Strategic Innovation, Corporate Culture and Business Sustainability of Commercial Banks in Kenya

Abstract

The constantly evolving business environment continues to pose sustainability challenges to commercial banks in Kenya, with several institutions experiencing instability and closure despite adopting strategic innovations. This study set out to investigate the influence of strategic innovation and corporate culture on the business sustainability of commercial banks in Kenya. The objectives focused on the effects of product, process, market, organizational, and business model innovations, as well as the moderating role of corporate culture. The study was anchored on the Dynamic Capabilities Theory, supported by Schumpeter’s Innovation Theory and Organizational Culture Theory. Guided by a positivist philosophy and explanatory design, data were collected from 35 of the 39 licensed commercial banks, with responses obtained from 140 participants. Structured questionnaires were used, and the data analyzed through correlation and regression models. The results revealed that all the dimensions of strategic innovation significantly influenced business sustainability. Product innovation had a positive effect (p = 0.004 < 0.05), process innovation was highly significant (p = 0.000 < 0.05), market innovation also showed significance (p = 0.004 < 0.05), and organizational innovation was strongly significant (p = 0.000 < 0.05). Business model innovation registered the strongest influence (p = 0.000 < 0.05). However, hierarchical regression analysis indicated that corporate culture provided only a partial moderating effect (p = 0.084 > 0.05), suggesting that while culture supports innovation, it does not decisively determine sustainability outcomes. The study concludes that product, process, market, organizational, and business model innovations are critical to the sustainability of commercial banks in Kenya, with corporate culture playing only a limited moderating role. It contributes to theory by extending the Dynamic Capabilities framework to emerging market contexts where innovation and culture interact. In practice, the findings emphasize the need for banks to strengthen processes, organizational structures, and business models, while aligning their cultures with innovation and technological change. At the policy level, the study points to the importance of regulatory frameworks that promote financial innovation, enhance governance, and support resilience in the sector. The research therefore advances empirical understanding and provides insights valuable to scholars, practitioners, and policymakers concerned with the sustainability of commercial banks in Kenya.