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