| dc.description.abstract | For most firms, successful new product innovations are engines of growth. Product
innovation is the result of bringing to life a new way to solve customer’s problem. To
remain relevant, financial institutions have gone through continuous re-modification,
re-invention and re-introduction of product propositions to meet customers changing
needs. The objective of the study was to determine the effect of product innovation on
performance of commercial banks in Kenya. The study adopted a cross-sectional
survey design approach. The population of the study comprised of (43) forty-three
commercial banks licensed by the Central Bank of Kenya as at 31st July 2014. All the
commercial banks were included in the study with the respondents being the general
managers. The study used both primary and secondary data. Primary data was
collected with the aid of a self-administered semi-structured questionnaire. Secondary
data was collected by use of desk search techniques from published reports and other
relevant documents. Descriptive statistics such as mean, standard deviation and
frequency distribution were used to analyse the data. Data presentation was done by
the use of percentages and frequency tables. The results indicated communication of
product innovation to staff was to a great extent with majority agreeing that product
innovation affected organization performance. It was found out that to command a
higher market share; a commercial bank needed innovative ideas. Majority of the
respondents strongly agreed that organisation strategy and goals impacts innovation
and to sustain performance, banks need to be innovative. From the study findings, it
can be concluded that product innovation impacts on customer satisfaction and that
the reputation in the market makes the bank stand out. A competitive bank is one that
undertakes rapid innovations and to command a higher market share, commercial
banks need innovative ideas. The study depict that aspects relating to product
innovation and competitiveness include: location and wide network, branch networks,
range of products, cost (charges), reputation, product range, customer service, bank
reputation, innovation and customer service, processes and systems, and discipline.
From the findings the study recommends that the services offered by commercial
banks should be enhanced by their level of innovations. Commercial banks’ range of
products should be of first class innovation. The banks should aim at enabling
customer’s access their bank accounts online. As concerns the level of satisfaction, it
is determined by a banks range of products, and therefore the bank should maintain a
wide range of products. Therefore, commercial banks should aim at product
innovation to enhance customer satisfaction. The organisation strategy and goals
should always be tailored to promoting innovation. People should be considered and
encouraged to innovate so that the organisation may remain competitive and be a
market leader. There is need to replicate the study using many other sectors and find
out the effect of innovation on organization performance. There is also a need to
conduct a similar study which will attempt to find out the effect of effective processes
on product innovation and the distinction between user resistance to change and
change management which arises as a result of product innovation and technology
evolution. This research study included only a relatively small number of financial
institutions, but there are many more others operating in Kenya. Future research
studies should therefore be undertaken to incorporate a larger number of firms in the
study. | en_US |
