Organizational Structure Change and Sustainable Competitive Advantage of Commercial Banks in Kenya

Abstract

Strategic renewal has become a central preoccupation for commercial banks operating in volatile and competitive environments. Despite over a decade of rapid financial sector evolution in Kenya, a significant number of commercial banks continue to grapple with structural rigidities that constrain their capacity to achieve sustainable competitive advantage. This study sought to establish how organizational structure change relates to the sustainable competitive advantage of commercial banks in Kenya, and to assess the moderating effect of corporate governance on this relationship. The study was anchored on the Resource-Based View and Dynamic Capability Theory. A descriptive correlational research design was adopted under the positivism research paradigm. The target population comprised 195 senior bank officials, from which 175 usable questionnaires were returned, representing an 89.74% response rate. Data were analyzed using SPSS version 29 through descriptive statistics, Pearson correlation, and hierarchical moderated regression. The study found a positive and statistically significant relationship between organizational structure change and sustainable competitive advantage (r = 0.651, p < 0.001; R² = 0.423; β = 0.575; p = 0.000). Corporate governance significantly moderated this relationship, improving the explained variance to 77.3% (R² = 0.773; F = 169.52; p = 0.000). It is recommended that commercial banks in Kenya adopt flexible and decentralized organizational structures that promote delegation, open communication, and cross-functional teamwork as critical drivers of long-term competitive advantage.