Volume 9, Issue 4, April – 2024 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24APR1616

Technology Infrastructure and Business

Performance of Commercial Banks in Kenya
1
Jeremiah Mugambi Ananga; 2Dr. Samson Nyang’au Paul; 3Dr. Tobias Mwalili
1
PhD Student; 2Lecturer
Jomo Kenyatta University of Agriculture and Technology

Abstract:- The general objective of the study was to I. INTRODUCTION

examine the role of technology infrastructureon business
performance of Commercial Banks in Kenya. The The contemporary business landscape is undergoing
philosophy that guided the research is positivism profound transformations driven by rapid technological
philosophy. The study adopted correlational research advancements, expanding globalization, evolving
design. The target population was commercial Banks in demographics, and increased regulatory scrutiny. These
Kenya register by the Central Bank of Kenya. The factors collectively give rise to a milieu characterized by
population consisted of all 42 commercial banks in novel prospects, formidable challenges, and heightened risks
Kenya. Respondents’ population comprised of five top for managers (Owuori, Ngala, &Obwatho, 2020). In this
managers from each bank translating to 210 top dynamic and unpredictable market environment,
managers. Slovin’s formula was used to calculate the competition engenders fluctuations in both demand and
sample size. Purposive sampling technique was used to supply, manifesting more rapidly, extensively, and
select 138 top managers of the 42 commercial Banks in unpredictably than in the past (Lu & Ramamurthy, 2019).
Kenya. This study used a self-administered, closed and Consequently, the ability to swiftly perceive and adapt to
open-ended questionnaire to obtain primary data. A market fluctuations, seizing opportunities and mitigating
pilot study was conducted to test the validity and threats with agility and ingenuity, has become imperative for
reliability of the data collection instrument. Quantitative organizational survival (Huang, Ouyang, Pan, & Chou,
data was collected and analyzed in this study by 2018).
calculating the response rate with descriptive statistics
such as mean, standard deviation, median and The IT infrastructure encompasses the tangible and
proportions using the Statistical Package for Social intangible components of information technology, including
Sciences (SPSS) version 24). Regression analysis and hardware, software, and networks, which are structured into
correlation analysis was used to carry out inferential systems to support the implementation of IT-based products
data analysis to determine the direction and strength of and processes, thereby facilitating innovation (Basheer et
the relationship between the independent and the al., 2016; Lu & Ramamurthy, 2011). Due to the inherent
dependent variables. In order to test the influence of diversity among firms in cultivating and enhancing IT
information technology capability on business capabilities, they exhibit varying degrees of proficiency in
performance of Commercial Banks in Kenya, the study harnessing information systems (IS) to bolster their
employed a hierarchical regression analysis with competitive edge. Scholars have delineated various
moderation. The study results were presented through dimensions of IT capability, encompassing aspects such as
use of tables and figures. The study concludes that IT strategy and structure (Bergeron, Raymond, &Rivard,
technology infrastructure has a positive and significant 2004); human and infrastructure capabilities, along with
effect on business performance of Commercial Banks in planning, development, and operational prowess
Kenya. The study revealed that hardware/Software, (Ravichandran, Lertwongsatien, &Lertwongsatien, 2005);
network and database influence business performance of infrastructure, business experience, relationship resources,
Commercial Banks in Kenya. This implies that and human resources (J.-S. Chen &Tsou, 2012); managerial,
improvement in information technology infrastructure personnel, and infrastructure prowess (Kim, Shin, Kim, &
(hardware/Software, network and database) would lead Lee, 2011); infrastructure capability, business spanning
to improvement in business performance of Commercial capability, and proactive stance (Lu & Ramamurthy, 2011);
Banks in Kenya. The study recommends that the as well as value, competitive, and dynamic capabilities
management of commercial banks in Kenya should (Bhatt & Grover, 2005); and finally, managerial, technical,
ensure they had adequate and up to date and relational IT capability (Garrison, Wakefield, & Kim,
hardware/Software to enable their employees improve 2015).
their productivity.
Technological capability serves as a pivotal
Keywords:- Technology Infrastructure, Business determinant of firms' performance enhancement, enabling
Performance of Commercial Banks and Positivism incremental advancements through the adoption of novel
Philosophy. technologies (Jonker, Romijn, &Szirmai, 2006). Enhanced
access to a diverse array of cutting-edge technologies

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Volume 9, Issue 4, April – 2024 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24APR1616

(Tatikonda& Stock, 2003) exerts influence on various The Central Bank of Kenya serves as the primary
aspects such as product cycle time regulator overseeing microfinance banks, foreign exchange
(MontoyaWeiss&Calantone, 1994), innovation velocity trading bureaus, credit reference bureaus, and commercial
within the firm (Coombs &Bierly III, 2006), as well as the banks. Within Kenya, there exist a total of 42 commercial
speed and efficiency of new product introduction to the banks, each holding an equal market share (Central Bank of
market (Calantone& Di Benedetto, 2012). Moreover, it Kenya Annual Report, 2021). The commercial banking
impacts product development costs and the success rate in sector in Kenya has witnessed a proliferation of players,
bringing new products to fruition (Tatikonda& Stock, 2003), including locally incorporated banks and internationally
underscoring its significance as a fundamental component of incorporated commercial banks (multinationals), both
organizational knowledge and expertise (Renko, originating from within the continent and beyond (Aburime,
Carsrud&Brännback, 2018). A firm's competitiveness and 2009). This influx of diverse participants underscores the
performance hinge upon its adeptness at performing across competitive landscape within the industry, where all banks
various dimensions, implying that its success emanates from vie for market dominance amidst a mix of public and private
its multifaceted capabilities (Stouder& Gallagher, 2015). As banking entities. Chowdhury and Rasid (2015) contend that
elucidated by Kim, Shin, and Min (2016), a firm's private commercial banks, in particular, have witnessed
capabilities enable it to navigate daily operations, facilitate steady growth across various branches, leading to increased
growth, adapt to dynamic market shifts, and ultimately employment opportunities, higher deposit volumes,
attain a competitive edge within the industry. expanded loan disbursements, and augmented net income
and earnings per share over time.
IT capabilities encompass a trifecta of components: IT
infrastructure, IT applications, and human IT skills According to Ongore and Kusa (2013), the ability of
(Bharadwaj, 2000). This amalgamation provides the commercial banks to fulfill their role as financial
requisite hardware and software infrastructure for intermediaries hinges on their capacity for financial
establishing networks that serve as conduits for fostering innovation and the tailored development of financial
firm innovation. Effective deployment of IT infrastructure products. Indeed, there is a pressing need for financial
enables firms to seamlessly integrate suitable applications at institutions to recognize the value of technology-driven
opportune moments, thereby widening pathways for financial services in order to sustain profitability and
technological breakthroughs (Zeng& Lu, 2020). By operational efficiency. In recent years, banks have faced
leveraging IT infrastructure, organizations can expedite the intensified competition stemming from heightened
identification and development of pivotal technologies, innovation among existing players and the emergence of
facilitate information sharing across products, services, and new market entrants (Cegarra-Navarro, Reverte, Gómez-
geographical locations, institute standardized transaction Melero, &Wensley, 2016). These shifts include the
processing, and streamline supply chain management across transition from traditional decentralized banking to a more
various business functions (Zahra et al., 2019). Furthermore, centralized model, facilitated by the integration of diverse
firms endowed with robust human IT skills are not only business capabilities (PWC, 2012). To maintain brand
better positioned to anticipate and cater to the future leadership and foster customer loyalty within the
business needs of the organization but also possess the commercial banking sector in Kenya, various strategies are
acumen to innovate novel product features ahead of employed, such as the introduction of innovative products
competitors, thereby reaping intangible benefits such as and the implementation of robust customer relationship
enhanced customer satisfaction (Bharadwaj, 2000). management initiatives.

Innovative concepts encompass leveraging IT to II. STATEMENT OF THE PROBLEM

pioneer new markets and secure a competitive edge through
heightened interactivity, cost-effective transactions, and Technological capability stands as a pivotal factor in
direct engagement with partners and clientele (Hoque, enhancing organizational performance (Zhou, Yim&Tse,
Mohammad, Albar, &Bao, 2016; Zhu, Zou, & Zhang, 2019). Consequently, many successful organizations
2018). Innovation catalyzes enhancements across a firm's worldwide rely on their technological prowess to efficiently
value chain, ushering in novel products, services, solutions, execute their routine business processes and activities
and operational methodologies (Shaw, O’Loughlin, (Ajonbadi, 2018). According to Bharadwaj (2018), J.-
&McFadzean, 2005). Schumpeter (1942) delineated S.Chen &Tsou (2021), and Zeng& Lu (2020), the adeptness
innovation as a pivotal facet of a firm's life cycle within the of organizations in leveraging, cultivating, and advancing
realm of entrepreneurship. Empirical studies by information their IT capabilities holds paramount importance
systems researchers have underscored that investments in (Bharadwaj, 2019). Information Technology capabilities
Information Technology (IT) bolster firms' productivity, possess immense potential to revolutionize organizations by
augment consumer welfare, and fortify their comparative shaping decision-making and operational execution through
advantage (Barua et al., 2000). Additionally, other research innovation.
has highlighted that IT management capabilities,
encompassing managerial proficiencies related to the Inadequate implementation of technological
acquisition, administration, and utilization of information capabilities has led to excessive operational expenses,
technologies, exert a substantial influence on business disjointed business processes, failure to meet domestic
performance (Bharadwaj, 2014; Santhanam et al., 2013). policy objectives, and challenges in attracting and retaining

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Volume 9, Issue 4, April – 2024 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24APR1616

skilled professionals (Zahra et al., 2019). Several studies B. Theoretical Framework

have explored the realm of IS/IT capabilities, such as
Akinbola, Adeniyi, and Oluwatosin's (2017) examination of  Dynamic Theory
IS capabilities in the telecommunications sector in Nigeria, Dynamic capabilities encompass an organization's
Bhatt and Grover's (2019) investigation into the role of adaptive responses to rapid environmental changes. These
information technology capabilities in gaining competitive capabilities are rooted in the managerial and organizational
advantage, and Oh and Kim's (2021) research on the processes of the organization (Sher and Lee, 2004). While
managerial capabilities of Information Technology and their the nature of dynamic capabilities is unique, characterized
impact on firm performance. by path dependence and emergent details, there exist
commonalities, connections, and best practices across firms
Mugambi and Kinyua (2020) conducted a study and organizations. Dynamic capabilities theory extends the
investigating the impact of innovation capability on Resource-Based View (RBV) and underscores that while the
organizational performance within the context of acquisition of capabilities is essential, it alone is not
Commercial Banks in Nairobi City County, Kenya. Their adequate for achieving competitive advantage (Teece,
research encompassed dimensions of product innovation, Pisano, and Shuen 1997).
service innovation, and service innovation. In contrast, the
current study examines the effects of Information Teece, Pisano, and Shuen (1997) argue that only firms
Technology Strategy, Information Technology Processes, capable of effectively creating, integrating, and reshaping
Information Technology Organization, and Information their resources to suit evolving environments can sustain
Technology Infrastructure capabilities.Kamau, Senaji, Eng, their competitive advantage. According to Dynamic
and Nzioki (2019) endeavored to ascertain the influence of Capabilities View (DCV), disparities in firm performance
Information Technology Capability on the competitive superiority are not dictated by variations in resource
advantage of the banking sector in Kenya. Anchored on the endowments but rather by the capabilities firms acquire and
McKinsey 7S Framework Model, the study employed a deploy (Eisenhardt and Martin, 2000). These capabilities are
descriptive survey design and focused on 39 operational deemed dynamic when they furnish firms with the capacity
commercial banks in Kenya. In contrast, the present study to enact novel strategies in response to shifting market
investigates the impact of IT capability on both financial and dynamics (Teece, Pisano, and Shuen, 1997).
non-financial performance metrics of Commercial banks,
while incorporating various dimensions of ITC and theories The concept of IT capabilities originates from the
as the study's foundation. resource-based view, which has faced criticism for its failure
to elucidate the benefits derived from IT capabilities in
The underexplored facets within this internal domain volatile business environments (Wade &Hulland, 2004). An
pertain to the dynamics of information technology increasing number of scholars advocate for embracing the
capabilities, including Information Technology Strategy, concept of IT capabilities through the lens of dynamic
Information Technology Processes, Information Technology capability view, which underscores the necessity of
Organization, and Information Technology Infrastructure, adaptation and change amidst rapidly evolving market
which pose a significant area for further research (Lu & demands. These capabilities represent the interconnected
Ramamurthy, 2011). Scholars have demonstrated that a processes within a firm that are crucial for future resource
firm's capacity to effectively harness its IT investments generation, enabling firms to navigate forthcoming
through the development of robust IT capabilities can yield challenges in a dynamic business landscape. By channeling
positive outcomes in terms of firm performance. Pertinent their efforts towards creating, renewing, or modifying a
literature delves into concepts such as managerial capability resource mix to gain competitive advantage, firms enhance
and organizational performance (Conyers, 2017), dynamic their performance (Eisenhardt& Martin, 2000; Teece et al.,
capability and competitive advantage (Rudolf, 2019), as 1997).Firms with robust IT capabilities often exhibit
well as innovation and performance (Kauzya, 2020).Despite accelerated decision-making processes by promptly
the evolving nature of firms' technological capabilities, responding to evolving market demands. Despite the
existing studies and reports have largely overlooked the widespread recognition of the significance of IT capabilities,
impact of Information Technology Strategy, Information there remains a paucity of understanding regarding the
Technology Processes, Information Technology multifaceted role of IT capabilities in shaping firm
Organization, and Information Technology Infrastructure performance. Numerous studies have established a
capabilities on the business performance of Commercial connection between the dynamic capabilities of
Banks in Kenya. This gap underscores the necessity for organizations and their innovation capability, as evidenced
conducting a comprehensive study to explore the role of by research conducted by Lawson and Samson (2001),
Technology Infrastructure in influencing the business Ellonen, Wikström, and Jantunen (2009), and Liao, Kickul,
performance of Commercial Banks in Kenya. and Ma (2009).

A. General Objective In their study, Lawson and Samson (2001) proposed

To examine the role of Technology Infrastructure on that organizations aiming for increased innovation should
business performance of Commercial Banks in Kenya. invest in seven key capability areas: vision and strategy,
organizational intelligence, leveraging the competence base,
fostering creativity, optimizing organizational structure,

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nurturing a conducive culture, and effective technology Consequently, IT capabilities contribute to enhancing
management. Dynamic capabilities can be analyzed and innovation activities and firm performance (Del Giudice&
classified based on different business contexts and a Straub, 2011). Therefore, it is imperative to conduct studies
spectrum of dimensions where they can be applied. aimed at gaining a clear understanding of how Technology
Research conducted on a Japanese automobile company Infrastructure enhances the operations of commercial banks.
revealed that dynamic capabilities constituted the primary
and most potent source of competitive advantage. Nevo and C. Conceptual Framework
Wade (2010) assert that IT capabilities play a supportive The conceptual framework shows the anticipated
role for other dynamic capabilities by introducing new relationship between Technology Infrastructure and firm
modules and facilitating various routine business processes. performance (dependent variable).

Fig 1: Conceptual Framework

D. Empirical Review overall firm performance (Byrd & Turner, 2001; Jacks et al.,
2011).
 Information Technology Infrastructure
IT infrastructure encompasses an organization's IT infrastructure holds significant importance among
capacity to deploy hardware platforms and associated the dimensions of IT capabilities (Flyvbjerg&Budzier,
software systems (Lu & Ramamurthy, 2006). IT 2011). According to Sambamurthy et al. (2003), the
infrastructure capability refers to a firm's proficiency in integration of infrastructure can generate myriad digital
implementing shareable platforms and encompasses its possibilities that enhance organizational learning, thereby
effectiveness in managing data management services, supporting the organization's capacity to leverage and apply
network communication services, and application portfolio available knowledge. A robust IT infrastructure enables
and services tailored to the firm's specific information organizations to rapidly implement new IT initiatives. By
system applications (Bharadwaj, 2000; Broadbent, Weill, & fostering information technology sharing, IT infrastructure
St Clair, 1999; Laudon&Laudon, 2013). A flexible IT facilitates diverse organizational functions, thereby
infrastructure synergizes information generation and streamlining processes and bolstering innovation activities
distribution, thereby enhancing a firm's competitiveness in (Bharadwaj, 2000).
dynamic environments and fostering a competitive
advantage (Lyver& Lu, 2018). IT infrastructure flexibility empowers firms to enhance
innovation and optimize the efficiency of all business
IT infrastructure encompasses the array of IT functions (Pavlou& El Sawy, 2006; Ray et al., 2005).
resources, including hardware, software, and networks, Through its adaptability, IT infrastructure flexibility
structured through systems, which forms the technical facilitates firm development, fostering market equilibrium
foundation for implementing IT and process innovation in by catalyzing the introduction of innovative activities (Todd
product development (Basheer et al., 2016; Lu & &Javalgi, 2007). Firms must cultivate robust IT
Ramamurthy, 2011). Huang et al. (2012) shed light on IT infrastructure flexibility to drive innovation initiatives.
capability, emphasizing its role in acquiring, disseminating, Researchers have identified IT infrastructure as a pivotal
gathering, and recycling IT resources to bolster business resource, serving as a new competitive weapon that can
strategies and operational processes. Effective management bestow sustained competitive advantage (Bharadwaj, 2000).
of diverse tasks within an organization, facilitated by a well- From the perspective of resource-based theory, IT
coordinated system supported by flexible IT infrastructure, infrastructure enabling firms to implement innovations
is crucial for reducing production costs and enhancing represents a type of causally ambiguous resource
(Bharadwaj, 2000; Reed and DeFillippi, 1990).

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IT infrastructure comprises two primary components: summaries, it helps researchers to explore the intricacies and
technical IT infrastructure and human IT infrastructure. nuances of the topic under investigation
Managerial IT skills are often tacit and reliant on
interpersonal relationships, which may require years to C. Target Population
cultivate (Chatfield and Bjorn-Andersen, 1997; Mata, The target population was commercial Banks in Kenya
Fuerst, and Barney, 1995). These relationships are typically register by the Central Bank of Kenya. The population
localized or specific to the organization, making skill consisted of all 42 commercial banks in Kenya.
development a socially intricate process (Mata, Fuerst, and Respondents’ population comprised of five top managers
Barney, 1995). For instance, IT managers must collaborate from each bank translating to 210 top managers. The top
with functional managers, suppliers, and customers to managers were targeted because top managers of a firm
develop suitable IT applications. Bush (2001) provides mostly handle strategic management issues.
evidence supporting the impact of IT infrastructure on
supply chain integration. However, previous research has D. Sample Size and Sampling Technique
predominantly focused on technical infrastructure while Sample size refers to the number of individual subjects
overlooking human IT resources concerning integration and or units selected from a larger population for inclusion in a
performance. research study or experiment. It is a critical aspect of
research design, as the size of the sample directly affects the
Cash et al. (2020) posited that an IT infrastructure validity and reliability of the study's findings (Mugenda &
evolves through learning and assimilation of a firm’s Mugenda, 2003).Respondents’ population comprised of five
information requirements. Exploration of the environment top managers from each organization translating to 210 top
can facilitate the development of appropriate capabilities. managers. Slovin’s formula (1960) was applied as
Research also indicates that the development of IT skills, illustrated:
integrated into specific business practices, requires
knowledge assimilation over time (Lu & Ramamurthy, n = N/ (1+Ne2),
2011). In a quantitative study investigating the direct
influence of intangible IT resources on sustainable Where;
competitive advantages in the high-tech industry in Algeria, n = Sample Size
Makhloufi, Abu Al-Rejal, and Mohtar (2018) discovered N = Total Population
that IT infrastructure significantly affects sustainable e = Error of Tolerance with a confidence level of 95 %
competitive advantage. Similarly, Bhatt, Wang, and Rodger (giving a margin error of 0.05)
(2017) examined the moderating effect of organizational n = 210 / (1+ 210*0.05*0.05) = 138
learning intensity on the relationships between information
systems and the competitive advantage of Chinese firms, Hence, the sample size was138.
collecting data from 122 IT managers. The results indicate
that flexible IT infrastructure has a significant impact on E. Data Collection Instruments
competitive advantage. This study employed a self-administered questionnaire,
comprising both closed and open-ended questions, to gather
III. RESEARCH METHODOLOGY primary data. Additionally, secondary data regarding the
performance of commercial banks was gathered, guided by
A. Research Philosophy predefined parameters. These parameters were established
This research was guided by Positivism. Positivism is a by the researcher, drawing upon information supplied by the
philosophical perspective and approach to knowledge that respondents.The selection of a questionnaire as the data
emphasizes empirical observation, scientific method, and collection instrument for this study was deliberate, driven by
the objective analysis of data(Mulwa 2013). Positivism its practicality and efficiency in gathering information from
holds that knowledge should be derived from empirical a large number of individuals within a relatively short
observation and sensory experience. It emphasizes the timeframe. Moreover, questionnaires offer the advantage of
importance of gathering data through direct observation or facilitating scientific and objective analysis compared to
measurement rather than relying on speculation or other research methods (Kothari, 2004).
intuition(Saunders et al., 2007).
F. Pilot Study
B. Research Design A pilot test was conducted to identify any weaknesses
The study used descriptive design. Descriptive in the instrumentation and to gather proxy data for selecting
research design serves as a fundamental approach in the a probability sample. The pre-testing procedure for the
realm of research methodology, offering crucial insights and questionnaire mirrored that of the actual study and data
advantages in various fields. Its significance lies in its collection process. Cooper and Schindler (2011) recommend
ability to systematically describe and summarize that the pre-test sample size should be relatively small,
characteristics, phenomena, or trends within a population or ranging from 1% to 10% of the total sample size. In
sample (Mohajan, 2018). Sekaran and Bougie (2010) adherence to this guideline, 21 respondents, constituting
indicates that descriptive research allows researchers to gain 10% of the sample size, participated in the pilot study.
a comprehensive understanding of a particular phenomenon Notably, these participants were not included in the main
or subject. By providing detailed descriptions and survey.

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ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24APR1616

G. Data Analysis and Presentation

Quantitative data collection and analysis were IV. PRESENTATION, ANALYSIS AND
conducted in this study utilizing the Statistical Package for INTERPRETATION OF DATA
Social Sciences (SPSS) version 24. Descriptive statistics,
including measures such as mean, standard deviation, A. Descriptive Statistics Analysis
median, and proportions, were calculated to provide an
overview of the data. Additionally, regression analysis and  Technology Infrastructure
correlation analysis were employed for inferential data The fourth specific objective of the study was to
analysis to ascertain the direction and strength of the examine the role of Technology Infrastructure on business
relationship between the independent and dependent performance of Commercial Banks in Kenya. The
variables.To examine the influence of information respondents were requested to indicate their level of
technology capability on the business performance of agreement on various statements relating to Technology
Commercial Banks in Kenya, hierarchical regression Infrastructure and business performance of Commercial
analysis with moderation was utilized. This approach allows Banks in Kenya. The results were as presented in Table 1.
the researcher to determine the sequence in which variables
are entered into the regression equation (Yeomans, 2017).

Table 1: Technology Infrastructure

Mean Std. Deviation
Information Technology facilities support the connection of various digital platforms (such 4.168 0.905
as, on-line transactions)
System software or functional components supporting the integration and extension of digital 3.989 0.885
platforms
Our bank easily retrieve relevant information from our partner databases 3.970 0.605
The components of our bank’s IT infrastructure are evolving with our business partners 3.955 0.981
Our IT standards are defined and enforced across functional units, and with joint 3.911 0.873
coordination among our strategic business partners/alliances
IT systems is an enablers and drivers for the bank’s business strategy 3.897 0.786
Our bank is informed of key IT emerging technologies related applicable in banking sector 3.889 0.896
Our bank’s ICT capability is characterized by investment towards improvement of the ICT 3.875 0.897
hardware
Data management services are reasonably good 3.852 0.934
The communication network is largely fulfilled in terms of connectivity, reliability, and 3.786 0.763
availability
The quality of IT service applications such as ERP is able to meet needs 3.765 0.852
IT management services is able to coordinate the physical infrastructure effectively and 3.721 0.743
efficiently
IT management services can manage relationships with business units effectively and 3.652 0.733
efficiently
Aggregate 3.790 0.867

From the results, the respondents agreed that SD=0.786). Further, the respondents agreed that their bank
information technology facilities support the connection of is informed of key IT emerging technologies related
various digital platforms (such as, on-line transactions) applicable in banking sector(M=3.889, SD=0.896). The
(M=4.168, SD=0.905). In addition, the respondents agreed respondents also agreed that bank’s ICT capability is
that system software or functional components supporting characterized by investment towards improvement of the
the integration and extension of digital platforms (M=3.959, ICT hardware(M=3.875, SD=0.897).
SD=0.885). Further, the respondents agreed that their bank
easily retrieve relevant information from their partner From the results, the respondents agreed that data
databases (M=3.970, SD=0.605). The respondents also management services are reasonably good (M=3.852,
agreed that the components of their bank’s IT infrastructure SD=0.934). In addition, the respondents agreed that the
are evolving with their business partners (M=3.955, communication network is largely fulfilled in terms of
SD=0.981). connectivity, reliability, and availability (M=3.786,
SD=0.763). Further, the respondents agreed that the quality
The respondents agreed that IT standards are defined of IT service applications such as ERP is able to meet needs
and enforced across functional units, and with joint (M=3.765, SD=0.852). The respondents also agreed that IT
coordination among their strategic business management services is able to coordinate the physical
partners/alliances(M=3.911, SD=0.873).In addition, the infrastructure effectively and efficiently (M=3.721,
respondents agreed that IT systems is an enablers and SD=0.743). The respondents agreed that IT management
drivers for the bank’s business strategy (M=3.897,

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services can manage relationships with business units enhancing both information generation and distribution
effectively and efficiently(M=3.652, SD=0.733). within organizations. This capability, in turn, augments the
firm’s capacity to compete effectively in turbulent
The research findings corroborate the assertions of environments, thereby fostering competitive advantage.
Sambamurthy et al. (2003) regarding the potential of Furthermore, the research by Huang et al. (2012) sheds light
infrastructure integration to generate numerous digital on the diverse functions of IT capability, including its
alternatives, thereby enhancing organizational learning and capacity to acquire, disseminate, collect, and recycle IT
facilitating the effective utilization of available knowledge. resources to support and advance business strategies and
A robust IT infrastructure enables organizations to promptly operational procedures.The success of firms is contingent
implement new IT initiatives, thereby supporting the diverse upon their adept management of various tasks facilitated by
operational needs of the firm through the sharing of a well-coordinated system supported by the flexibility of IT
information technology resources and fostering innovation infrastructure (Byrd & Turner, 2001). Such infrastructure
activities (Bharadwaj, 2000).Moreover, the effectiveness of not only streamlines production processes but also
a company in leveraging IT resources is intricately linked to contributes to cost reduction, ultimately enhancing overall
the interaction between the IT function and the various firm performance (Jacks et al., 2011).
business units (Panda &Rath, 2018). This relationship
infrastructure entails a shared risk and responsibility for IT  Business Performance of Commercial Banks in Kenya
application management between IT and business unit The respondents were requested to indicate their level
management (Zahra et al., 2019). of agreement on various statements relating to business
performance of Commercial Banks in Kenya. The results
The study conducted by Lyver and Lu (2018) were as presented in Table 2.
underscores the role of flexible IT infrastructure in

Table 2: Business performance of Commercial Banks in Kenya

Mean Std. Deviation
Service delivery in commercial banks has improved over time 4.084 0.997
Adoption of information technology capability has enhanced competitive advantage of 3.917 0.831
commercial banks
Am satisfied with the level of competitive advantage in our organization 3.898 0.563
There are few customer complaints on the quality of services offered by our organization 3.851 0.851
The net profit has increased with technology implementation 3.832 0.923
Generally, quality of service delivery has improved hence contributing positively to bank annual 3.795 0.865
profitability
Am satisfied with the level of performance of in our organization 3.767 0.785
Adoption of IT capability has improved the market share of commercial banks 3.721 0.821
Net profit of commercial banks has been increasing as a result of adopting information 3.698 0.828
technology capabilities
Aggregate 3.766 0.858

From the results, the respondents agreed that service market share of commercial banks (M=3.721, SD=0.821).
delivery in commercial banks has improved over time The respondents also agreed that net profit of commercial
(M=4.084, SD=0.997). In addition, the respondents agreed banks has been increasing as a result of adopting
that adoption of information technology capability has information technology capabilities (M=3.698, SD=0.828).
enhanced competitive advantage of commercial banks
(M=3.917, SD=0.831). Further, the respondents agreed that The findings of this study align with the observations
they are satisfied with the level of competitive advantage in of Basheer et al. (2016) and Galliers et al. (2020), who
their organization(M=3.898, SD=0.563). The respondents emphasized the widespread adoption of IT capabilities by
also agreed that there are few customer complaints on the companies for various functions such as information
quality of services offered by their organization(M=3.851, collection, processing, storage, and retrieval. These
SD=0.851). capabilities have significantly enhanced companies' capacity
to capitalize on opportunities and mitigate threats in the
The respondents agreed that the net profit has business environment. Additionally, IT plays a crucial role
increased with technology implementation (M=3.832, in identifying the strengths and weaknesses of business
SD=0.923). In addition, the respondents agreed that strategies (Chu et al., 2019).By integrating IT into their
generally, quality of service delivery has improved hence operations, businesses gain insights into external
contributing positively to bank annual profitability environmental dynamics and develop strategies for
(M=3.795, SD=0.865). Further, the respondents agreed that processing incoming data to predict external factors (Lu &
they are satisfied with the level of performance of their Ramamurthy, 2011). This integration not only enhances the
organization (M=3.767, SD=0.785). The respondents also understanding of external environmental factors but also
agreed that adoption of IT capability has improved the

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 Volume 9, Issue 4, April – 2024 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24APR1616

informs decision-making processes aimed at adapting to encompasses the hardware and software necessary for
changing business landscapes. establishing networks that facilitate firm innovation.
Through the proper implementation of IT infrastructure,
Hadjet al. (2020) highlighted the fundamental role of firms gain the ability to deploy the appropriate applications
IT capabilities in achieving competitive advantage, at the opportune moment, thereby expanding opportunities
suggesting that they may offer insights into the seemingly for technological innovation (Sambamurthy, Bharadwaj, &
contradictory impact of IT capabilities on competitive Grover, 2003).
advantage. Information Technology Capability (ITC)

B. Correlation Analysis

Table 3: Correlation Coefficients

Organization Performance Technology Infrastructure
Pearson Correlation 1
Organization Performance Sig. (2-tailed)
N 131
Pearson Correlation .859** 1
Technology Infrastructure Sig. (2-tailed) .000
N 131 131

The findings demonstrated a highly significant statistical significance. These results align with those of
relationship between Technology Infrastructure and the Minjeong and Sungyong (2021), who similarly identified a
business performance of Commercial Banks in Kenya (r = robust correlation between technology infrastructure and
0.859, p value = 0.000). This significance was evident as the organizational performance.
p-value of 0.000 was below the threshold of 0.05, indicating

Table 4: Regression Coefficients

Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
1 (Constant) 0.341 0.089 3.831 0.000
Technology Infrastructure 0.398 0.102 0.399 3.716 0.002
a Dependent Variable: Organization Performance

The regression model was as follows: B. Recommendations

Y = 0.341+ 0.398X1 +ε The study found that technology infrastructure has a
positive and significant effect on business performance of
In addition, the results revealed that Technology Commercial Banks in Kenya.This study therefore
Infrastructure has significant effect on business performance recommends that the management of commercial banks in
of Commercial Banks in Kenyaβ1=0.398, p value= 0.002). Kenya should ensure they had adequate and up to date
The relationship was considered significant since the p value hardware/Software to enable their employees improve their
0.002 was less than the significant level of 0.05. The productivity.
findings are in line with the results of Minjeong and
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