Strategic Alignment, Sustainable Competitive Advantage, Strategic Leadership and Firm Performance among Commercial Banks in Kenya

This study examined the serial mediating effect of sustainable competitive advantage and strategic alignment on the relationship between strategic leadership and firm performance among commercial banks in Kenya. An explanatory cross-sectional survey design was adopted, and primary data were collected through structured questionnaires from 304 managers. Descriptive statistics, Pearson correlation, multiple linear regression and Hayes’ PROCESS Macro Model 6 with 5,000 bootstrap samples were used. All six direct null hypotheses were rejected. Strategic leadership positively affected firm performance (B = .626, β = .322, t = 6.430, p < .001, R² = .298), strategic alignment (B = .387, β = .275, t = 5.484, p < .001, R² = .293), and sustainable competitive advantage (B = .481, β = .249, t = 5.523, p < .001, R² = .431). Strategic alignment positively affected firm performance (B = .800, β = .577, t = 11.999, p < .001, R² = .460) and sustainable competitive advantage (B = .880, β = .638, t = 17.523, p < .001, R² = .690). Sustainable competitive advantage had the strongest direct effect on firm performance (B = .693, β = .690, t = 13.360, p < .001, R² = .499). In the serial mediation model, the direct effect of strategic leadership on firm performance remained significant (B = .2801, p = .0009); the total indirect effect was .3458, Boot 95% CI [.2167, .5081]. The indirect effect through sustainable competitive advantage alone was significant (.2121, Boot 95% CI [.1198, .3471]); the indirect effect through strategic alignment alone was not (.0418, Boot 95% CI [-.0048, .0999]); and the serial indirect effect through sustainable competitive advantage and strategic alignment was significant (.0918, Boot 95% CI [.0394, .1617]). The study concludes that strategic leadership improves bank performance both directly and by building durable competitive capabilities that become more valuable when aligned with organizational structures, systems, technology and processes.