Influence of innovation and competitive strategies on the performance of commercial banks in Kenya

Abstract

The objectives of this study were to determine the innovation strategies andcompetitive strategies adopted by commercial banks in Kenya and also to establish how such strategies influence the performance of commercial banks in Kenya. The research employed the cross sectional survey design method and targeted all the banks as licensed by Central Bank of Kenya. The target respondents comprised of fifty six (56) senior managers from various departments. The study applied stratified random sampling technique to select fourteen (14) banks. The study revealed that banks adopted competitive strategies including cost leadership strategies, market focus strategies, differentiation strategies and corporate growth and development strategies to enhance their performance. The study found that adoption of innovation strategies influenced the profitability of Banks in Kenya to a very great extent. The study further revealed that other innovation strategies that are adopted by banks include process innovation strategies, technology innovations and product innovation strategies. The study recommended that for all the commercial banks to earn more profit, they should increase number of customers, for their business to grow further and also for them to invest more, they should embrace the adoption of market innovative strategies. The study also recommended that banks should strive to ensure product range extension, product replacement, product improvement, product repositioning and new product introduction to enable them to be more productive, to grow faster, to invest more and also to earn more profit. Lastly the study recommended that a similar study should be carried out in other organizations and across East Africa and beyond and see whether the same results would be replicated.