Organizational Leadership and Sustainable Competitive Advantage of Islamic Financial Institutions in Kenya

This study investigated the effect of organizational leadership on sustainable competitive advantage of Islamic financial institutions in Kenya. Guided by the Strategic Intent Model and the Path-Goal Leadership Theory and employing a positivist mixed-methods research design, data were collected from 110 managers drawn from all nine licensed Islamic financial institutions operating in Kenya. Quantitative data obtained from managers in operations, business development, portfolio management, human resources, and finance were analyzed using SPSS version 26, while qualitative insights were gathered through interviews with senior executives, including directors and chief executive officers. The findings reveal that organizational leadership manifested through consultative leadership practices, ethical and Shariah-aligned conduct, strategic vision articulation, mentorship, and employee engagement has a positive and statistically significant effect on sustainable competitive advantage, explaining 16.1% of the variance (R² = 0.161, β = 0.402, p < 0.001). Qualitative evidence further demonstrates that participatory, ethically grounded, and strategically focused leadership enhances institutional cohesion, employee commitment, and trust, while supporting effective strategy execution within a highly regulated and faith-based financial environment. The study concludes that organizational leadership constitutes a critical intangible capability through which Islamic financial institutions can differentiate themselves and sustain long-term competitive advantage. Strengthening inclusive, values-driven, and strategically aligned leadership practices is therefore essential for enhancing resilience and competitiveness in the Islamic finance sector.