Effects of Economic Responsibility on Organizational Performance: A Study of Tier-One Commercial Banks in Kenya

Abstract

The study examined the effect of economic responsibility on organizational performance of tier-one commercial banks in Kenya. Specifically, it analyzed the relationship between economic responsibility, customer satisfaction, and financial performance measured through return on investment (ROI). Guided by Stakeholder Theory and the Triple Bottom Line framework, the study adopted a mixed-method research design, collecting data from 335 customers and 34 managers across nine tier-one commercial banks. Customer surveys, manager interviews, and document analysis were used, and data were analyzed using descriptive statistics, correlation, and multiple regression techniques. The results reveal that economic responsibility is strongly and positively associated with customer satisfaction (r = 0.75, p < 0.01). This suggests that when banks adopt sound economic responsibility practices, customers are more likely to report higher satisfaction with services. Regression findings further confirmed that economic responsibility significantly predicted customer satisfaction (β = 0.72, R² = 0.56, p < 0.001) and ROI (β = 0.60, R² = 0.42, p < 0.001) in the individual model. In the combined model, it remained the dominant predictor of both customer satisfaction (β = 0.35, R² = 0.68, p < 0.001) and ROI (β = 0.38, R² = 0.58, p = 0.005). These findings suggest that banks that prioritize fair pricing, financial innovation, stability, and long-term profitability achieve higher customer satisfaction and improved financial outcomes. The study concludes that economic responsibility is central to sustainable performance in Kenya’s banking sector, reinforcing both Stakeholder Value perspectives. It recommends that policymakers strengthen CSR reporting frameworks, banks embed economic responsibility in their strategies, and future research refine CSR models to reflect its primacy.