Diagnosing the Organizational Culture of Rural Community Banks in Ghana and Its Effects on Their Financial Performance

Jenkins A. Asaah, Beatrice L. Asaah, Austin W. Luguterah


Rural Community Banks (RCBs) are important rural development partners in Ghana. They are the lifeline of credit to small businesses and individuals who do not have the necessary collateral and capacity to borrow from the traditional commercial banks. However, the RCBs are confronted with increasing customers’ demands, keen competition, and poor financial performance which has led to 26% of the country’s RCBs earmarked for liquidation. This is a serious threat to the sustainability of the country’s RCBs prompting serious concern among stakeholders of rural banking. Previous studies have looked at the issue from the perspective of regulations, corporate governance, and ownership structure. This paper seeks to look at the problem from the organizational culture and product innovation point of views.

Based on the Competing Values Framework and empirical studies, hypotheses were stated and tested using data collected from 92 RCBs.The data were analyzed using the Smart PLS of SEM.

The findings are that RCBs in Ghana exhibit four different cultural types but the dominant culture is control-oriented. Product innovation has a strong impact on financial performance. Cultural orientations such as compete-oriented and innovate-oriented can support RCBs to introduce innovative financial products (product innovation) while control-oriented cannot.

Based on the findings, the RCBs are encouraged to create a Research and Product Development (RPD) unit. This unit should develop a cultural orientation that values and encourages freedom of thought, and experimentation of innovative ideas. The bank as an institution should value customer and competitor interactions which serve as a feedback platform for the development of innovative financial products and services.

The theoretical contribution of this paper is that organizational cultural orientations that value and focus on customer satisfaction, and interaction with competitors nurture product innovation.

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DOI: https://doi.org/10.5296/jsss.v7i2.15805


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Copyright (c) 2020 Jenkins A. Asaah, Beatrice L. Asaah, Austin W. Luguterah

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Journal of Social Science Studies ISSN 2329-9150

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