Knowledge Application and Organizational Competence of Commercial Banks in Nairobi County, Kenya

Abstract

Commercial banks contribute significantly to financial intermediation, credit creation, savings mobilization, payment facilitation, investment, and economic development. Despite their importance, many banks struggle to convert available knowledge into organizational competence because of fragmented information systems, departmental barriers, weak knowledge-use mechanisms, and limited integration of institutional learning into decision-making. Knowledge application is increasingly recognized as an important knowledge-management practice because it enables banks to use acquired, stored, and shared knowledge to strengthen innovation, operational efficiency, customer responsiveness, regulatory compliance, risk management, and strategic adaptation. This study examined the effect of knowledge application on the organizational competence of commercial banks in Nairobi County, Kenya. The study was anchored on Competence-Based Theory and adopted descriptive and correlational research designs. The target population comprised 585 senior and middle-level managers working across 39 licensed commercial banks. A stratified random sample of 238 managers was selected. Data were collected using structured questionnaires and analysed through descriptive statistics, Pearson Product Moment Correlation, and simple linear regression. The study obtained 180 usable questionnaires, representing a response rate of 75.6%. The findings established that knowledge application had a positive and statistically significant effect on organizational competence (β = 0.714, p < 0.001). Knowledge application explained 51.0% of the variation in organizational competence (R² = 0.510). The study concluded that applying available knowledge strengthened innovation, operational efficiency, customer responsiveness, regulatory compliance, risk management, and strategic adaptability. The study recommends integrating organizational knowledge into decision support, customer relationship management, risk management, compliance, product development, service improvement, and process improvement systems. Commercial banks should establish institutional mechanisms for translating customer information, regulatory updates, employee expertise, operational experience, and lessons learned into consistent decisions and measurable organizational improvements.