also essential for older people who are out of work to ensure

they can be employed (Mueller, 2011). Continuous learning is important for both employed and

unemployed individuals.

Dialogue is the collective and collaborative communication method by which persons collectively

explore their individual and collective assumptions and predispositions Barge (2002). To Watkins

and Marsick (2003) inquiry is based on open minded inquisitiveness. The inquisitiveness allows

persons to suspend presuppositions and judgments in search of the truth and improved solutions.

Walton (1999). Persuasion dialogue will still be a success even where initial disagreement remains

unresolved for the reason that there is the benefit the parties to make known their assumptions and

commitments in the course of the dialogue. Walton (1999) persuasion dialogue is considered a

success where the exchange of arguments bears the five features that define the ideal stances that

each party to the dialogue must show for the dialogue to be a truly two-sided and interactive

argument; flexible commitment, empathy, open-mindedness, critical doubt, and evidence

sensitivity. Flexible commitment is that willingness by the proponent and respondent to hold their

positions while at the same time remaining open to be persuaded in light of new facts. Empathy is

the expectation that each side has to give due regard to the commitments of the other and take great

care to ensure to base their arguments on those commitments while portraying those commitments

accurately. Open-mindedness means to a party’s will to think through proposals even when those

proposals contradict their point of view, instead of just rebuffing them outright. Critical doubt is

the ability of a party to set aside their commitments to making an allowance for objections to their

arguments. Evidence sensitivity is the requirement on either side to withdraw or adjust

commitments where the side presents a justifiable reason.

When a group of people function as a whole, they are aligned, acting on a shared vision that is an

extension of personal visions. Argyris and Schon (2011) identified integrating perspectives,

experimenting, and crossing boundaries as team learning processes that are essential for the right

collaboration. Integrating perspectives entails synthesis of obvious conflicts with the objective of

resolving the divergent views without resorting to majority rule. Experimenting are the steps taken

to test a hypothesis or endeavors to unearth new information. Crossing boundaries is bridging the

lines that separate one team from another within an organization. Staff will be said to have crossed

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the boundaries when they seek support, work together with others to undertake a specific goal, or

actively listen to another group’s opinions. Management support for the operation of teams and

support for working across functional, divisional, or hierarchical boundaries have been said to be

the greatest organizational influences on team learning (Weintraub, 2009).

Empowerment within an organization when seen from the member of staff’s perspective is seen

as something perceived by them. Empowerment is determined by finding the work done by the

member of staff meaningful. The member of staff feeling themselves as worthy and the likelihood

of choosing as well as the extent of effectiveness perceived over certain results in the course of

work (Ugboro & Obeng, 2000). Spreitzer, set out two angles of empowerment in a business

context, relational and psychological angles. Relational which is the top-down approach. It

suggests that empowerment happens when the upper echelons within a hierarchy devolve power

to the subordinate levels of the hierarchy. The psychological angle concentrates on the employee’s

side of empowerment. It is also identified as organic or bottom-up processing. It suggests that

empowerment is attained only when psychological states elicit a perception of empowerment in

an employee (Mattews, 2003).

Top to bottom empowerment denotes support from superiors to their subordinates. It is the decision

to give power to staff at four dimensions that consists of authority, specialization, resource and

personality. Authority means the power to decide on the meaning, environment and content of the

work of employees. Specialization is the knowledge and skill of decision making and its

application. Resource dimension, is of utmost significance sharing knowledge, the option of

achieving and expending resources related to their work. Personality is the confidence to use the

authority and motivation (Koçel, 2003).

1.1.2 Organizational Performance of Commercial Banks

An organization’s performance determines its survival in any given economy. Mackie (2008)

defines organizational performance as the effectiveness of the organization in fulfilling its purpose.

Performance of commercial banks in Kenya is measured by the growth in bank accounts, customer

deposits and the loan book. Lately ability to leverage on alternative channels has gained

significance in measuring the performance of commercial banks. According to Richard et al.

(2009) organizational performance encompasses three specific areas of firm outcomes: financial

performance, product market performance and shareholder return. Growth has mainly been

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underpinned by the ability of banks to respond to the need of the Kenyan Market for convenience

and efficiency through alternative banking channels such as mobile, internet and agency banking

to complement the branch network.

According to Roman and Tomuleasa (2012), commercial bank performance is influenced by

several factors which can be categorized as internal determinants and external determinants. Other

researchers like Abdullah, Parvez and Ayreen, (2014) and Athanasoglou et al. (2005) prefer to

categorize them into bank specific, industry specific and macroeconomic determinants. Bank

specific factors include bank size, diversification, innovation, management efficiency, capital

adequacy and liquidity. External factors can further be divided into gross domestic product (GDP),

demographics, inflation and interest rates. These factors can have either positive or negative impact

on the performance of commercial banks.

Technology tools have enhanced the performance of commercial banks by making it possible for

commercial banks to lower barriers to entry which has exponentially increased retail accounts.

Commercial banks have also realized that with technology, lowering costs of transacting across

other bank accounts attracts more customers to open accounts. With the growth in bank accounts

focus shifts to growing customer deposits. Mobile banking makes it possible for consumers to

easily access their banking services without necessarily having to queue in the banking halls.

Mobile banking also opens up a convenient and easily accessible channel for accessing deposits

from customers. Which can also be used to advance credit to the account holders. Customers can

easily transfer their money from their mobile phone to their account. Growth in customer deposit

is a major indicator of bank growth; a study conducted by Alagheband (2006) depicted a positive

relationship between electronic banking and increase in customer deposits.

According to Atavachi (2013) the demographic factors of customers also affect customer deposits

and borrowing: these include: the age, region, the level of income among other factors. The age of

a population greatly affects the level of customer deposits and borrowing. An old population is

more likely to save their money as compared to a young population. Old people face uncertainty

about their future and therefore tend to save more and invest in their future. In contrast the young

generation do not mind so much about the future and hence they spend more than they save. This

greatly affects growth of deposits and customers’ ability to borrow both are at the centre of an

efficient financial system.

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Chan and Chia (2011) indicate that the level of income of consumers also affects the performance

of commercial banks. Most consumers in the middle class and the high end are more likely to save

their money as compared to low income earners since they lack surplus money to save after they

deduct their expenditures.

Inflation is another determinant of the performance of commercial banks; inflation may affect

savings in a number of ways. Akinyele and Olorunleke (2010) argue that greater uncertainty arises

in saving because risk-averse consumers set resources aside as a precaution against possible

adverse changes in income and other factors. Therefore, when inflation raises uncertainty

regarding future income growth, risk-adverse consumers may increase their precautionary saving.

Izogo (2012) explain that savings may rise in inflationary environment if consumers mistake an

increase in the general price level for an increase in some relative prices and refrain from buying.

Inflation could also influence saving through its impact on real wealth. If consumers attempt to

maintain target level of wealth or liquid assets relative to income, saving will rise with inflation.

1.1.3 Commercial Banks in Ongata Rongai

Out of the 43 commercial Banks licensed by the Central Bank of Kenya, 13 have opened branches

in the study location, Ongata Rongai town in Kajiado County (KCG, 2014). The banking

institutions are out doing each other in establishing footprints in key hubs of trade, as they seek to

grow market share and profitability through new branches, upgraded online banking platforms,

digitized paperless application processes, and third party agents in addition to mobile banking

products to enable them reach more customers and to diversify their deposit base (KNBS, 2015).

The opening of branches in the town are mainly to support small and medium retail business, as

well as real estate clients. Physical branches are designed to complement the investments in digital

platforms, and retail banking products and services targeting the growing business community in

the populous town and customers in the surrounding areas in the wider Kajiado County. New

technologies and new business models are deployed to reach wider client base, attract more

deposits and deliver more loan products in ways that were not possible before. Through digital

platforms, banks are also offering a fast and convenient banking experience (Gubbins, 2015).

An organization‘s performance includes multiple activities that help in establishing the goals and

monitor the progress towards the target. It is used to make adjustments to accomplish goals more

8

efficiently and effectively (Harrison, 2000). In commercial banking the main indicators are the

size of asset base, customer deposits as well as loans and advances. Corporate performance is

highly linked to profitability of commercial banks, it gives an evidence on the capacity of a

commercial bank to undertake risks as well as growing their activities (Barbu et al, 2009).

Competition between commercial banks and telecommunication companies has zeroed in

significant investments in technology as a means to reach new customers and capture benefits of

a wider network as means of shoring up deposits which remain the main source of affordable funds

for the Kenyan banks (Gubbins 2015).

1.2 Statement of the Problem

Performance of Kenyan commercial banks has been significantly impacted through learning of

new techniques of undertaking challenges in a varying setting. This is a major determinant whether

a commercial bank will experience growth, or stagnate, or worse still experience significant

decline. This study focuses on the Kenyan banking sector because it is a dynamic sector that has

been forced to adjust to the major changes that are taking place both globally and locally in a bid

to survive and remain competitively viable organizations. The industry has constantly combined

personalized services and technology to deliver banking services. There is greater emphasis on

improving speeds and reducing the amount of time spent banking (Kariuki, 2015). Market

dynamics demand that banks develop the capacity to detect the changing forces in the market and

the ability to appropriately respond to the changes, such capacity will ensure that the strategic

responses taken will be of benefit to the organization. Developing the ability to quickly discern

changes in the business environment and adjusting appropriately is at the core of learning

organization (Mwangi, 2012). The key to success does not depend on leveraging technology and

financial might, but on the quality of human resources that an organization has. The human

resource must be trainable and have a capacity for lifelong learning for the organization to succeed.

The organization itself must focus on providing an enabling environment for their employees to

learn.

Studies have been undertaken by several scholars on the application of learning organization in

Kenya. Kibet (2010) studied the application of learning organization at NSSF and concluded that

NSSF was not a learning organization. Kibet recommended that related studies be done in other

organizations to determine whether the finding was unique to NSSF or a trend in other

9

organizations. Omadede (2012) studied learning organization practices at Kenya Shell and

concluded that to a large extent Kenya Shell was practicing the learning organization disciplines.

In the study he noted that such disciplines had provided a conducive environment for anticipating,

embracing and creating change. Ayilo (2010) studied organizational learning in commercial banks

in Kenya and concluded that organizational learning dimensions were practiced in Kenyan banks.

Nzuve and Omolo (2012) concluded that more than half of commercial banks in Kenya had

adopted the dimensions of learning organization. They also observed that majority of commercial

banks in Kenya lean towards specific aspects rather than holistically focusing on the organization

as a dynamic entity. They recommended that commercial banks in Kenya should grasp more

organized, certain and solid paths as they embrace a learning culture. This would enable them to

thrive in the ever dynamic and competitive market.

Despite the increased study on learning organization in Kenya information on the impact of

adopting the learning organization dimensions in Kenya banking sector especially in light of the

fast changing business environment, the rapid adoption of technology and its impact on banking

business in Kenya in the recent years there is no current study on learning organization dimensions

and their effect on organizational performance of commercial banks in Kenya. A number of studies

focus on why learning matters, yet few empirical studies address the processes required to build

learning organizations and their potential impact on organizational performance. There exists few

studies focusing on the variables employed in the current study. Lastly there exist mixed results

on the effect of learning organizations. This hence saw a need of conducting the current study in

order to determine the impact that banks in Kenya have realized out of becoming learning

organizations.

1.4 General Objectives

The general objective of the study was to investigate the effects of Learning Organizations

dimensions on the organizational performance of commercial banks in Ongata Rongai Township.

1.4.1 Specific objectives

(i) To determine the effect of continuous learning on the organizational performance of the

commercial banks in Ongata Rongai.

(ii) To establish the effect of inquiry and dialogue on the organizational performance of the

commercial banks in Ongata Rongai.

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(iii)To determine the effect of team learning on the organizational performance of the

commercial banks in Ongata Rongai.

(iv) To determine the effect of employee empowerment on the organizational performance of

the commercial banks in Ongata Rongai.

1.4.2 Research Hypotheses

The study sought to verify the following hypotheses:

H01: There is no significant relationship between continuous learning and organizational

performance

H02: There is no significant relationship between inquiry and dialogue and organizational

performance

H03: There is no significant relationship between team learning and organizational performance

H04: There is no significant relationship between employee empowerment and organizational

performance

1.5 Significance of the study

This study was intended to benefit to the Central Bank of Kenya in its search for knowledge in

growing the financial services sector as well as boosting financial access and inclusion.

Information flow and innovations has been major drivers of change in Kenya. The Central Bank

of Kenya and by extension the government will acknowledge the areas of learning which are

appropriate to support the banking sector through the study findings. The findings provide the

regulator insights in its design of regulatory mechanisms to reward and incentivize learning and

innovation among market players.

In banking circles, the findings were found to be of great value to commercial banks in assessing

the significance of adopting learning organization dimensions on their general performance with

regard to boosting their profitability. Commercial banks, are increasingly appreciating the

importance of human capital development as a means of developing a competitive edge and the

link between adoption of learning organization dimensions and organizational performance.

Regionally, this study provided commercial banks in East Africa with an insight into the learning

organization practices of Kenyan commercial banks, their impact on the Corporate bottom-line

and dimensions that they can apply so as to boost the general performance of their businesses. In

11

addition, this study saves them the expenses of conducting cost benefit research as it informs them

on the learning organization dimensions that have enhanced relationship to business performance.

To the scholars, this study adds value to the existing body of knowledge as it recommends ways

for improvement of organizational performance by leveraging on learning organization

dimensions. However, this study serves as a stepping stone for newer research on financial

innovation.

1.6 Limitations of the Study

This study was however not without any challenges. Reluctance of respondents to provide

information was one of the challenges but this was addressed by giving assurances that their

information would be treated discretely and was entirely for educational purpose. Authorization

from the branch managers and National Commission for Science, Technology and Innovation was

also sought.

This study was specifically conducted within the banking industry. Results obtained therefore may

not allow for generalization in industries in other sectors. Lastly, self-reporting documents such as

questionnaires may have led to biased results on issues such educational level and age because

they are subject to reporting inaccuracies. Despite this limitation, the quality of the findings, their

interpretation and reporting were not affected.

1.7 Scope of the Study

The study targeted 13 commercial Banks licensed by the Central Bank of Kenya that have branches

in the study location of Ongata Rongai town in Kajiado County. The commercial banks that formed

the units of analysis of the study are those that have been operating for more than 1 year in the

region. This was to give room for comparison of performance between the current and the previous

year. Data collection was conducted in the year 2017. The study utilized primary data. Staff from

the management and lower level were sampled as respondents in the study to ensure inclusivity.

Four dimensions of learning organizations guided the study. These included; continuous learning,

inquiry and dialogue, team learning and employee empowerment.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter presents a review of literature related to the subject under study and a theoretical

framework particularly organizational learning theory and the theory of constraints. It focused on

learning organization and its dimensions, literature investigating effects of selected dimensions on

organizational performance, and aspects of organizational performance in the banking industry in

Kenya.

2.2 Theoretical Review

In this study the theoretical foundation is informed by the organizational learning theory and the

theory of constraints. The theoretical framework is the specific mechanism, or lens, by which the

research topic will be examined.

2.2.1 Organizational Learning Theory

The concept of organizational learning has been highly acknowledged by researchers in the recent

past. The concept posits that learning and successful organizations have the capacity to learn

sooner, better and more quickly than their rivals and employ this learning in their working process

(Alavi, 2010). Organizational learning dates back to the late 1970s, a period when researchers

focused on the concept from a psychological viewpoint. Chris Argyris and Donald Schön by their

1978 work, advanced the concepts of single-loop and double-loop learning (Argyris & Schön,

1978). They christened the processes by which mistakes are rectified by employing other strategies

or processes calculated to produce different and successful outcomes, single-loop learning. They

expounded that single-loop and double-loop learning processes can be found in organizations, they

both kinds of organizational learning. Single-loop learning happens when organizations identify

faults, fix them, and then proceed with their existing policies and objectives. It is said to be double-

loop learning where organizations identify faults and alter their policies and objectives before they

adopt remedial action (Romero, 2014).

Organizational learning has also been defined as the actions of the organization like acquiring

knowledge, distributing information, interpreting that information, and consciously or

subconsciously maintaining memory on the positive variation of the organization (Templeton, et

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al., 2002). In terms of the learning function in behavior change, organizational learning is that

combined process tailored to support and protect the organizational behavior change (Rodriguez,

et al., 2003). It entails the production of new knowledge, skills and behavior that supports an

organization to adjust well to new ways of operation. It can be regarded as a dynamic process. It

includes creating, acquiring, and collecting knowledge with the objective of developing resources,

and capacity for improved performance of the organization (Perez Lopez, 2005).

Alerga and Chiva (2008), described organizational learning as the process by which organizations

learn. This encompasses every change to the organizational models which has the effect of

improving or preserving operational performance. The means of evaluating learning in

organizations is also an issue of focus. Evaluation according to Cullingford (2010) to study and

understand learning is to enter “that no-man’s land between thinking as a capacity and

development as a process of change”. Organizational learning model by Neef (2001) was adopted

because they were general and modern. These measures consisted of the learning culture of the

organization, extent of team work and learning, common perspective, sharing of knowledge,

collaborative leadership, development of the staff's skills and competences and systemic thinking.

(Neef, 2001).

Organization Learning is a result of organizational inquiry. Every time the expected end results

vary from the actual outcome, the researcher or organization will want to engage in inquiry to find

out and, where required, solve the inconsistency. It is in the course of this inquiry, that the

researcher will interact with other members of the organization. Learning takes place in the course

of this interaction. It for that reason, that learning is said to be a direct product of this interaction

Argyris and Schon (1996).

The concept has two tenets. The first tenet of the concept is the single loop learning. Which is

made up of one feedback loop once strategy is adjusted as reaction to an unexpected outcome (this

is also called error correction). For instance, where the is decline in sales, marketing managers will

seek to find out the reason, and make strategy adjustments in an attempt to grow the sales according

to the set targets. The other tenet of the concept is the double loop learning perspective which

refers to learning that happens as result of the change of theory-in-use. In this tenet according to

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Argyris and Schon (1996) the values, strategies, and assumptions that guide the action to be taken

are altered so as to create a more efficient environment.

This theory is relevant to the current study in that, it informs the study in regard to analyzing the

strategies used in adopting learning organization dimensions and the concepts identified by the

management. The theory also informed the study on the impact realized on the adoption of the

learning organization dimensions in the commercial banks under study.

2.2.2 The Theory of Constraints

The Theory of Constraints (TOC) is closely associated with Eliyahu Moshe Goldratt. He

popularized theory as an overall management philosophy in the year 1984. First on the scene was

the Optimized Production Timetables scheduling software (Goldratt & Cox, 1984). The theory has

since has advanced from a basic production scheduling software program to a complement of

integrated management tools. It now encompasses three interconnected areas: logistics/production,

performance measurement, and problem solving/thinking tools (Spencer & Cox, 1995).

In the view of Goldratt (1990b), Klein and DeBruine (1995) and Dettmer (1997), TOC considers

organizations to be chains made up of a number of links, or networks of chains. When seen as

constrained systems, links of a chain all play a role in furtherance of the goal. Every link is heavily

reliant on the others. But as expected the chain, can only be as strong as its weakest link.

Goldratt’s TOC posits that the overall performance at organizational level can only be as good as

its weakest link. Improvement in the performance of the organization must as an initial step find

the weakest link or constraint and remedy it. It is made up of distinct, but related processes and

interrelated concepts which include: the performance measures and five focusing steps, logical

thinking processes, and logistics. It follows therefore that if at all times there will be a constraint,

the theory of constraints then employs a focusing process to point out constraints and makes

changes to the organization to remedy the constraint (Cox & Goldratt, 1986).

The theory underscores the usage of Goldratt’s three key performance measurements. These

measurements are throughput, inventory and operating expense. He emphasizes the use the three

global operational measures instead of the local ones like efficiency and utilization. He considers

increasing throughput the greatest of the three. In this case throughput means the rate at which the

15

organization is able to make money not by way of production but by way of sales. This is because

according to this theory good are not considered assets until they are sold (Noreen, 1995).

Goldratt presented a system called the five focusing steps for addressing system problems on a

continuous improvement basis. The system entails identification of a constraint, its exploitation,

subordination of other activities, then elevating it and finally if there is any change, start yet again

at step one. (Goldratt & Cox, 2004)

The Thinking Processes lay emphasis on the current issues that inhibit the system from reaching

its targets. Number one is to identify symptoms in the system that show the system is not

performing according to expectations. On that basis, the TOC Thinking Process tools are deployed

to deduce the reasons of the symptoms identified. The steps to be taken to rectify those causes,

and the extent to which corrective actions can be taken. The TOC approach therefore is to map the

system from the perspective of current problems, instead of trying to model the whole system.

(Klein, 1995)

Commercial Banks have in the past emphasized on expanding market share by opening of new

branches while ignoring such aspects as use of technology and innovations in the market. In recent

years, due to changes in the business environment, commercial banks have been compelled to

change focus and put more emphasis on the learning of their workforce in order to continuously

sustain or improve organizational performance (Higan, 2011). The ultimate aim of adopting

learning organization dimensions is to achieve cost reduction that maximizes profits realized by a

commercial bank. Increasing throughput and/or decreasing operating expense through increased

efficiency by bank staff should lead to the accomplishment of commercial banks ultimate goal of

growing market reach share and consequently increasing profitability. Anything that prevents a

commercial bank from reaching its set performance objective is thus labelled a constraint.

Learning organization dimensions should therefore be geared towards streamlining all the

functions towards alleviating the constraints in the commercial bank. This formed the basis of the

current study which sought to examine the effect of learning organization dimensions on

organization performance of commercial banks.

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2.3 Empirical Review

A learning organization is in essence one that encourages a continuous organizational rebirth by

entrenching a set of main measures to nurture a tendency to learn, adapt and change. This study

will focus on select dimensions namely; continuous learning, inquiry and dialogue, employee

empowerment, and team learning.

2.3.1 Continuous Learning and Organizational Performance

Continuous learning, represents an attempt by the organization to generate leaning opportunities

for all employees. This dimension is important for short and long term success of both individuals

and organizations. Maurer (2010) study on the aspects of managerial work that are associated with

a need for competence at continuous learning revealed that at individual level the benefits of

continuous learning are the acquisition of better skill sets. This increases their capability to attain

the organizations objectives, the individual is also better placed to be competitive in the

employment market. According to Maurer (2010) study continuous learning is increasingly

important because the need to continuously gain new skills and develop professionally is essential

to career success and organizational success, and having an organization in which learning,

development, and growth is part of existing jobs can help in retention of employees. Since the

ability to constantly acquire knowledge bears the potential to result in increased productivity,

organizations stand to benefit by remaining effective, innovative and competitive (Mirvis, 2011).

The ever present fight by organizations to remain in business and continue growing in the

increasingly competitive business environment, necessitates that continuous learning remains a

significant factor within organizations. To be able to learn and nature one’s skill set is increasingly

being acknowledged as a core career competency (Hall & Mirvis, 2012). It is now up to the

members of staff at personal level to take charge for their own career growth and acquisition of

the varied knowledge and skills required. The change means the process of learning and the

capability to always gain more updated skills and to better the current ones is now a critical

requirement for career success (Weiss, 2010).

Mayo (2010) study concluded that the nature of the job and requisite competencies have a profound

effect on the professional development a member of staff. The avenues for acquisition of new skills

can be by sources: training, education and communication. Even then the work environment

remains a major determinant if the new skills result in a change in on the job behavior (Weiss,

2010). Where members of staff cannot find an opportunity to apply the fresh skills acquired the

17

incentive to learn is reduced. In contrast, where an organization’s culture identifies or rewards

members of staff who take initiative to practice the new ideas and skills, this may result in a

positive impact in terms of continuous learning amongst the members of staff (Mueller, 2011).

Husein et al (2016), sought to investigate the association between learning organization culture

and organizational performance in Public Institutions of Higher Education in Malaysia.

Continuous learning was found to be highly associated with organizational performance.

Norashikin et al., (2013) study concluded that continuous learning opportunities through

scholarships, training programmes, and research grants should be made available to the

academics to add value to their existing skills and knowledge for higher performance. As

continuous learning is reflected as opportunities to learn (Watkins & Marsick, 1999), academics

perceived prospect for ongoing education and growth as crucial to contribute to overall

performance. Indeed, as learning is integrated into work, academics can have the opportunity to

learn on the job and subsequently transform it into improved teaching, learning and research

activities.

To some extent the findings corroborate with a past study by Akhtar et al. (2011) conducted to

investigate the impact of organizational learning on organizational performance of higher

education institutes of Pakistan. In his findings he highlighted that continuous learning may have

greater a greater impact on individual performance which will lead to the overall performance of

the organization.

A study by Behjanna and Sharifi (2015) sought to examine the impact of continuous learning on

organizational performances of Social Security offices medical documentations in Zanjan city.

The results of the study showed that continuous learning has significant positive impacts on

organizational performance. In their study they concluded that continuous learning is a process

that occurs with growing knowledge and improving performance over time. In general it can be

said that people who are in search of continuous learning, are more professional in business

creation and transferring knowledge, skills and behaviors to help new knowledge acquired in the

reforming acts. According to Behjanna and Sharifi (2015) continuous learning is effective in

improving job skills of manpower. Also these learnings raise the information of the employees

and develop their knowledge and skills and change their behaviors which affect the job.

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Consistent with Behjanna and Sharifi (2015), are the results of Sharifi (2004) which showed that

intermittent and continuous learning is in relation with effectiveness of university professors. The

study was also in accordance with Taslimi, et al (2004) study which demonstrated that the

National Iranian Oil Distribution and Refinery follows an appropriate organizational learning

approaches for continuous learning of its organization to identify and reach the learning needs

and develop and implement the knowledge, practically.

2.3.2 Inquiry and Dialogue and Organizational Performance

Developing a spirit of inquiry is important in fostering a thorough understanding of underlying

assumptions and core beliefs. Bennett and Brown (2014) believe that a distraction free, informal

setting and creating early opportunities for individuals to discover one another’s commonalities

are critical elements for encouraging inquiry and discovery. Garvin (2010) states that there are

primarily two basic approaches to inquiry: descriptive and exploratory. Descriptive approaches

involve precise, focused questioning with the goal of determining frequencies, patterns of use, or

comparisons of products or services. Exploratory approaches use open ended questions to elicit

users’ perception and needs. The skills required are the ability to conduct unstructured far reaching

interviews, follow up and probe discreetly, suspend judgment, keep an open mind and listen

emphatically.

The study by Aktar (2011) on the impact of organizational learning on organizational performance

revealed a significant positive impact of the organizational learning on organizational

performance. Inquiry and dialogue, and systems connection were the two dimensions which were

found to be highly significant. Supported by previous study of Jyothibabu, Farooq and Pradhan,

(2010) inquiry and dialogue fosters thinking collectively and efficient communication,

management are more encouraged to promote innovation. In other words, a culture that encourages

two-way communication, opinion and exploration are definitely favored in supporting

organizational innovativeness.

Harris and Samreen (2015) study noted that dialogue and inquiry, and continuous learning are

critical predictors of hospitals’ non-financial performance. Dialogue and inquiry stresses on the

need for hospitals to nurture a culture that encourages staff to experiment, take risk, question freely,

give and receive feedback, and debate on difficult issues. Likewise, continuous learning underlines

the necessity of an environment in which employees could grow, change, adapt, and take charge

19

of their decisions. Several other studies have also found similar results (Wang & Yang, 2007;

Davis & Daley, 2008; Hung et al., 2010). They advocate that an environment of inquiry, dialogue

and continuous learning is indispensable for the improvement of an institution’s non-financial

performance.

The study by Wetherington (2013) on the relationship between learning organization dimensions

and performance in the nonprofit sector revealed that there existed a positive relationship between

inquiry and dialogue dimension and performance. This study was in line with previous study by

Marsick and Watkins (1999) demonstrating a relationship between an engaging culture

encouraging inquiry and cooperation with higher organizational performance. Consistent with

Wetherington (2013) findings, Mrisha et al (2017) study sought to establish the effect of learning

organization culture on performance. The findings of the study indicated that there was a positive

and strong relationship between systems connection, strategic leadership, Inquiry and dialogue and

organizational performance.

The discipline of dialogue is central to organizational learning. It increases curiosity at individual

level and amplifies team learning. Dialogue becomes fruitless or frustrating where there are

unstated variances in meaning. It happens mostly when individuals are of different backgrounds,

so much so, that there are different uses of the same terms and different reference points (Garvin,

2010). But Marquardt (2012) believes it is possible to foster dialogue. He proposes seeing

workmates as contemporaries, avoiding long - standing assumptions, and slowing down the

process of inquiry. This consist of the liberty to openly air personal views and have a permitted

level of debate. In the absence of the liberty, there is a false climate of a high degree of politeness

and conformity, which will potentially suppress the important views held within the organization

(DiBella & Nevis, 2013).

Executives and their staff are every so often confronted with complex responsibilities and

situations which have no standard operating processes this therefore necessitates dialogue within

organizations (Lipshitz, Friedman, & Popper, 2007; Noordegraaf & Abma, 2003). Noordegraaf

and Abma assert that in such circumstances, stories and dialogue are an essential mechanism to

deal with ambiguity and to establish a common understanding of the circumstances and the

appropriate actions.

20

Handy (2013) observes that owing to fast evolving pace of electronic communication opportunities

for conversation, consultation, and interaction are fast fading in most organizations. Interpersonal

deliberations provide an opportunity for persons to more readily share their values and concerns

and help us determine whether we want to adopt these references as well. Sometimes, this happens

by way of informal, hallway conversations that allow members to share their true thoughts and

concerns in a safe environment (Dixon, 2013).

2.3.3 Team Learning and Organizational Performance

Teams have become the key learning unit in organizations, but it is important that they learn as a

team, not act as individuals learning alone but acting as a team. To learn together, team members

must become masters of dialogue and discussion (Senge, 1990). Pokharel and Sang (2015) study

found that team learning is developed when members of the team share and learn new knowledge,

skills and perspectives. Even though individuals in the team may start off differently, going

through an on-going capacity and continuous effort, teams can work efficiently. When the member

of the teams are supportive and trust each other, it will lead to a great team performance. Through

effective team collaboration, common goals set by the organization can be achieved (Watkins &

Marsick, 2003). The study of Norashikin et al (2016) was set to determine the relationship between

learning organization and organizational performance. The findings revealed that team learning

which represents the learning at the group level was also found to have the positive significant

relationship with organizational performance.

Watkins and Marsick (2003) state that various group and organizational conditions have an impact

on team learning and determining whether team learning becomes organizational learning. Team

factors include an overall appreciation for teamwork, opportunities for individual expression, and

operating principles which balance necessary tasks with maintaining healthy interpersonal

relationships. Organizational factors include support for the operation of teams and collaboration

across functional lines as a routine way of working.

Nkawautei (2012) study sought to determine the factors that influence organizational learning and

the impact of organizational learning on continuous improvement among commercial banks in

Kenya. This study concluded that teamwork is very essential for an organizations to achieve

continuous improvement. A divided workforce has a divided vision hence it becomes really hard

21

to achieve the required goals. And if the employees are not being compensated well, their

productivity becomes low hence their contribution towards continuous improvement deteriorate.

Wetherington (2013) study discovered a positive relationship between team learning and

organizational performance. These findings support the previous work demonstrating

organizations whose leaders promote collaboration, cooperation, and learning in teams are likely

to have higher performance than organizations not exhibiting these attributes (Yang & Chen,

2005). According to Wetherington (2013), unless awareness of the relationships between learning

and performance is translated into action, organizational performance might not be maximized.

Leaders can improve performance by exhibiting a focus on learning and by influencing learning

throughout the organization. Leaders should focus on creating a culture of openness and

cooperation to facilitate performance.

A study by Omadede (2012) on learning organizational practices at Kenya Shell Limited found

that the organization mainly uses cross functional workshops, safety days, away days and the on

boarding programs to implement the strategy of collaboration and team learning in the

organization. However programs for facilitating teams to adopt good ideas from the minority and

harnessing group alignment, functioning as a whole and synergy manifestation was found to be

limited.

Some theories of team learning are premised on the belief that learning occurs from the differences

within the team variance, the different team members bring experiences of diversity which

contribute to team learning. Kayes, Kayes and Kolb (2005) consider team learning as a product of

individual experience as well as the interaction of experience among team members. To others

team learning is all about team agreement. In accordance with the team norms perspective, in

which team learning is considered a relatively stable measure of teams. Team learning therefore

becomes those shared beliefs and behaviors within a team.

Proximal learning refers to the mechanisms by which team learning results in improved

performance of teams. This learning happens when a person is engaging with another person or

persons to attain the capability to solve problems that were beyond one person. Meaning persons

working as a team stand to achieve better outcomes when working together, than they could

individually (Kayes, 2003). The potential for greater performance is achieved through the

22

opportunity for individuals to learn from each other through sharing of expertise, knowledge and

insight during the course of problem solving The differences in individual capacity, knowledge

and experience amongst the team members produce proximal learning processes.

Learning is a contributor to organizational effectiveness. It enables teams to generate knowledge

amongst team members, generate knowledge with those outside team, and to work with the

environment to facilitate adaptation to change. Team learning results in enhanced performance for

the team which translates to enhanced organizational performance. Team learning therefore

provides an avenue for organizations to crack complex problems, create new knowledge, and to

improve the performance of task specific project teams. On the other hand, failure in learning every

so often suffocate the capacity of organizations to perform (Kayes, 2004).

2.3.4 Employee Empowerment and Organizational Performance

Employee empowerment is the course by which peoples’ rights and will to choose and progress

themselves is increased through empowerment, help, sharing, training and cooperation (Koçel,

2011). The term has grown in significance as result of global change and competition. It is also

termed as employee sharing because of the four elements: information on performance, to enable

members of staff understand organizational performance and make their contribution, the benefits

they are likely to get as result of positive organizational performance and the power to make

decisions on the direction and performance of the enterprise (Yüksel and Erkutlu, 2003).

According to Watkins and Marsick (2003), empowerment entails having some level of control

over one’s personality, cognition, and motivation. It is viewed in terms of self-worth and capacity

to make a transformation. It calls for commitment at various positions of an organization to reform

established structures and cultures that encourage employees for abiding by the set procedures.

Levelling the pecking order of an organization, devolving responsibility, and promoting decision

making at levels nearest to where the work is done are the elements to nurture empowerment

(Watkins and Marsick, 2003)

Participative policy making is the utmost level of empowerment, it allows all the employees of the

organization to participate in policy and strategy formulation (Pedler, 2009). Agarwal et.al (2009)

look at empowerment as the will to train others, appropriately framing questions to probe mental

models, and making oneself accessible as a resource for further consultation. Managers also have

23

the option to encourage officers under them to participate in experimentation, allow time for

experimentation, and be prepared to put up with mistakes when dealing with new areas of

responsibility (Nonaka & Takeuchi, 1995). Learning organization provides encouragement to

employees to keep up the hard work in ever more hostile and chaotic environment (Stewart, 2011).

Finding obtained by Pokharel and Sang (2015), environmental connection ensures employees to

understand their contributions to the communities. Once they understand their role in the

environment, work is more productive, and there is the higher willingness in providing the best

performance to the organization.

A study by Harris and Samreen (2015) on learning organization as a strategy to improve

performance they examined the effect of the practices of learning organization on the financial and

non-financial performance of Pakistani hospitals. The results mentioned that financial performance

of hospitals is affected the most by strategic leadership and empowerment. Strategic leadership

emphasizes the need for hospital management to think strategically, promote learning,

stimulate organizational change, and take hospital to new heights and directions. While,

empowerment draws attention towards the significance of giving staff a certain degree of

autonomy, providing them resources, rewarding their achievements, involving them in policy

making, and encouraging them to provide feedback. These results are supported by previous

studies which also found that organizations that have strategic leadership and processes to

empower their employees, are more likely to have a better financial performance (Wang &

Yang, 2007; Davis & Daley, 2008; Sharifirad, 2011).

A study by Tabatabaei (2014) suggested that managers should devolve more responsibilities upon

employees and let them participate in decision-making and implementing decisions. Have to

ensure that the organizational members at lower levels have been provided with access to

information, and are allowed to decide based on the information provided for them. Given this

method, all members of organization can address improving performance and acquiring a

competitive advantage to learning. Omadede (2012) study observed that organization mainly uses

the system of appeal to reason, clear and consistent communication as well as staff involvement

in goal setting process to build in staff empowerment.

24

Kimolo (2013) study sought to establish the relationship between employee empowerment

practices and employee performance in Regional Development Authorities in Kenya. The

study found that employee empowerment practices were found to be moderately embraced in

regional development authorities. Employees were in agreement that employee performance

practice was in place and was being used. The study concluded that employee empowerment

practices has an impact on employee performance. In today’s global competiveness there is a

great desire on the part of the employees to play an active role in organization activities and as

such every effort should be made to accommodate employee’s views. The study recommended

that employee empowerment practices should be supported by both top and middle level

management so as to improve employee’s performance.

2.3.5 Learning Organizations and Organization Performance

Organizational performance means the usefulness of the organization in accomplishing the core

purpose for which it is established Mackie (2008). Performance therefore remains as the centre of

everything the institution does and determines its continued existence. In the circumstances

learning organizations must make sure they learn from experience, cultivate programmes to ensure

constant improvement, devise organized problem solving measures, and speedy knowledge

transfer. They have to also ensure efficiency all through the organization by way of official training

programmes closely related to implementation of the organizational targets Garvin (1993).

Each learning organization model emphasizes the necessity of workplace learning to enable

companies to respond to the growing expectations of their customers and the need to compete

successfully in a global and fast-paced environment. A study by the American Society for Training

and Development (2014) established that those companies which invested more in training

improved their total shareholder return by 6 percent. It is this combination of a long-held faith in

the value of workplace learning and a handful of studies which have begun to show a favorable

bottom-line impact for organizations that have created an urgency to show a strong connection

between learning organization elements and performance improvement within an organization.

There is a close link between learning and business strategy (Miller & Stewart 1999). The link can

be seen when the organization constantly learns from business opportunities and threats, while

individuals, groups and the organization are also learning how to learn. Information systems and

25

technology should work to encourage instead of controlling learning. There should also be

established procedures for defining, generating, capturing, distribution and acting on knowledge.

Improving performance or ensuring sustained levels of great performance, requires development

of the appropriate approaches, this includes a number of factors. Development of appropriate

information technology, procuring and retaining an appropriate capacity of human resource and

development of strategies that inspire research innovation and development. Other factors include

the creation of new markets as well as promotion of team work and suitable performance

evaluation mechanism. These approaches are essential to learning organization, therefore the

increased attention on dealing the many hiccups that organizations face (Nzuve & Omollo,2012)

2.4 Summary of Literature Review and Gaps

Most of the highlighted studies in the literature review do not explicitly address the effect

of learning organizations dimensions on the organizational performance of commercial banks in

Kenya. A scarcity of literature in the area of study exists, particularly in the developing

countries like Kenya. The few that have been conducted in the third world nations have

eluded criticism in the criteria, title, scope and methodology used hence the research gaps in

terms of literature. Table 2.1 shows the salient gaps that this study filled in respect to studies done

in the Kenyan context.

Table 2.1 Summary of Gaps

Study, Author,

Year and Title

Findings Gaps and how they were be

filled

Ayilo.(2010).

Organizational

learning and

operational

performance in

commercial banks

in Kenya.

The findings of the study concluded that

organizational learning affects operation

performance in commercial banks.

The study was limited

operational performance of

commercial banks. This study

widened the scope to overall

performance of commercial

banks. The study did not

consider the variables of

26

learning organizations as

factored in this study.

Maseki (2012).

Knowledge

management and

performance of

commercial banks

in Kenya.

The study found that knowledge

management greatly affected

performance of the commercial banks.

Knowledge management improved

performance of employees on their

duties in the bank and enhanced

employee competence.

The study was limited to

knowledge management

which is just one aspect of

learning organization. It did

not assess the impact of

dimensions of learning

organizations on performance

which formed the basis of this

study.

Akhtar,et. al (2011).

Impact of

organizational

learning on

organizational

performance:

The results revealed a significant

positive impact of the organizational

learning on organizational performance.

Inquiry and dialogue, and systems

connection were the two dimensions

which were found to be highly

significant; however, five of them

(continuous learning, team work,

embedded systems, empowerment and

leadership) were insignificant in relation

to the organizational performance.

The study focused much on

organizational learning which

is a reactive concept and

focused on higher education

institutes. This study focused

on learning organizations

which is proactive and in

banking industry.

Ambula,et.al(2016).

Learning

Organization and

Performance of

Large

Manufacturing

Firms.

Results of the study reveal that learning

organization has a significant influence

on firm performance measured in both

financial and non-financial terms..

The study utilized a cross

sectional survey design.

Cross sectional studies do not

measure causal effects on the

observed relationships

between study variables and

therefore does not give actual

27

relationships that exist

between learning

organization dimensions and

organizational performance.

This study sought to

determine the existence of

those relationships

Nzuve & Omolo

(2012). A study of

the practice of the

learning

organization and its

relationship to

performance among

Kenyan commercial

banks

The study established that most Kenyan

commercial banks had to a large extent

adopted the practices of learning

organizations

The study assessed practices

of learning organizations

which are different from the

dimensions of learning

organizations that will be

assessed in this study. The

study also employed census

research method while this

study used survey method.

Mrisha, et al (2017).

Effect of Learning

Organization

Culture on

Organizational

Performance

Among Logistics

Firms in Mombasa

County

The study established that learning

organization culture significantly affects

organizational performance

The study variables were

based on levels of leaning

organizations i.e. individual,

team and organizational level.

This study employed specific

dimensions of learning

organizations as variables

that guided the study.

28

2.5 Conceptual Framework

The conceptual framework highlights the connection between the dependent and the independent

variables of the study. The dependent variable in the case will be the corporate performance of the

commercial banks, independent variables are the learning organization dimensions; namely

continuous learning, inquiry and dialogue, employee empowerment and team learning.

29

Independent Variables Dependent Variable

Figure 2.1: Conceptual Framework

Source: Author (2017)

Inquiry and Dialogue

Listen to others views

Free to question

Treat each other with respect

Building trust with each other

Continuous learning

Identify skills

Help each other learn

Resources to support learning

View problems as opportunities

to learn

Employee empowerment

Choice in work assignment

Distribution of responsibilities

Contribution towards the vision

Recognition of initiatives

Organizational Performance of

Commercial Banks

Customer deposits

Number of accounts

Amount of loans advanced

Profitability

Team learning

Share experiences and information

Freedom to adapt to goals

Focus on group tasks

Reward teams for achievement

30

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter outlines the methods that were applied in gathering of data for the study. This section

presents the research design, study population, sampling procedures, data collection and analysis.

3.2 Research Design

The study employed a descriptive survey research design. Descriptive research design is a

systematic, empirical inquiry whereby the researcher has no direct control of independent variable.

This is because their manifestation has already occurred hence cannot be manipulated (Mugenda

& Mugenda, 2011). The researcher preferred this research design because the study was not

confined to the collection and description of the data, but sought to determine the existence of

certain relationships among the research variables (Mugenda & Mugenda, 2011).

According to Malhotra and Birks (2011), a survey is a method of collecting data from people about

who they are, how they think (motivations and beliefs) and what they do (behavior). A survey in

form of standardized questions in a questionnaire was used to collect data.

3.3 Target Population

Population in statistics is the precise population about which information is sought after. The study

targeted 13 commercial banks operating in Ongata Rongai Town. The researcher focused on the

management level staff and the lower level staff of the commercial banks operating at the branch level.

The management level staff comprised of the branch managers and departmental managers while the

lower level staff entailed officers working in those departments on a different level other than

management. The total number of personnel in the thirteen banks was 194 as shown in the sampling

table.

3.4 Sample Population

A sample is a demonstrative part of the aggregate population whereas the manner in which that part is

determined is called the sampling technique (Kothari & Garg, 2014). The study adopted stratified

random sampling technique which is a two-step process. First the target population is partitioned into

strata’s and then elements are selected from each stratum by simple random sampling.

31

A sample size of 10% or beyond of the reachable population is considered to be enough for descriptive

studies (Mugenda & Mugenda, 2011). Saunders et al, (2012) pointed out that statistician have

indicated that a sample of thirty or above would result in a sampling distribution for a mean that

is very close to the distribution. This study settled on 30% of each stratum which was sample

comparable to size.

The study grouped the population into management level staff and lower level staff as displayed on

Table 3.1 below. Out of every stratum 30% of the respondents was obtained to be a sample. Owing to

the disparity of various features of the two sub-groups composing the population of study stratified

random sampling procedure was employed.

32

Table 3.1: Target Population and sampling chart

Bank Staff Level Total

population

Target population

(30%)

Bank Staff Level Total population Target population

(30%)

Kenya Commercial

Bank

Management level

Lower level staff

Subtotal

3

20

23

1

6

7

Barclays Bank Management level

Lower level staff

Subtotal

3

13

16

1

4

5

Equity Bank Management level

Lower level staff

Subtotal

3

27

30

1

8

9

Cooperative Bank Management level

Lower level staff

Subtotal

3

24

27

1

6

7

Bank of Africa Management level

Lower level staff

Subtotal

3

7

10

1

2

3

Chase Bank Management level

Lower level staff

Subtotal

4

7

11

1

2

3

I & M Bank Management level

Lower level staff

Subtotal

3

7

10

1

2

3

Jamii Bora Management level

Lower level staff

Subtotal

3

6

9

1

2

3

Credit Bank Management level

Lower level staff

Subtotal

1

3

4

1

1

2

Ecobank Management level

Lower level staff

Subtotal

3

5

8

1

2

3

Sidian Bank Management level

Lower level staff

Subtotal

3

8

11

1

2

3

Family Bank Management level

Lower level staff

Subtotal

4

17

21

1

5

6

National Bank Management level

Lower level staff

Subtotal

4

10

14

1

3

4

Total 194 58

(Source: Human Resource Management Information Systems, 2017)

33

3.5 Validity and Reliability of the Research Instrument

In any kind of research, the accuracy of data to be collected is basically determined by the kind of

collection tools used. This is in regard to their validity and reliability. It ensures that a test can be

trusted and can be referred to when forming opinions and conclusions about clients. Reliability

and validity of the instruments in research also ensures that the study can assist in future actions

and decisions (Drost, 2011).

3.5.1 Validity of Research Instrument

Validity focusses on the relevance of the research instruments (Drost, 2011). Validity was achieved

by having objective questions considered when designing the questionnaire. To ensure validity,

the researcher made sure that questions used related to or covered all the variables of the study. A

pilot test was carried out to pretest the questionnaires to ensure that face was achieved. Six

questionnaires were administered to potential respondents after which necessary editing was done

to ensure that the final questionnaire to be used was valid. The researcher employed construct

validity to determine whether the instrument was tied to the concepts and the theoretical

assumptions. Use of clear wording of the questions and employing terms that were familiar and

understood by the respondents was ensured. Content validity was ensured by seeking experts and

supervisor’s opinion to maintain clarity, simplicity and to ascertain whether the content of the

questionnaires was up to standard before administering them to the respondents.

3.5.2 Reliability of Research Instrument

The degree into which the research instruments are likely to produce consistent results is termed

as reliability (Mugenda & Mugenda, 2009). The reliability analysis was conducted for all

statements structured on a Likert scale using Cronbach alpha score test. A Cronbach’s alpha of 0.8

and above was taken as acceptable reliability according to Croncbach (1957). A coefficient value

of 0.823 was achieved which was acceptable for determining the internal consistency of the

research instrument.

3.6 Data Collection

Self-administered questionnaires with closed and few open-ended questions were developed to collect

primary data. Kothari & Garg (2014) recommended the use of self-administered questionnaire. This is

because it offers respondents a platform to give their opinion on issues, values, attitudes and beliefs.

34

The close-ended questions supplied structured responses that assisted in making tangible

recommendations.

3.6.1 Data Collection Instruments

Questionnaires designed using the variables highlighted as significant for meeting the study

objectives were used to collect data. The questionnaires were carefully designed using the used

version of the Dimensions of the Learning Organization Questionnaire (DLOQ) constructed by

Watkins and Marsick (1993; 2003). Several studies have been done to examine the validity and

reliability of measures of the learning organization in several cultural contexts: the United States,

Colombia, China, and Taiwan (Ellinger et al., 2002; Lien et al., 2006; Yang et al., 2004; Zhang et

al., 2004; Hernandez, 2000). The results of these studies have verified the applicability of the

DLOQ in different cultures, providing internal consistency of each item’s reliability (coefficient

alpha range from .71 to .91) and reliable factor structure of the dimensions of the learning

organization (Lien et al., 2006).

3.6.2 Data Collection Procedure

The questionnaires intended for primary data collection were administered using a drop and pick

afterwards method. The sampled respondents in the questionnaire were bank employees.

3.7 Pilot Testing of the Research Instrument

Pre-testing of the data collection tools was carried out on a group of respondents before the main

study. Connelly (2008), recommended that 10% of the larger study sample should be used as a

pilot study sample. The sample size population for this study was expected to be 58 hence 6

respondents from the sample size were sampled for pilot testing for further developments as well

as enhancing accuracy of the instruments. The respondents chosen during piloting did not

participate in the main study.

3.8 Data Analysis and Presentations

Sekaram, (2009) asserted that there are three objectives in data analysis; getting a feel for the data,

testing the goodness of the data, and answering the research question. Establishing the goodness

of data lends credibility to all subsequent analysis and findings

Completed research instruments were reviewed for completeness and any discrepancies. They

were assembled, coded, summarized and analyzed to generate descriptive statistics. Coding means

35

assigning numerals or other symbols to the categories or responses. Descriptive statistics computed

included sums, means, standard deviations, frequencies and percentages. Data was analyzed using

the statistical package for social science (SPSS). By the use of percentages and frequency tables,

the data was presented diagrammatically. This type of presentation was efficient in that it was easy

to depict data more accurately. Qualitative data was analyzed using content analysis with themes

being developed as per the responses obtained.

The researcher conducted a multiple regression analysis so as to establish how continuous learning,

inquiry and dialogue, team learning and employee empowerment affect the performance of

commercial banks in Kenya. Several hypotheses were tested and their results interpreted. The

following equation was used to show the relationship:

Y = α0 + β1X1 + β2X2 + β3X3 + β4X4 + e

Where:

Y - Organizational performance of commercial banks

(dependent variable)

α0 - Is the constant

X1 - Continuous learning

X2 - Inquiry and dialogue

X3 - Team learning

X4 - Employee empowerment

β1, β2, β3 & β4 - Coefficients

e - Error term

3.9 Ethical Consideration

When conducting any research, there a certain ethical considerations that one should bear in mind

throughout the research process. To begin with, this study sought to collect data from commercial

banks whereby they fear divulging information as it’s considered as sensitive and private by those

institutions. Information given by the respondents might be confidential hence should not get to the

hands of the public. The researcher acquired authority to conduct the studies was obtained from

36

National Commission for Science, Technology and Innovation. The researcher sought consent

from the respondents and assured them that the research was solely for academic purposes and any

confidential information obtained would not be revealed to any unauthorized third party. The

researcher respected people’s opinions and will endeavor to embrace confidentiality.

37

CHAPTER FOUR

DATA ANALYSIS, INTERPRETATIONS AND DISCUSSIONS

4.1 Introduction

This section involves data analysis and interpretation of findings in line with the objective of the

research, to examine the effects of learning organization dimensions on organizational

performance of commercial banks in Ongata Rongai Township.

4.2 Response Rate

The researcher sought to establish the response rate of the study.

Table 4.1 Response Rate

Frequency Percent

Valid Management level staff 13 29.5

Lower level staff 31 70.5

Total 44 100.0

Source: Researcher (2017)

From the frequency table above, 70.5% of the respondents are lower level staff and 29.5% of the

respondents are management level staff. Management level staff comprised of the branch

managers and departmental managers, while the lower level staff comprised of officers working

in those departments on a different level other than management representing operational staff.

The study targeted 56 respondents from 13 banks for the administration of questionnaires. From

the frequency table 4.1 above, a total of 44 respondents were observed from 11 banks. A total of

11 banks out of 13 responded, 2 banks namely Eco bank and Cooperative bank could not be

sampled. Eco bank had closed down its Ongata Rongai branch, while Cooperative bank did not

participate citing internal policy on interviewing staff for any kind of survey.

According to Mugenda and Mugenda, (2003) a 50% response rate is adequate, 60% good and

above 70% rated very good. The position is buttressed by Kothari, (2004) who asserts that a

response rate of 50% is adequate, while a response rate greater than 70% is very good. In this case

the response rate was 79% which is very good.

38

4.3 Bio Data

The researcher sought to establish the gender, age, position in the organization, level of education

and years of experience of the respondents.

4.3.1 Gender of the Respondents

The study determined the gender distribution of the respondents. From the frequency table 4.2

below, 56.8% of the respondents in the commercial banks sampled in Ongata Rongai Township

were male while 43.2% of the interviewees were female.

Table 4.2 Gender of the Respondents

Frequency Percent Cumulative Percent

Valid Male 25 56.8 56.8

Female 19 43.2 100.0

Total 44 100.0

Source: Researcher (2017)

This shows there are more male employees than female staff in commercial banks in Ongata

Rongai. This finding confirms the Kenya National Bureau of Statistics (KNBS) finding that

Kenya’s workforce is skewed in favour of men.

4.3.2 Age of the Respondents

The age of the interviewees was categorized into five bands. The interviewees were requested to

specify their age brackets. The outcome has been tabulated in the Table 4.3.

Table 4.3 Age of the Respondents

Frequency Percent Cumulative Percent

Valid 18-24 years 8 18.2 18.2

25-31 years 25 56.8 75.0

32-38 years 6 13.6 88.6

39-45 years 2 4.5 93.2

46-52 years 3 6.8 100.0

Total 44 100.0

Source: Researcher (2017)

The respondents’ between18 - 24 years constituted 18.2%, 25 - 31 years 56.8%, 32 - 38 years

13.6%, those aged between 39 - 45 years constituted 4.5%, while those aged between 46 - 52 years

39

constituted 6.8%. This shows that majority of the staff in commercial banks are of the age between

25-31year, an age which is perceived to be critical to the improvement of performance or ensuring

sustained levels of performance.

4.3.3 Level of education

The interviewees were categorized into five bands; they were asked to indicate their education

level. The results have been tabulated in figure 4.4.

Table 4.4 Level of Education

Frequency Percent Cumulative Percent

Valid Diploma 1 2.3 2.3

Graduate 33 75.0 77.3

Postgraduate 8 18.2 95.5

O-level 2 4.5 100.0

Total 44 100.0

Source: Researcher (2017)

From the above findings, 75% of the respondents were graduates, 18.5% were postgraduates, 4.5%

o-level and 2.3% were diploma holders. This implies that most of the respondents are graduate

degree holders hence enough education to execute their roles effectively.

4.3.4 Years of Experience

The years of experience was categorized into four bands for comparison. The respondents were

requested to indicate their years of experience. The results have been tabulated in the Table 4.5.

Table 4.5 Years of Experience in the Institution

Frequency Percent Cumulative Percent

Valid Less than 5 years 30 68.2 68.2

5-10 years 10 22.7 90.9

11-15 years 1 2.3 93.2

Over 15 years 3 6.8 100.0

Total 44 100.0

Source: Researcher (2017)

From the frequency table 4.5 above, 68.2% have experience of less than 5years, 22.7% have 5-10

years’ experience, 6.8% have over 15 years’ experience and 2.3% have experience of 11-15 years.

40

This shows that majority of the staff in commercial banks are on entry level job and the staff

complement reduces as they go up the ladder.

4.4 Effects of Continuous Learning on Organizational Performance

The table 4.6 below shows the respondents opinion on the effects of continuous learning on the

organizational performance of commercial banks in Ongata Rongai.

Table 4.6 Effects of Continuous Learning

Frequency Percent Cumulative Percent

Valid Very great extent 15 34.1 34.1

Great extent 19 43.2 77.3

Moderate extent 7 15.9 93.2

Less extent 1 2.3 95.5

Not at all 2 4.5 100.0

Total 44 100.0

Source: Researcher (2017)

From table 4.6 above, 43.2% agree that to a great extent continuous learning affects organizational

performance, 34.1 % to a very great extent, 15.9% to a moderate extent, 4.5% not at all and 2.3%

to a less extent. Most of the respondents agree that continuous learning affects performance to a

great extent. This concurs with findings by Mayo, (2010) that continuous learning is imperative

for short and long term success of both individuals and organizations. It thus becomes essential for

surviving and prospering in dynamic and competitive environment.

Table 4.7 Aspects of Continuous Learning on the Organizational Performance

N Mean Std. Deviation

People identify skills needed for future

tasks 44 3.59 1.085

People help each other learn 44 3.98 1.000

People can get resources to support their

learning 44 3.07 1.319

People view problems in their work as an

opportunity to learn 44 3.52 1.267

Valid N (listwise) 44

Source: Researcher (2017)

41

From table 4.7 above, the aspect of continuous learning that states that people help each other learn

comes out as the most significant with a mean of 3.98. It can therefore be concluded that the aspect

that people help each other learn has a significant effect on the organizational performance. This

supports the findings by Maurer, (2010) that continuous learning enables individual to acquire

expertise, improves their capability to achieve organizational goals, as well remaining competitive

on the job market and in the ever growing global economy.

4.5 Effects of Inquiry and Dialogue on Organizational Performance

Table 4.8 below indicates respondent’s opinion on the effects of inquiry and dialogue on the

organizational performance of commercial banks in Ongata Rongai.

Table 4.8 Effects of Inquiry and Dialogue

Frequency Percent Cumulative Percent

Valid Very great extent 10 22.7 22.7

Great extent 23 52.3 75.0

Moderate extent 10 22.7 97.7

Less extent 1 2.3 100.0

Total 44 100.0

Source: Researcher (2017)

From the table above, 52.3% agree to a great extent that inquiry and dialogue affects organizational

performance, 22.7% agree to a very great extent and moderate extent respectively and 2.3% agree

to a less extent. Most of the respondents agree that inquiry and dialogue affect organizational

performance to a great extent. This agrees with existing literature that developing a spirit of inquiry

is important in gaining insight of underlying assumptions and principles of an organization.

42

Table 4.9 Aspects of Inquiry and Dialogue on the Organizational Performance

N Mean Std. Deviation

People listen to others views before speaking 44 3.77 .961

People are free to question regardless of position 44 3.52 1.151

People treat each other with respect 44 3.98 .976

People spend time building trust with each other 44 3.45 1.150

Valid N (listwise) 44

Source: Researcher (2017)

From table 4.9, the aspect of inquiry and dialogue that states that people treat each other with

respect comes out as the most significant with a mean of 3.98. It can therefore be concluded that

the aspect that people treat each other with respect has a significant effect on the organizational

performance of commercial banks in Ongata Rongai. This supports by Watkins and Marsick

(2003) study findings that proper inquiry should be founded on unprejudiced curiosity where

people are able to suspend presuppositions and judgments in pursuit of better solutions to

problems.

4.6 Effects of Team Learning on Organizational Performance

Table 4.10 below shows respondents’ opinion on the effects of team learning on the organizational

performance of commercial banks in Ongata Rongai.

Table 4.10 Effects of Team Learning

Frequency Percent Cumulative Percent

Valid Very great extent 9 20.5 20.5

Great extent 14 31.8 52.3

Moderate extent 11 25.0 77.3

Less extent 6 13.6 90.9

Not at all 4 9.1 100.0

Total 44 100.0

Source: Researcher (2017)

From the results in table 4.10 above, 20.5% agree to a very great extent that team learning affects

organizational performance, 31.8 % agree to a great extent, 25% moderate extent, 13.6% less

extent respectively while 9.1 % agree that it does not affect performance at all. These findings

43

therefore to some extent agrees with Kayes, (2004) findings in that organizations rely on team

learning to solve complex problems, create new knowledge, and to improve the performance of

ad-hoc or task specific project teams. On the other hand, failures in learning often restrains the

capacity of organizations to perform.

Table 4.11 Aspects of Team Learning on the Organizational Performance

N Mean Std. Deviation

People share experiences and information 44 3.66 .987

Teams have freedom to adapt their goals 44 3.45 1.022

Teams focus on both group tasks and team performance 44 3.66 1.055

Teams are rewarded for their performance 44 3.45 1.150

Valid N (listwise) 44

Source: Researcher (2017)

Table 4.11 above shows that, the aspect of team learning that states that people share experiences

and information comes out as the most significant with a mean of 3.66 and a lesser deviation of 0.

987. It can therefore be concluded that the aspect that people share experiences and information

has a significant effect on the organizational performance of commercial banks. This concurs with

Pokharel and Sang (2015) findings that capacity to perform better is attained when people learn

from each another through sharing of knowledge and awareness as they try to solve problems.

4.7 Effects of Employee Empowerment on Organizational Performance

Researcher sought to investigate on the effects of employee empowerment on the organizational

performance of commercial banks in Ongata Rongai. From table 4.12 below, 40.9% of the

respondents agree to a very great extent and great extent respectively that employee empowerment

affects the general performance of staff in commercial banks, 13.6 % to a moderate extent and

2.3% to a less extent and not at all respectively.

44

4.12 Effects of Employee Empowerment

Frequency Percent

Cumulative

Percent

Valid Very great extent 18 40.9 40.9

Great extent 18 40.9 81.8

Moderate extent 6 13.6 95.5

Less extent 1 2.3 97.7

Not at all 1 2.3 100.0

Total 44 100.0

Source: Field data Researcher (2017)

Most of the respondents agree that employee empowerment affects the general performance of

commercial banks to a very great extent and great extent respectively. This is consistent with the

study by Yüksel and Erkutlu, (2003) in their description of employee empowerment as the ability

of employees to share information related to organization‘s performance in which they understand

contribute to. They also defined it as the authority to make decisions on the direction and

performance of the organization.

Table 4.13 Aspects of Employee Empowerment on the Organizational Performance

N Mean Std. Deviation

My organization recognizes peoples initiative 44 3.64 1.143

My organization gives people chances in assignments 44 2.93 1.319

My organization invites peoples contribution to its vision 44 3.52 1.210

My organization encourages equal responsibilities 44 3.50 1.303

Valid N (listwise) 44

Source: Researcher (2017)

Results displayed on table 4.13 shows that, the aspect of employee empowerment that states that

my organization recognizes people’s initiative comes out as the most significant with a mean of

3.64.

It can therefore be concluded that the aspect that my organization recognizes people’s initiative

has a significant effect on the organizational performance. This coincides with findings by Robins

et al., (2002) in that some of the major determinants of empowerment perception include:

recognizing work done by employees; feeling oneself as sufficient, the possibility of making

choice and the degree of effectiveness perceived over certain results in the work process.

45

4.8 Organizational Performance of Commercial banks in Ongata Rongai

The table 4.14 below shows respondents opinion on the extent to which the general performance

of their bank has improved from last year.

Table 4.14 Extent to which performance has improved from last year

Frequency Percent Cumulative Percent

Valid Very great extent 12 27.3 27.3

Great extent 12 27.3 54.5

Moderate extent 17 38.6 93.2

Less extent 3 6.8 100.0

Total 44 100.0

Source: Researcher (2017)

From table 4.14 above, 38.6% of the respondents believe that the general performance of their

bank has improved from last year to a moderate extent, 27.3% to a great extent and very great

extent respectively and 6.8% to a less extent. Most of the respondent agreed that the general

performance of their bank from last year has improved to a moderate extent.

Table 4.15 Aspects of Organizational Performance

N Mean Std. Deviation

There is growth in deposits than last year 44 3.36 1.278

There is growth in the number of accounts than last year 44 3.52 .952

There is growth in the amount of loans than last year 44 2.95 1.200

There is growth in profitability than last year 44 3.14 1.268

Valid N (listwise) 44

Source: Researcher (2017)

From the table above, growth in the number of bank accounts stood out as the most significant

indicator of general performance in commercial banks. This confirms to the previous literature that

shows technology tools have enhanced the performance of commercial banks by making it possible

for commercial banks to lower barriers to entry which has exponentially increased retail accounts.

Commercial banks have also realized that with technology, lowering transaction costs across other

bank accounts draws more customers into opening accounts. With the growth in bank accounts

focus shifts to growing customer deposits.

46

4.9 Hypothesis Testing and Results Interpretation

This section discusses the correlation between the variables, the multiple linear regression model

and a summary of hypothesis testing

4.9.1 Diagnostic Test Results

The diagnostic tests in this study included checking for normality and multicollinearity between the

independent variables.

4.9.1.1 Test of Normality

A histogram on regression standardized residual for the dependent variable was plotted showing the

distribution of errors to test for normality. The results were presented in figure 4.1 below:

Figure 4.1 Distribution of residual errors

Source: Researcher (2017)

The figure above shows that the residual errors have been distributed evenly between the expected

cumulative probability and the observed cumulative probability hence implying that the dependent

47

variable assumes a normal curve. This in turn justifies the use of multiple regression to show the

results of this study.

4.9.1.2 Test of Multicollinearity

Table 4.16 Correlation of Independent Variables

Correlations

Continuous

learning

Inquiry and

Dialogue Team learning

Employee

empowerment

Continuous learning Pearson Correlation 1 .493** .479** .478**

Sig. (2-tailed) .001 .001 .001

N 44 44 44 44

Inquiry and Dialogue Pearson Correlation .493** 1 .666** .660**

Sig. (2-tailed) .001 .000 .000

N 44 44 44 44

Team learning Pearson Correlation .479** .666** 1 .682**

Sig. (2-tailed) .001 .000 .000

N 44 44 44 44

Employee empowerment Pearson Correlation .478** .660** .682** 1

Sig. (2-tailed) .001 .000 .000

N 44 44 44 44

**. Correlation is significant at the 0.01 level (2-tailed). Source: Researcher (2017)

According to Lin (2007) if the absolute value of Pearson correlation is greater than 0.8, collinearity

is very likely to exist. The findings in Table 4.16 show the correlation between Continuous learning

and Inquiry and dialogue is 0.493, correlation between Continuous learning and team learning is

0.479, correlation between Continuous learning and employee empowerment is 0.478, correlation

between Inquiries and dialogue and team learning is 0.666, correlation between inquiries and

dialogue and employee empowerment is 0.660. Subsequently, the correlation between team

learning and employee empowerment is 0.682.

The findings therefore indicate that no two variables have a correlation coefficient of above 0.7

hence concluding that collinearity is highly unlikely to exist among the study variables

48

4.9.2 Inferential Analysis

Regression analysis was conducted with the aim of establishing the effects of learning organization

dimensions on organizational performance of commercial banks in Kenya. In addition, the findings

of the regression would be important in solving the four study hypotheses. Regression analysis was

conducted with the help of SPSS software at 95% confidence level and the findings presented in this

section.

Hypothesis for the Study

H01: There is no significant relationship between continuous learning and organizational

performance

H02: There is no significant relationship between inquiry and dialogue and organizational

performance

H03: There is no significant relationship between team learning and organizational performance

H04: There is no significant relationship between employee empowerment and organizational

performance

4.9.2.1 Effect of Continuous Learning on the Organizational Performance

The first objective of the study was to determine the effect of continuous learning on the

organizational performance of the commercial banks in Ongata Rongai.

H01: There is no significant relationship between continuous learning and organizational

performance

Continuous learning was measured in terms of Identifying skills, helping each other learn,

resources to support learning and viewing problems as opportunities to learn. Regression analysis

was done to determine the relationship between continuous learning and organizational

performance. Table 4.17 shows the effect of continuous learning on the organizational

performance.

49

Table 4.17 Effect of Continuous Learning on the Organizational Performance

a) Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .572a .328 .259 .812

a. Predictors: (Constant), View problems as learning opportunities, Resources to support their learning, Help each

other learn, Identify skills needed

From the regression results above, the R value was 0.572 indicating that there is a positive

relationship between continuous learning and organizational performance. The R squared (R2)

value of 0.328 shows that 32.8 percent of organizational performance is explained by continuous

learning. The remaining 67.2 percent is explained by other factors enhancing performance of

commercial banks in Kenya.

b) ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 12.528 4 3.132 4.749 .003b

Residual 25.722 39 .660

Total 38.250 43

a. Dependent Variable: Organizational performance

b. Predictors: (Constant), View problems as learning opportunities, Resources to support their

learning, Help each other learn, Identify skills needed

c) Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

T Sig. B Std. Error Beta

1 (Constant) 4.215 .555 7.597 .000

Identify skills needed -.052 .169 -.060 -.305 .762

Help each other learn -.183 .171 -.194 -1.070 .291

Resources to support their

learning .309 .105 .433 2.945 .005

View problems as learning

opportunities -.029 .108 -.039 -.270 .788

a. Dependent Variable: Organizational performance

50

The model was significant with the F ratio = 4.749 at p > 0.05. This is an indication that continuous

learning factors have a positive and significant effect on organizational performance. The beta

values show the degree to which each predictor variable affects the outcome when all other

predictors are held constant.

Resources to support learning had the highest positive and significant effect on organizational

performance at β = 0.433 at p < 0.05. This means that as resources to support learning increased,

organizational performance improved. Helping each learn had the highest negative and non-

significant effect on organizational performance with β =-0.194 at p < 0.05. The remaining

continuous learning factors, had negative and non-significant effect on organizational performance

(Identify skills needed β=-0.060, View problems as opportunities β=-.039)

We can therefore conclude that continuous learning have an effect on organizational performance

but the effect may be positive or negative and further the effect may be significant or not significant

4.9.2.2 Effect of Inquiry and Dialogue on the Organizational Performance

The second objective of the study was to establish the effect of inquiry and dialogue on the

organizational performance of the commercial banks in Ongata Rongai.

H02: There is no significant relationship between inquiry and dialogue and organizational

performance

Inquiry and dialogue was measured in terms of listening to others’ views, being free to question,

treating each other with respect and Building trust with each other. Regression analysis was done

to determine the relationship between Inquiry and Dialogue and organizational performance. Table

4.18 shows the effect of Inquiry and Dialogue on the organizational performance.

Table 4.18 Effect of Inquiry and Dialogue on the Organizational Performance

a) Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .537a .289 .216 .835

a. Predictors: (Constant), Building trust with each other, Listen to others views, Treat each other with respect, Free

to question

51

b) ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 11.040 4 2.760 3.956 .009b

Residual 27.210 39 .698

Total 38.250 43

a. Dependent Variable: Organizational performance

b. Predictors: (Constant), Building trust with each other, Listen to others views, Treat each other with respect, Free

to question

c) Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

T Sig. B Std. Error Beta

1 (Constant) 4.194 .587 7.149 .000

Listen to others views .335 .181 .342 1.858 .041

Free to question -.248 .178 -.303 -1.396 .171

Treat each other with

respect -.191 .184 -.197 -1.037 .306

Building trust with each

other .276 .165 .337 1.670 .013

a. Dependent Variable: Organizational performance

From the regression results above, the R value was 0.537 indicating that there is a positive

relationship between inquiry and dialogue and organizational performance. The R squared (R2)

value of 0.289 shows that 28.9 percent of organizational performance is explained by inquiry and

dialogue. The remaining 71.1 percent is explained by other factors enhancing performance of

commercial banks in Kenya.

The model was significant with the F ratio = 3.956 at p > 0.05. This is an indication that inquiry

and dialogue factors have a positive and significant effect on organizational performance. The beta

values show the degree to which each predictor variable affects the outcome when all other

predictors are held constant.

Listening to others’ views had the highest positive and significant effect on organizational

performance at β = 0.342 at p < 0.05. This means that as listening to others’ views increased,

52

organizational performance improved by 34.2 percent. Being free to question had the highest

negative and non-significant effect on organizational performance with β =-0.303 at p < 0.05.

Building trust with each other had a positive and significant effect on organizational performance

with β = 0.337 at p < 0.05.Treating each other with respect had a negative and non-significant

effect on organizational performance with β=-0.197 at p < 0.05.

We can therefore conclude that inquiry and dialogue has an effect on organizational performance

but the effect may be positive or negative and further the effect may be significant or not

significant.

4.9.2.3Effect of Team Learning on the Organizational Performance

The third objective of the study was to determine the effect of team learning on the organizational

performance of the commercial banks in Ongata Rongai.

H03 : There is no significant relationship between team learning and organizational performance

Team learning was measured in terms of sharing experiences and information, freedom to adapt

to goals, Focus on group tasks and rewarding teams for achievement. Regression analysis was

done to determine the relationship between Team learning and organizational performance. Table

4.19 shows the effect of Team learning on the organizational performance.

Table 4.19 Effect of Team Learning on the Organizational Performance

a) Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .373a .139 .051 .919

a. Predictors: (Constant), Share experiences and information, Freedom to adapt to goals, Focus on group

tasks, Reward teams for achievement

53

b) ANOVAa

Model Sum of Squares Df Mean Square F Sig.

1 Regression 5.328 4 1.332 1.578 .199b

Residual 32.922 39 .844

Total 38.250 43

a. Dependent Variable: Organizational performance

b. Predictors: (Constant), Share experiences and information, Freedom to adapt to goals, Focus on group tasks,

Reward teams for achievement

c) Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

T Sig. B Std. Error Beta

1 (Constant) 3.683 .603 6.106 .000

Share experiences and

information -.161 .211 -.169 -.762 .451

Freedom to adapt to goals -.223 .163 -.242 -1.372 .178

Focus on group tasks, -.031 .230 -.034 -.134 .894

Reward teams for

achievement .012 .185 .014 .063 .950

a. Dependent Variable: Organizational performance

From the regression results above, the R value was 0.373 indicating that there is a positive

relationship between team learning and organizational performance. The R squared (R2) value of

0.139 shows that 13.9 percent of organizational performance is explained by team learning. The

remaining 86.1 percent is explained by other factors enhancing performance of commercial banks

in Kenya.

The model was not significant with the F ratio = 1.578 at p > 0.05. This is an indication that team

learning factors have a positive and non-significant effect on organizational performance. The beta

values show the degree to which each predictor variable affects the outcome when all other

predictors are held constant.

All team learning factors were non-significant in explaining their effect on organizational

performance at p > 0.05. Rewarding teams for achievement had a positive effect with β = 0.014.

The remaining team learning factors, had negative and non-significant effect on organizational

54

performance (share experiences and information β=-0.169, freedom to adapt to goals β=-.242 and

focus on group tasks β=-.034)

We can therefore conclude team learning has an effect on organizational performance but the effect

may be positive or negative and further the effect is not significant.

4.9.2.4 Effect of Employee Empowerment on the Organizational Performance

The forth objective of the study was to determine the effect of employee empowerment on the

organizational performance of the commercial banks in Ongata Rongai.

H04: There is no significant relationship between employee empowerment and organizational

performance

Employee empowerment was measured by choice in work assignment, distribution of

responsibilities, contribution towards the vision and recognition of initiatives. Regression analysis

was done to determine the relationship between Employee empowerment and organizational

performance. Table 4.20 shows the effect of Employee empowerment on the organizational

performance.

Table 4.20 Effect of Employee Empowerment on the Organizational Performance

a) Model Summary

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .576a .332 .263 .809

a. Predictors: (Constant), Choice in work assignment, Distribution of responsibilities,

Contribution towards the vision, Recognition of initiatives

b) ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 12.699 4 3.175 4.846 .003b

Residual 25.551 39 .655

Total 38.250 43

a. Dependent Variable: Organizational performance

b. Predictors: (Constant), Choice in work assignment, Distribution of responsibilities, Contribution towards the

vision, Recognition of initiatives

55

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) 3.824 .432 8.858 .000

Recognition of initiatives .309 .204 .375 1.514 .038

Choice in work assignment .218 .142 .304 1.528 .034

Contribution towards the

vision .086 .181 .110 .476 .637

Distribution of

responsibilities -.032 .125 -.045 -.259 .797

a. Dependent Variable: Organizational performance

From the regression results above, the R value was 0.576 indicating that there is a positive

relationship between employee empowerment and organizational performance. The R squared (R2)

value of 0.332 shows that 33.2 percent of organizational performance is explained by employee

empowerment. The remaining 67.8 percent is explained by other factors enhancing performance

of commercial banks in Kenya.

The model was significant with the F ratio = 4.846 at p > 0.05. This is an indication that employee

empowerment factors have a positive and significant effect on organizational performance. The

beta values show the degree to which each predictor variable affects the outcome when all other

predictors are held constant.

Recognition of initiatives had the highest positive and significant effect on organizational

performance at β = 0.375 at p < 0.05. This means that as recognition of initiatives increased,

organizational performance improved by 37.5 percent. Distribution of responsibilities had a

negative and non-significant effect on organizational performance with β =-0.045 at p < 0.05.

Choice in work assignments had a positive and significant effect on organizational performance

with β = 0.304 at p < 0.05. Contribution towards vision had a positive and non-significant effect

on organizational performance with β=0.110 at p < 0.05.

56

We can therefore conclude that employee empowerment has an effect on organizational

performance but the effect may be positive or negative and further the effect may be significant or

not significant.

4.9.2.5 Effects of Learning Organization Dimensions on Organizational Performance

Table 4.21 shows the R squared. The R-squared is the percent of variance explained by the model.

The R square value of 0.200 means that 20.0% of the organizational performance can be attributed

to learning organization dimensions. This shows that learning organization dimensions are critical

to some extent in enhancing organizational performance.

Table 4.21: Model Summary

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .447a .200 .117 1.200

a. Predictors: (Constant),Employee empowerment, Continuous learning, Inquiry and Dialogue, Team learning

Table 4.22 shows the F statistic (2.431) which is significant (p=0.034) at 95%. The F-statistic indicates

that the set of independent variables were as a whole contributing to the variance in the dependent

variable and that there was a statistically significant relationship between organizational performance

and the set of predictor variables.

Table 4.22: Model Summary

ANOVAa

Model Sum of Squares Df Mean Square F Sig.

1 Regression 14.005 4 3.501 2.431 .034b

Residual 56.177 39 1.440

Total 70.182 43

a. Dependent Variable: Organizational performance

57

Table 4.23 Regression Model Estimation

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

T Sig. B Std. Error Beta

1 (Constant) 2.271 .939 2.419 .020

Continuous learning .072 .208 -.056 -.345 .032

Inquiry and Dialogue .129 .245 -.099 -.528 .001

Team learning -.103 .255 -.080 -.405 .688

Employee empowerment .624 .241 .559 2.589 .013

a. Dependent Variable: Organizational performance

Source: Researcher (2017)

4.9.3 Interpretation of results

4.9.3.1 Effect of continuous learning on the organizational performance

Findings in Table 4.23 show that continuous learning (p=0.032) was statistically significant at 95%

confidence level. The researcher therefore rejects the first null hypothesis and concludes that

continuous learning has significant effect on the organizational performance of commercial banks in

Kenya. The findings are therefore in agreement with Maurer (2010) who found that continuous

learning is important for short and long term success of both individuals and organizations. At

individual level the benefits of continuous learning are the acquisition of better skill sets. This

increases their capability to attain the organizations objectives, the individual is also better placed

to be competitive in the employment market.

4.9.3.2 Effect of inquiry and dialogue on the organizational performance

Findings in Table 4.23 show that inquiry and dialogue (p=0.001) was statistically significant at 95%

confidence level. The researcher therefore rejects the second null hypothesis and concludes that inquiry

and dialogue has significant effect on the organizational performance of commercial banks in Kenya.

These findings therefore concurs with Lipshitz, Friedman, and Popper (2007) and Noordegraaf and

Abma (2003) who found that stories and dialogue are an essential mechanism to deal with

ambiguity and to establish a common understanding of the circumstances and the appropriate

actions.

58

4.9.3.3 Effect of team learning on the organizational performance

Findings in Table 4.23 show that team learning (p=0.688) was not statistically significant at 95%

confidence level. The researcher therefore fails to rejects the third null hypothesis and concludes that

team learning has no significant effect on the organizational performance of commercial banks in

Kenya. This implies that team learning will be removed from the regression model showing the

relationship.

4.9.3.4 Effect of employee empowerment on the organizational performance

Findings in Table 4.23 show that employee empowerment (p=0.013) was statistically significant at

95% confidence level. The researcher therefore rejects the fourth null hypothesis and concludes that

employee empowerment has significant effect on the organizational performance of commercial

banks in Kenya. The findings are therefore in agreement with Yüksel and Erkutlu (2003) who

described employee empowerment as employee sharing because of the four elements: information

on performance, to enable members of staff understand organizational performance and make their

contribution, the benefits they are likely to get as result of positive organizational performance and

the power to make decisions on the direction and performance of the enterprise

59

4.9.4 Hypothesis Testing Summary

Table 4.24 Hypothesis Testing

Hypothesis Value Decision Interpretation

H01 : There is no significant

relationship between continuous

learning and organizational

performance

.032 Reject P-value is less than 5%

level of significance

H02 : There is no significant

relationship between inquiry and

dialogue and organizational

performance

.001 Reject P-value is less than 5%

level of significance

H03 : There is no significant

relationship between team

learning and organizational

performance

.688 Failed to reject P-value is more than

5% level of

significance

H04: There is no significant

relationship between employee

empowerment and

organizational performance

.013 Reject P-value is less than 5%

level of significance

Source: Researcher (2017)

The results indicates that when continuous learning is increased by one unit, organizational

performance would increase by 0.072 units, when inquiry and dialogue is increased by one unit,

organizational performance improved by 0.129 units and when employee empowerment is

increased by one unit, organizational performance would increase by 0.624 units. It can therefore

be concluded that the three learning organization dimensions are statistically significant in

predicting the dependent variables (organizational performance). The regression model with

organizational performance as the dependent variable was then developed as:

Y =2.271+.072X1+.129X2+.624X4

Organizational performance = 2.271+.072 Continuous learning +.129 Inquiry and dialogue +.624

Employee empowerment.

60

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter presents a summary, conclusions and recommendations arrived at by the researcher

from the study.

5.2 Summary of Findings

The objective of the research was to investigate the effects of learning organization dimensions on

the organizational performance of commercial banks in Ongata Rongai. Various methods were

used to arrive at the findings which included descriptive statistics and regression analysis.

Empirical evidence was collected from 11 commercial banks in Ongata Rongai Township, with

consideration being put to the management level and lower level staff of these banks. The total

number of staff members who responded to the questionnaires was 44. The specific objectives

were formulated and discussed in Chapter four.

The first objective of the study was to determine the effect of continuous learning on the

organizational performance of the commercial banks in Ongata Rongai. Continuous learning was

measured in terms of Identifying skills, helping each other learn, resources to support learning and

viewing problems as opportunities to learn. Regression analysis was done to determine the

relationship between continuous learning and organizational performance. From the regression

results, the R value was 0.572 signifying that there is a positive relationship between continuous

learning and organizational performance. Resources to support learning had the highest positive

and significant effect on organizational performance whereas other factors such as identifying

skills needed, helping each other learn and viewing problems as learning opportunities had

negative effect on organizational performance. From the data analysis, continuous learning had a

coefficient of 0.072 (P = 0.032) which was statistically significant in predicting the general

performance of commercial banks. This implied there was a significant relationship between

continuous leaning and the organizational performance of commercial banks hence the first

hypothesis was rejected.

61

The second objective of the study was to establish the effect of inquiry and dialogue on the

organizational performance of the commercial banks in Ongata Rongai. Inquiry and dialogue was

measured in terms of listening to others’ views, being free to question, treating each other with

respect and Building trust with each other. Regression analysis was done to determine the

relationship between Inquiry and Dialogue and organizational performance. From the regression

results above, the R value was 0.537 indicating that there is a positive relationship between inquiry

and dialogue and organizational performance.. Listening to others’ views and building trust with

each other had the highest positive effects whereas being free to question and treating each other

with respect had a negative effect on organizational performance. Inquiry and dialogue had a

coefficient of 0.129 (P = 0.001) which was statistically significant in predicting the general

performance. This implied there was a significant relationship between inquiry and dialogue and

organizational performance of commercial banks. Therefore, the second hypothesis was rejected.

The third objective of the study was to determine the effect of team learning on the organizational

performance of the commercial banks in Ongata Rongai. Team learning was measured in terms of

sharing experiences and information, freedom to adapt to goals, focus on group tasks and

rewarding teams for achievement. From the regression results, the R value was 0.373 indicating

that there is a positive relationship between team learning and organizational performance. Team

learning had a coefficient of -.103 (P = 0.688) and was not statistically significant in predicting the

general performance. This implied there was a no correlation between team learning and

organizational performance of commercial banks. Thus it was removed from the regression model.

The forth objective of the study was to determine the effect of employee empowerment on the

organizational performance of the commercial banks in Ongata Rongai. Employee empowerment

was measured by choice in work assignment, distribution of responsibilities, contribution towards

the vision and recognition of initiatives. Regression analysis was done to determine the

relationship between employee empowerment and organizational performance. Recognition of

initiatives, choice in work assignment and contribution towards the vision have positive effects

whereas distribution of responsibilities has negative effect on organizational performance. From

the data analysis, employee empowerment had a coefficient of 0,624 (P= 0.013) which was

62

statistically significant in predicting the general performance in commercial banks. This implied

that there existed a major correlation between employee empowerment and firm performance in

commercial banks. It’s on the basis of this that the fourth hypothesis was rejected.

5.3 Conclusion

The study sought to determine the effects of learning organization dimensions on the

organizational performance in commercial banks. From the findings, it can be concluded that

continuous learning has positive and significant relationship on organizational performance. This

is better achieved when organizations invest on resources to support learning. Thus organizations

increase their productivity when they continuously acquire knowledge.

The findings of the study also revealed that dialogue and inquiry positively influence the

organizational performance. Successful dialogue is held when people are able to listen and

accommodate each other views while suspending their presuppositions and judgments in search of

solutions to problem. Results of the study showed that team learning has no significant effect on

organizational performance. This contradicts the beliefs of majority that organizations depend on

team learning to solve complex problems.

This study further established that employee empowerment positively impacts the organization

performance to a greater extent. When employees are given an option of doing what they are best

in and further recognized for taking initiatives, the performance of an organization increases. This

is however achieved through flattening of organizational hierarchies, decentralizing areas of

responsibilities as well as embracing a culture that allows employees to make decisions at the job

performance level.

The ultimate aim of adopting learning organization dimensions is to achieve cost reduction that

maximizes profits realized by a commercial bank. Increasing throughput and/or decreasing

operating expense through increased efficiency by bank staff should lead to the accomplishment

of commercial banks ultimate goal of growing market reach share and consequently increasing

profitability. High organizational performance has been experienced in commercial banks through

continuous learning, inquiries and dialogues and employee empowerment.

63

It can be concluded from the results presented in this research that there exists a significant

correlation between dimensions of learning organization and organizational performance of

commercial banks.

5.4 Recommendations

From the conclusions arrived at, it would be recommendable for commercial banks to adopt

dimensions of learning organizations that impact on their performance positively. To start with,

the findings clearly indicate that continuous learning to a large extents affects the performance of

commercial banks positively. When organizations continually create and acquire new knowledge

with an aim of improving their practices, it translates to improved performances. To enhance this

therefore, organizations should invest resources required to support learning.

The study also revealed that inquiry and dialogue significantly affects organizational performance.

Listening to each other’s views and building trust with each other appeared to have a positive and

significant effect on organizational performance. Organizations should therefore encourage

dialogues between members that are genuine, spontaneous and enthusiastic withholding

presuppositions and judgments while trying to seek for answers to existing problems. They should

embrace a spirit of inquiry aimed at understanding of underlying assumptions and beliefs.

Lastly this study recommends that organizations should embrace division of labour and

specialization policy. With this in place employees should be given an opportunity to choose their

work assignment based on one’s area of specialization and most importantly get recognized for

taking certain initiatives that lead to improved performance. Employee empowerment affects

performance to a great extent. It’s a sense of self-worth and ability to make a difference.

Organizations should enhance this by adopting short organizational structures, decentralizing areas

of responsibilities and embracing a culture that allow employees to make decisions at the job

performance levels.

5.5 Suggestions for Further Research

This study covered dimensions of learning organization in regard to performance of commercial

banks. The researcher recommends that a similar research to be carried out in other financial

organizations such as insurance companies and the results be compared so as to establish whether

there is consistency on learning organizations and organizational performance. This study

64

concentrated on selected dimensions of learning organization which was not conclusive. Further

research should therefore be conducted to establish whether there exists a relationship between

other dimensions of learning organization and the organizational performance.

65

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APPENDICES

Appendix I: Letter of Introduction

RUTH N. MBUTHIA

KENYATTA UNIVERSITY

SCHOOL OF BUSINESS

NAIROBI

Dear Sir/Madam,

Re: AUTHORITY TO CONDUCT RESEARCH

I am a postgraduate student from Kenyatta University doing Master of Business Administration.

As a university requirement for every student before graduating with the said degree, am currently

undertaking an academic research whose theme is to evaluate the effect of learning organization

dimensions on organizational performance of commercial banks in Kenya. I humbly request you to

fill the attached questionnaire. Please note that your views will be treated confidentially and will

go a long way in assisting commercial banks in Kenya to boost their performance through adoption

of learning organization dimensions.

Thank you in advance.

Ruth Mbuthia

72

Appendix II: Research Authorization Letter

73

Appendix III: Research Permit

74

Appendix IV: Questionnaire

This study seeks to evaluate the effects of learning organization dimensions on the organizational

performance of commercial banks in Kenya. Information provided is solely for academic purposes.

Instructions

1. Please read each question carefully.

2. For questions requiring you to choose the extent of agreement or importance indicate only one

appropriate choice on scale of 1-5

3. Please tick [√] your answer appropriately

4. Fill in answers to all questions with blank spaces.

5. Do not indicate your name on the questionnaire

PART I: RESPONDENTS BIO DATA

1. Name of the bank _________________________________________

2. Respondents gender

Male [ ]

Female [ ]

3. Indicate your age bracket?

18 -24 years [ ] 25 - 31 years [ ] 32 - 38 years [ ]

39 - 45 years [ ] 46 - 52 years [ ] above 52years [ ]

4. Indicate your position within the organization Department/Section

Management level staff [ ]

Lower level staff [ ]

5. Highest level of education?

Diploma [ ]

Graduate [ ]

Postgraduate [ ]

75

Others, please specify ____________________

6. Years of service in the institution?

Less than 5 years [ ]

5 – 10 years [ ]

11 – 15 years [ ]

Over 15 years [ ]

PART II: EFFECTS OF DIMENSIONS OF LEARNING ORGANIZATION VARIABLES

ON ORGANIZATIONAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA.

SECTION A: CONTINUOUS LEARNING AND ORGANIZATIONAL PERFORMANCE.

1. Indicate the extent to which continuous learning affect the general performance in your bank?

Very great extent [ ]

Great extent [ ]

Moderate extent [ ]

Less extent [ ]

Not at all [ ]

2. Indicate the extent to which the following aspects of continuous learning apply to your

organization? (Tick the most appropriate option using the provided scales). Not at all =1, To

a little extent =2, To a moderate extent =3, To a great extent =4, To a very great

extent = 5

76

1 2 3 4 5

In my organization, people identify skills they need for

future work tasks.

In my organization, people help each other learn.

In my organization, people can get money and other

resources to support their learning.

In my organization, people view problems in their work as

an opportunity to learn.

3. List any other way that continuous learning is enhanced in your organization

---------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

4. In your opinion, how has continuous learning affected the general performance in your bank?

----------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------

SECTION B: INQUIRY & DIALOGUE AND ORGANIZATIONAL PERFORMANCE.

5. To what extent does inquiry and dialogue affect the general performance in your bank?

Very great extent [ ]

Great extent [ ]

Moderate extent [ ]

Less extent [ ]

Not at all [ ]

6. To what extent does the following aspect of inquiry and dialogue apply to your

organization? (Tick the most appropriate option using the provided scales). Not at all =1, To

77

a little extent =2, To a moderate extent =3, To a great extent =4, To a very great

extent = 5

1 2 3 4 5

In my organization, people listen to others’ views before

speaking.

In my organization, people are free to question regardless of

their position

In my organization, people treat each other with respect.

In my organization, people spend time building trust with

each other.

7. List any other way that inquiry and dialogue is enhanced as part of learning in your

organization

----------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

8. In your opinion, how has inquiry and dialogue affected the general performance in your bank?-

----------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------

SECTION B: TEAM LEARNING AND ORGANIZATIONAL PERFORMANCE.

9. Indicate the extent to which team learning affect the general performance in your bank?

Very great extent [ ]

Great extent [ ]

Moderate extent [ ]

Less extent [ ]

78

Not at all [ ]

10. Indicate the extent to which the following aspect of team learning apply to your organization?

(Tick the most appropriate option using the provided scales). Not at all =1, little extent =2,

moderate extent =3, great extent =4, very great extent = 5

1 2 3 4 5

In my organization, people share experiences and

information.

In my organization, teams have the freedom to adapt their

goals as needed.

In my organization, teams focus both on the group’s task

and on how well the group is working.

In my organization, teams/groups are rewarded for their

achievements as a team/group.

11. List any other way that team learning is enhanced as part of learning in your organization

---------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

12. In your opinion, how has team learning affected the general performance in your bank?

----------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------

SECTION B: EMPLOYEE EMPOWERMENT AND ORGANIZATIONAL

PERFORMANCE.

13. To what extent does employee empowerment affect the general performance in your bank?

Very great extent [ ]

Great extent [ ]

Moderate extent [ ]

79

Less extent [ ]

Not at all [ ]

14. Indicate the extent to which the following aspects of employee empowerment apply to your

organization? (Tick the most appropriate option using the provided scales). Not at all =1, A

little extent =2, Moderate extent =3, A great extent =4, A very great extent = 5

1 2 3 4 5

My organization recognizes people for taking initiative.

My organization gives people choices in their work

assignments.

My organization invites people to contribute to the

organization’s vision

My organization encourages equal distribution of

responsibilities

15. List any other way that employees are empowered in your organization

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

16. In your opinion, how has employee empowerment affected the general performance in your

bank?---------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

SECTION B: ORGANIZATIONAL PERFORMANCE

17. To what extent has the general performance of your bank improved from last year?

Very great extent [ ]

Great extent [ ]

Moderate extent [ ]

Less extent [ ]

80

Not at all [ ]

18. Indicate the extent to which the following aspect of corporate performance apply to your bank?

(Tick the most appropriate option using the provided scales). Not at all =1, To a little extent

=2, To a moderate extent =3, To a great extent =4, To a very great extent = 5

1 2 3 4 5

In my organization there is growth in deposits than last year

In my organization there is growth in number of accounts

than last year

In my organization there is growth in the amount of loans

advanced than last year

In my organization there is growth in the profitability than

last year

19. List any other performance indicator that has been achieved as a result of adoption learning

organization dimensions in your bank ------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

Thank you for your time.

81

Appendix V: Commercial Banks within Ongata Rongai Township

1. Kenya Commercial Bank

2. Barclays Bank

3. Equity Bank

4. Cooperative Bank

5. Bank of Africa

6. Chase Bank

7. I & M Bank

8. Jamii Bora

9. Credit Bank

10. Eco Bank

11. Sidian Bank

12. Family Bank

13. National Bank