Effects of Innovation Strategies on Performance of Commercial Banks in Kenya

Abstract

To achieve growth and sustain performance it is critical for any organization to foster and encourage creativity and innovative practices internally. Innovation strategy gives a clear direction and concentrates the effort of the whole organization on a common innovation end. An innovation strategy, then, becomes a source of competitive advantage for firms that strive to achieve a high level of innovation. Therefore the need for innovation is obvious and crucial for commercial banks operating in a continuous uncertain and competitive environment. This research was determining the effects of innovation strategies on performance of commercial banks. The study was done in the commercial banks operating in Kenya. The study adopted descriptive research design for it portrays an accurate profile of situations. The study carried out a census. The study used a questionnaire to collect the required data because it is efficient, cheap and easy to be administered. The collected data was well examined and checked for completeness and comprehensibility, then summarized, coded and tabulated. Descriptive statistics such as means, standard deviation and frequency distribution were used to analyze the data. The qualitative data was analyzed using content analysis and finding presented in prose form. The study revealed that the commercial banks in Kenya had employed creating of value through pricing, availability of resources and capabilities, customer satisfaction and retention and entry into new markets form of market innovation strategies. Banks also had employed environmental analysis and response to changes and aggressive anti-competitors marketing campaigns form of market innovation strategies. The study found that adoption of innovation strategies influenced the profitability of commercial banks in Kenya to a very great extent. The study concludes that innovation strategies are indispensable to bank’s future growth and sustainability. Commercial banks with serious innovation strategies, improved their profitability. The study recommended that for all the commercial banks to earn more profit, they should embrace the adoption of innovative strategies, 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 in the short run and also in the long run