HOW DOES STRATEGIC PLANNING INFLUENCE THE PERFORMANCE OF FINANCIAL INSTITUTIONS? AN EMPIRICAL STUDY OF ETHIOPIA
This research investigates the impact of strategic planning on the performance of financial institutions in Ethiopia. The study also investigates the mediating role of strategic innovation and moderating role of political environment. The study used a positivistic paradigm employing a cross-sectional research design. A total of 175 questionnaires were delivered to the respondents, with 142 of them returned to be used for the study. The study mainly relied on primary data obtained by administering the questionnaires. It employs hierarchical linear models (HLM) to examine the study variables by using SPSS MIXED procedure and MLMED for mediation hypothesis. These data consist of 142 managers from 35 different financial institutions. So, 142 managers (level 1) are nested in 35 financial institutions (level 2). This study expands the knowledge edge in the field of strategic management through the discovery that strategic planning affects the performance of financial institutions both directly and indirectly through the mediation of strategic innovation and moderation of political environment, which has positive and significant effect. These results support the theoretical view that financial institutions achieve superior performance through the configuration of strategic planning and transformation of innovation; they also support the resource based view and dynamic capability theory. The findings of this research offer guidance to managers on how to configure strategic planning and how to gain a competitive advantage through innovation to enhance the performance of financial institutions. Limitations and future research are discussed.