The effect of Strategic Orientation on Organizational Performance in Ethiopian Banks: the Role of Operational Efficiency as a Moderator
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Date
2025-05-30
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A.A.U
Abstract
The objective of this study is to examine the effect of strategic orientation on organizational performance in Ethiopian banks, with a specific focus on operational efficiency as a moderating variable. The objective is to evaluate how market orientation, innovation orientation, and entrepreneurial orientation influence bank performance, and whether operational efficiency strengthens or weakens these relationships. Explanatory research design was adopted, and 381 structured questionnaires were distributed to bank employees across various institutions, of which 360 were valid for analysis. For this study both primary and secondary source of data were used. The primary data was collected using close-ended with five point Likert scale and open-ended questionnaire and secondary sources were collected from previously done articles and books. The collected data was analysed by using correlation and regression models through SPSS version 26. Regression analysis showed that strategic orientation variables collectively explained 27%. The remaining 73% suggests that other unexamined factors such as leadership quality, regulatory environment, technological adoption, or macroeconomic conditions also play crucial roles.When operational efficiency was introduced as a moderating factor, the adjusted R² dropped to 0.057, suggesting that while the moderation effect exists, it accounts for only a modest portion of performance variability. Nevertheless, operational efficiency was identified as a key factor in mitigating performance challenges in the dynamic financial environment of Ethiopia. The study recommends that banks enhance their innovation capabilities and integrate efficiency-improving technologies to fully leverage strategic orientations. Future research should Investigate additional moderating or mediating variables (e.g., leadership styles, organizational culture, leadership quality) to better understand the complexity of organizational performance.
Keywords: Strategic orientation, Organizational performance, Operational efficiency, Market orientation, Innovation, Entrepreneurial orientation