The impact of strategic orientation on the financial performance of banks: Evidence from Malaysian banks during the period 2006–2023

Abstract

This study explores the relationship between the dimensions of strategic orientation—vision, mission, and objectives—and the financial performance of Malaysian commercial banks from 2006 to 2023. It fills a gap in the literature by assessing the individual impact of each component in a rapidly evolving banking sector. A quantitative approach was used, applying panel data regression and content analysis of annual reports. The random effects model was selected. The sample includes 8 banks with 144 observations. Financial performance was measured using ROE and ROA, while strategic orientation was rated on a 1–5 scale based on the analysis of official statements about vision, mission, and objectives. Results show that strategic objectives have the strongest and most consistent positive impact. Vision was only marginally related to ROA, and mission had no significant effect. The study recommends adopting SMART objectives and developing evaluation tools to enhance strategic clarity and support sustainable financial performance.