Business Innovation Strategies and Organizational Performance in the Banking Sector: A Case Study of Tier One Banks in Kenya
The study sought to determine the effect of product innovation strategies, market innovation strategies, technological innovation strategies and process innovation strategies on organizational performance of tier-one banks in Kenya. The study is anchored on the following theories; Diffusion Theory, Institutional Theory and Goal Setting Theory. This study adopts a descriptive research design with a target population of 1400 respondents at the tier-one bank headquarters. Stratified proportion sampling was involved in order to get a suitable unit of representative of analysis that was 140 respondents. This research study used a questionnaire as the main data collection tool. The inferential results on the effect of product innovation strategies on organization performance show R = 0.632 indicating a strong positive correlation and R2 = 0.399 and there was a significant effect between product innovation strategies and organization performance (t = 8.668, p<0.05). The inferential results on the effect of market innovation strategies on organization performance show R = 0.575 indicating a strong positive correlation and R2 = 0.331 and there was a significant effect between market innovation strategies and organization performance (t = 7.480, p<0.05). The inferential results on the effect of technological innovation strategies on organization performance show R = 0.557 indicating a strong positive correlation and R2 = 0.310 and there was a significant effect between technological innovation strategies and organization performance (t = 7.121, p<0.05). The inferential results on the effect of process innovation strategies on organization performance show R = 0.441 indicating a strong positive correlation and R2 = 0.194 and there was a significant effect between process innovation strategies and organization performance (t = 5.216, p<0.05). The study further established that among the business innovation strategies included in the study, product innovation strategy had the most influence on performance of tier-one banks in Kenya. The study affirmed that market innovation strategy also had a significant effect on performance. The study further confirmed that among the business innovation strategies, that process innovation had the least impact on performance of tier -one banks in Kenya. The study recommends that tier-one banks in Kenya should continuously engage in product innovation to enhance the competitive advantage it possesses against other players in the banking sector. This can be achieved by conducting market research among banking clients and to identify products that they can introduce into their product list that will not only attract new clients but as well as retain the old clients.
Keywords: Product Innovation Strategies, Market Innovation Strategies, Technological Innovation Strategies, Process Innovation Strategies, Organizational Performance, Tier-One Banks
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