The effect of strategic innovation on performance of mobile telecommunication firms in Kenya

Abstract

Strategic innovation is considered a critical requirement for the growth and profitability of organizations. It has a considerable impact on corporate performance by producing an improved market position that conveys competitive advantage and superior performance. The need for strategic innovation is more to private sector organizations operating in increasingly competitive market and in which case innovation is often a condition for survival. Organisations that have adopted strategic innovation strategies achieve their success by moving beyond industry norms or „sustaining‟ innovations to achieve certain business model innovation, thereby disrupting established competitors and generating value for themselves, their customers and their shareholders. Firms in the mobile telecommunication industry in Kenya have been operating in increasingly competitive, highly regulated and dynamic market and therefore have to formulate strategies to ensure their survival. The telecommunication industry environment has of late been affected adversely by the changing operating environment that has seen three out of the four firms in the industry make huge losses. Interestingly, while Safaricom is making the highest profits in East and Central Africa, Airtel, Orange and Yu have been making huge losses that have led to the management of both Yu and Orange Telkom consider leaving the Kenyan market. This study sought to find out the effect of strategic innovation on the performance of mobile telecommunication firms in Kenya. The study used descriptive research design in data collection and analysis. SPSS version 21 was used to analyze the data. The study found out that strategic innovation has positive effect on organizational performance. Adoption of superior strategies relating to products, services, marketing processes and human resources led superior organization performance. The study recommends that mobile telecommunication firms should invest more in research and development so as to be able to innovate more and adopt more innovative strategies so as to improve their performance.