electronic commerce capability and performance of commercial banks in kenya

Description

Kenya’s Vision 2030 economic blueprint seeks to transform Kenya into a middle-income country by the year 2030. The Government of Kenya through the Central Bank of Kenya has provided an enabling environment to ensure that commercial banks contribute towards the realization of the Vision 2030’s envisaged prosperous economy. In order to play their intermediation role, commercial banks have to be profitable. They have thus invested heavily in e-commerce solutions. Despite these initiatives, commercial banks have presented mixed results in terms of their performance. Hence, this study investigated the effect of e-commerce capability on performance of commercial banks in Kenya. The specific objectives of the study were to establish the effect of e-commerce information capability, transaction capability, customization capability and back-end integration capability on performance of commercial banks in Kenya. The study also sought to establish the moderation effect of the business operating environment on the relationship between e-commerce capability and performance of commercial banks and determine the mediation effect of competitive advantage on the relationship between e-commerce capability and performance of commercial. The study was anchored on Unified Theory of Technology Acceptance and Use of Technology Theory and supported by Dynamic Capability Theory and Resource-Based View Theory. The study was guided by positivism research philosophy and used explanatory non-experimental design. A census of 43 commercial banks was taken; data for performance was extracted for the financial year 2016/2017. Data for e-commerce capability was collected from commercial banks websites. Data analysis was done using descriptive and inferential statistics. The study established that e-commerce information capability, customization capability and back-end capability significantly affected performance of commercial banks in Kenya. Transaction capability had an insignificant effect of performance of commercial banks in Kenya. The study further established that the business operating environment had positive but insignificant moderating effect on the relationship between e-commerce capability and performance of commercial banks in Kenya. Competitive advantage was found to partially mediate the relationship between competitive advantage and performance of commercial banks in Kenya. The study concluded that information capability, customization capability and back-end integration capability were significant predictors of performance of commercial banks. The study recommends that management of banks should invest more resources in e-commerce capability to improve their performance. The study further recommended for banks should include more transaction capability in their e-commerce platforms. This will ensure reduction in operation costs especially marketing and transactions costs.