Banks compete in an environment where regulation, technology, customer expectations and economic conditions can change faster than a conventional planning cycle. A study of Ethiopian private banks now offers a detailed look at whether systematically scanning that environment is associated with stronger organisational performance, and whether competitive strategy helps explain part of that relationship.
The research, published on 28 September 2026 in Discover Global Society, surveyed employees across Ethiopia’s private banking sector. Its central result was not simply that environmental scanning and performance moved together. The statistical model indicated that competitive strategy partly carried the association, suggesting that information about the business environment may matter most when organisations translate it into choices about how they compete.
From gathering information to acting on it
Strategic environmental scanning is the organised collection and interpretation of information about forces that could affect an organisation. In this study, that broad idea covered familiar strategic tools including PESTEL analysis, SWOT analysis, Porter’s Five Forces, scenario planning, benchmarking, gap analysis and a resource-based assessment of internal capabilities.
The distinction matters because scanning is not the same as strategy. A bank can monitor regulatory changes, new technologies or shifts in customer behaviour without necessarily changing its market position. The researchers therefore tested competitive strategy as a mediator between scanning and organisational performance. Competitive strategy included cost leadership, differentiation and focus approaches, while performance was assessed through financial, customer, internal-process, and learning-and-growth perspectives.
How the banking study was conducted
The target population comprised 147,367 employees in Ethiopian private banks as of June 2025. The researchers selected 383 employees using simple random sampling and distributed structured questionnaires in Addis Ababa, Hawassa and Bahir Dar in April 2026. Of those questionnaires, 375 were returned in usable form, producing a reported response rate of about 98%.
The survey used five-point agreement scales and drew its measures from previously used instruments. A 30-person pilot sample was excluded from the main analysis. The English questionnaire was translated into Amharic and independently back-translated, an important step when measurement instruments cross languages.
Rather than relying on a single regression, the analysis combined exploratory factor analysis, confirmatory factor analysis and structural equation modelling. SPSS 26 was used for descriptive analysis and AMOS 26 for the structural model. This allowed the authors to test both the measurement structure and the proposed direct and indirect relationships among environmental scanning, competitive strategy and organisational performance.
The measurement model passed several statistical checks
The internal-consistency results were generally strong. Cronbach’s alpha ranged from 0.789 for Five Forces analysis to 0.859 for SWOT analysis among the scanning dimensions. Competitive strategy recorded an alpha of 0.811 and organisational performance 0.828. The Kaiser-Meyer-Olkin measure was 0.960, while Bartlett’s test was statistically significant, supporting the use of factor analysis.
The first five extracted components together explained 68.912% of the variance. Confirmatory analysis retained factor loadings above 0.50, although the strength of individual indicators varied. Scenario-planning items, for example, loaded more modestly than several PESTEL items, while the competitive-strategy construct contained a mix of weaker and stronger indicators.
Model-fit statistics were also within the thresholds used by the authors. The chi-square-to-degrees-of-freedom ratio was 2.980, the comparative fit index was 0.915, the Tucker-Lewis index was 0.923 and RMSEA was 0.061. These diagnostics do not prove the proposed causal story, but they indicate that the specified measurement model represented the observed covariance structure reasonably well.
Competitive strategy explained part of the link
The structural results showed positive associations across the three central constructs. Environmental scanning and competitive strategy had a reported covariance of 0.580, while competitive strategy and organisational performance had a covariance of 0.436. Both relationships were statistically significant at p < 0.001.
The mediation analysis is particularly useful for interpreting the study. The authors reported a direct effect of environmental scanning on organisational performance of about 0.36. The indirect pathway, running from scanning through competitive strategy to performance, was approximately 0.33, based on component paths of about 0.94 and 0.35. The total effect was reported at approximately 0.69.
That pattern was interpreted as partial mediation. In practical terms, employees’ perceptions of stronger scanning practices were associated with better perceived organisational performance even after the competitive-strategy pathway was considered, but a substantial portion of the relationship also ran through strategy. The result supports a more nuanced reading than simply saying that collecting more information makes a bank perform better.
Which strategic practices stood out?
When the individual strategic dimensions were examined, all of the reported paths were positive and statistically significant. PESTEL analysis had a coefficient of 0.713, SWOT analysis 0.640, Five Forces analysis 0.676, benchmarking 0.761 and gap analysis 0.732. Scenario planning produced a coefficient of 0.895, while the resource-based-view analysis was 0.872.
The broader scanning construct was strongly associated with competitive strategy, with a reported coefficient of 0.894. Competitive strategy, in turn, had the largest reported coefficient with organisational performance at 0.914. These estimates come from a model based on employee perceptions, so they should be understood as associations among measured constructs rather than as evidence that adopting a particular tool will mechanically generate a specified improvement in profits or market share.
Why the result matters beyond one banking market
The study highlights a recurring management problem: organisations can become good at collecting signals while remaining poor at converting them into action. Regulatory monitoring, competitor analysis, customer research and technology scanning create value only if they inform choices about products, positioning, costs, service and resource allocation.
For banks operating in changing financial systems, the finding is especially relevant because strategic decisions are constrained by regulation while simultaneously being exposed to technological disruption and shifting customer expectations. The Ethiopian setting provides a useful emerging-market case in which those pressures are occurring together.
The evidence does not establish that every bank should maximise every scanning activity. Some constructs were measured more cleanly than others, and the study did not observe actual strategic decisions over time. A more defensible implication is that scanning and competitive positioning appear to function as connected organisational capabilities rather than isolated management exercises.
Important limits to the evidence
The authors identify several limitations. The research focused only on Ethiopian private banks, which limits generalisation to public banks, other financial institutions and other countries. The measures were self-reported, creating the possibility of social-desirability and common-method bias even though the study used anonymity and statistical checks to reduce those concerns.
Most importantly, the design was cross-sectional. Employees reported scanning, strategy and performance at one point in time. Structural equation modelling can test whether a proposed network of relationships fits the data, but it cannot by itself establish the temporal sequence required for causal inference. Better-performing banks may also have more resources to invest in formal strategic analysis, or another organisational characteristic may influence both.
Future longitudinal work could test whether changes in environmental scanning precede changes in strategy and performance. Including objective financial and operational indicators would also help determine how closely employees’ assessments correspond with realised business outcomes.
A strategy process rather than a strategy checklist
The strongest contribution of the study is therefore not a ranking of management frameworks. It is the evidence that environmental awareness and competitive action are intertwined. Across 375 private-bank employees, the relationship between scanning and performance remained positive, while competitive strategy accounted for an additional indirect pathway.
That makes strategic scanning less useful as a periodic checklist and more useful as part of a continuing decision process. The information matters, but what organisations do with it may be just as important.
Source Information
Study title: Effect of strategic environmental scanning on the private bank performance in Ethiopia with mediating role of competitive strategy
Authors: Wonsha Michael Didiso, Brehanu Borji Ayalewu and Sintayehu Assefa Yirga
Journal: Discover Global Society
Year: 2026
Published: 28 September 2026
DOI: 10.1007/s44282-026-00620-2
