Organizational Culture, Transformational Leadership and Firm Performance of Micro Finance Institutions in Kenya

Abstract

Organizations are constantly facing an increasingly dynamic environments characterized by considerable and often unpredictable economic, technological and political change. The main objective of this study is to assess the effect of leadership on the relationship between organizational culture and performance. The specific objective are; to determine the effect of involvement, consistency, adaptability and mission on organizational performance of micro finance institutions in Kenya. The study adopted descriptive research design. The target population consist of 43 micro finance institutions in Nairobi town with 236 cadre of employees in total. The study will use random sampling technique. The sample size consisted of 108 employees. The type of data used was primary collected using self-administered questionnaires. Data was analyzed using both descriptive statistics and inferential statistics. The research findings indicated that organizational culture significantly relates to organizational performance. The study established that transformational leadership significantly affects the relationship between organizational culture and firm performance of the micro finance institutions in Nairobi. The study informs management on how culture influences organizational performance by providing empirically tested evidence and the role leadership play. The study recommends that organizations should instill a culture in its employees as this enhances the performance. The findings provided some guidance for future direction to all of stakeholders for their business sustainability in the competitive business environment. It is also recommended that transformational leadership should be practiced in the firms as it was found to affect the relationship between organizational culture and performance.