The Effect of Strategic Orientation on Organizational Performance: The Case of Some Selected Banks

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Date

2026-06-02

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Addis Ababa University

Abstract

The issue of poor understanding concerning the influence of different orientations of strategy towards organizational performance is prevalent in the banking industry in Ethiopia. Although several strategies are put in place, the specific effect of the strategies is not known and the literature available is largely limited to the development of strategies. Consequently, this paper aims to investigate the effect of strategic orientation on organizational performance in a selected bank focusing on evaluating the impact of market orientation, technology orientation, entrepreneurial orientation and learning orientation on organizational performance of the selected bank. Chapter Three outlines the methodology used in investigating the effect of strategic orientation on organizational performance in selected banks. In this case, the research philosophy adopted is positivist. This philosophy stresses empirical measures of phenomena which makes it appropriate in exploring the effect of variables such as strategic orientation and organizational performance. The deductive approach was used in developing theories and hypothesis based on Resource Based View, Dynamic Capability and Market Based View. An explanatory design was used in order to find cause and effect relationship. The data was obtained in one point of time in order to make the study efficient and effective. Quantitative research approach was used in the study to enable generalizability of findings since it enables objective measurement and statistical analysis. Employees of the selected commercial banks of Addis Ababa, Ethiopia who know well enough the bank's strategies were targeted to participate in the study. Stratified Random Sampling technique was used to select a sample of 286 respondents using Yamane formula. The data sources included primary data collected from structured questionnaire survey as well as the secondary data taken from books, reports and journals. The questions of the questionnaire consist of demographic attributes, strategic orientation elements and organizational performance measured using Likert scale. The questions were validated using previous similar studies. The validity of the questionnaire was established through experts' reviews and factor analysis. At the same time, the reliability of the tool was ascertained using Cronbach Alpha where all of the variables exceeded the acceptable cut-off value of 0.70. Independent variables in the study include Market Orientation, Entrepreneurial Orientation, Learning Orientation and Technology Orientation while organizational performance was the dependent variable. The analysis of the data involved descriptive analysis using SPSS version 27. On the other hand, inferential analysis involving multiple regressions and correlation was conducted. The relationship between independent and dependent variable were specified using the Multiple Regression Analysis and the diagnostic test conducted includes the normality test, VIF/Tolerance Test for Multicollinearity, Durbin Watson Test for Autocorrelation, Homoscedasticity and Linearity test to verify the model. The results indicate that market, technology, entrepreneurial and learning strategic orientation are practiced in moderate levels in the selected bank and are positively correlated with the bank's performance by 36.6%. However, among these variables, learning orientation and entrepreneur orientation showed very strong positive correlation with performance while market orientation showed negative correlation.

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Keywords

Strategic Orientation, Organizational Performance, Banking Sector

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