Effect of Strategy Structure Fit on Financial Performance of Commercial Banks in Kigali, Rwanda

Egide Sakindi () and Dr. Gitahi Njenga ()

International Journal of Entrepreneurship and Project Management, 2024, vol. 9, issue 3, 76 - 95

Abstract: Purpose: The purpose of this project is to to investigate the effect of strategy-structure fit on organizational performance of commercial Bank in Rwanda. Methodology: A crossectional research design was used and a quantitative approach was employed for data collection. The study population comprised departmental heads, departmental supervisors, branch managers and branch supervisors categorized as senior management, middle level management, and lower-level management consisting of 86 respondents. The sample size of 71 respondents was determined using the Slovin formula. Findings: First, the findings indicate a significant relationship between strategic structure and financial outcomes, with 84% of respondents noting a positive alignment between strategy and organizational structure, which supported strategic goals and innovation, enhancing overall financial performance. Secondly, 90% of respondents agreed that aligning strategy with organizational structure positively affects financial results, especially for cost leadership and differentiation strategies, as banks benefitted from decentralized and flexible structures suited to these strategies. Lastly, 85% of respondents emphasized the importance of continuous evaluation and control, citing improved profitability and alignment with strategic objectives as crucial for sustained financial success. Key informant interviews echoed these insights, highlighting the importance of structured evaluations and controls in maintaining financial stability and fostering sustainable growth within banks. Unique Contribution to Theory, Practice and Policy: The study recommends that commercial banks in Rwanda actively involve employees in setting clear goals and aligning strategies to improve financial performance, while enhancing strategy structure through cost leadership, product differentiation, and targeting niche markets to boost turnover. Additionally, it advises that banks in Kigali prioritize resource allocation and top management commitment to achieving financial targets, expanding product offerings to serve broader society, and maintaining effective strategic planning for long-term goals.

Keywords: Strategy Structure Fit; Financial Performance; Commercial Banks; Rwanda (search for similar items in EconPapers)
Date: 2024
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