Influence of Strategic Innovation on Performance of Insurance Companies in Kenya

Abstract

Increased global and regional rivalries have led firms to create and innovate means of sustained competitive edge against similar entities in the sector or industry. A fast changing environment with constant abrupt changes, make firms to continually innovate in order to adapt and survive. . Owing to performance disparities among firms, it is important to investigate whether the level of strategic innovation is a major source of variation in their performance. The overall aim of this study was therefore to determine the influence of strategic innovation on performance of insurance firms in Kenya and the following objectives were formulated in purpose of achieving this overall objective. To establish the effect of product innovation on firm performance; marketing innovation on firm performance; process innovation on firm performance and innovation on firm performance. This study was anchored on Schumpeterian innovative theory, theory of innovative enterprise, resource based theory and dynamic capability theory. The research design employed was descriptive research design. The population comprised of all the 41 insurance firms in Kenya leading to use census survey design as well. Both primary and secondary data was collected. Reliability was assessed using Cronbach’s alpha coefficient and validity (face, content and construct) of data collection tools was evaluated. Numerous pre-estimation and post-estimation tests (diagnostic tests) such as normality test, linearity test, homoscedasticity test and multicollinearity test were performed so as to determine whether the data conformed to the statistical assumptions of regression analysis. The study applied multiple regression analysis as the principal estimation tool. The findings suggest that product and process innovation were negatively and significantly related to performance while marketing and organizational innovation were positively and significantly associated with performance. The findings were presented in form of tables and figures. The study made significant contribution to management practice, policy formulation and theory development.