Role of Stakeholder Management on Firm Performance: An Empirical Analysis of Commercial Banks in Nairobi City County, Kenya

The survival and success of any business enterprise in the globalized economies is highly linked to access of valuable resources that are predominantly in the hands of stakeholders. The highly volatile business environment characterized with ever changing behavior of stakeholders makes it critical for organization to constantly pursue practices with potential for performance improvement. It has been observed that the changes in the Kenyan banking sector have resulted in an assortment of responses that has triggered fluctuations in crucial performance indicators amongst the industry prayers. This study therefore sought to examine the role of stakeholders’ management on performance of Commercial banks in Nairobi City County. The study was anchored on Resource Based View and stakeholders’ theory. Descriptive research design was utilized for this study. The target population was commercial banks in Nairobi City County. The unit of observations was employees in the head offices of commercial banks in Nairobi while the unit of analysis was commercial banks in Nairobi. Proportionate stratified random sampling method was used to select 89 management staff of Commercial Banks in Nairobi City County to form the sample. Structured questionnaires were used for purposes of data collection. Both descriptive statistics and inferential statistics were used for data analysis. Descriptive statistics included the frequencies, sample mean and sample standard deviation. The inferential statistics utilized multiple linear regression analysis. The study found out that stakeholder management affected performance of Commercial Banks in Kenya. Management of Commercial banks should formulate policies that provide guidance on execution of activities relating to stakeholder management. The study also recommends the management team should make deliberate effort to involve all stakeholders in the entire process of strategic management.