The relationship between strategic thinking and leadership effectiveness in Kenyan indigenous banks

Abstract

Background: Leadership effectiveness is critical to organisational performance and survival. To be effective, organisational leaders must possess the right competencies. One vital leadership competency is strategic thinking, which is described as the ability to synthesise and utilise intuition and creativity in order for an organisation to achieve an integrated perspective. Strategic thinking remains a critical area for research, owing to lack of supporting empirical literature, and to theories that give little or no guidance to leaders. Aim: The purpose of this study is to empirically test the relationship between strategic thinking competency and leadership effectiveness in Kenyan indigenous banks. Setting: The setting of the study is the indigenous banks in Kenya. Methods: The study was based on a positivist research paradigm which is quantitative in nature and utilised a survey method to collect data. Both probability and non-probability methods were used to determine the target population. The research instrument was a self-administered, closed-ended questionnaire. From a target population of 494 individuals, a total of 257 responses were received and analysed. The analysis was performed using structural equation modelling with confirmatory factor analysis, Cronbach’s alpha and goodness-of-fit indices being used for analysis and testing relationships. Results: The overall findings are that a positive relationship exists between strategic thinking and leadership effectiveness in indigenous banks in Kenya. The study further establishes positive relationships between the strategic thinking competency and its sub-constructs of general strategic thinking, intent-focused and hypothesis-driven, but a negative relationship with intelligent opportunism. A similar positive relationship exists between leadership effectiveness and its sub-constructs of influence, follower commitment and versatility. Conclusion: This research has established that strategic thinking is an important determinant of leadership effectiveness for indigenous banks in Kenya, and therefore supports prevailing literature and theory indicating a positive relationship. The implication of the study is that bank management should strive to maintain strategic thinking competency for effective leadership, successful bank performance and stability.

Keywords

• strategic thinking
• leadership effectiveness
• structural equation model
• goodness-of-fit
• indigenous bank effectiveness