The impact of Corporate Entrepreneurship on financial performance of firms: evidence from Kenya’s banking industry

A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA)The aim of this study is to determine the impact of corporate entrepreneurship on financial performance of commercial banks in Kenya. The study will examine five sub-dimensions of corporate entrepreneurship; innovation, risk taking, pro-activeness, competitive aggressiveness and autonomy. These five sub-dimensions of corporate entrepreneurship formed the basis of the research questions. They are: What effect does innovation have on perceived financial performance of commercial banks in Kenya? What effect does risk taking have on perceived financial performance of commercial banks in Kenya? Which has a greater impact on the perceived financial performance of commercial banks in Kenya; pro-activeness, competitive aggressiveness or autonomy? The research study was quantitative and data was collected from 44 commercial banks in Kenya through closed-ended questionnaires. The questionnaires entail assessing the degree of corporate entrepreneurship in an organization in relation to its performance. The data collected was entered into a computer application package (SPSS) to quantitatively analyze the data both in terms of descriptive statistics and inferential statistics. Descriptive statistics include frequencies, measures of central tendencies (mean) and measures of dispersion (standard deviation, variance). Inferential statistics include correlation and regression. The data was then presented using tables and pie charts for clarity and ease of understanding. The findings of the research indicate that there is a strong positive association between level of corporate entrepreneurship and financial performance of a firm. Specifically innovation, risk taking, pro-activeness, competitive aggressiveness and autonomy were all found to have a positive effect on a firm’s financial performance. Therefore it is observed that, innovations carried out by banks do have a major influence on their financial performance. Risk taking too has a positive impact on financial performance of banks and finally among the three (pro-activeness, competitive aggressiveness and autonomy) competitive aggressiveness had the greatest impact on financial performance of banks followed by autonomy and pro-activeness respectively. Conclusion drawn from the research findings indicate that most banks studied were innovative, risk takers, pro-active, autonomous and competitive aggressive. These entrepreneurial behaviors within banks were observed to lead to high levels of performance and profitability. These findings do match other studies that hypothesized a positive association between corporate entrepreneurship and financial performance of a firm. Recommendations to senior executives, directors and management are depicted and they are aimed at giving direction and guidelines on which parts of corporate activities financial institutions need to focus on in order to become more entrepreneurially orientated. Further, future research should test CE dimensions in other industries such as (manufacturing sector, insurance sector etc.). This will allow for comparisons between industries. The increased number and variety of industries could provide the opportunity to identify a number of different industry factors that affect financial performance