Effects of Financial Innovations on Financial Performance of Non-governmental Organizations in the Health Sector in Nairobi County

Abstract

The dearth in adoption of innovative financial systems is believed to be a drawback for Non-governmental organizations (NGOs) in achieving of organization objectives. The debate round its perceived benefits in the production processes and subsequent outcomes is still ongoing with one side approving of its ability n boosting financial performance while the other one disapproving. The investigations attempt to fill the vacuum in the reporting of the impact of financial innovations on performance among non-public institutions in the healthcare field in Nairobi County. The concept of financial innovation was measured using the three innovations; product, process and institutional innovations while financial performance was assessed in terms of organizational return-on-investments. This study involved a population of 113 NGOs in the health sector, which were based in Nairobi County, where a sample size of 34 health NGOs was arrived at using a 30% proposition by Mugenda and Mugenda. The study also used cross sectional research design incorporating sampling of the population to acquire a target population of 34 NGOs. Secondary data was collected from the websites, annual reports, audited and published financial statements of these NGOs, with regards to ROI and the three types of innovations undertaken by the institutions. Data was ran through SPSS and was analyzed using descriptive statistics using mean and standard deviations and using inferential statistics using multiple linear regression. Coefficient of correlations were also obtained using the Karl Pearson’s correlation coefficients. The study found out that the NGOs implemented at least one type of financial innovation to their daily operations. The findings further noted that the three innovations with a significant value of 0.000 (< 0.05), had a positive and statistically significant relationship towards the financial performance of the health sector NGOs in Nairobi County. This study recommended that NGOs should put in place appropriate innovations which would bring about exemplary performance as well as efficient delivery of services and information to their stakeholders and beneficiaries. Recommendations were also made that there should be a wider exploration of other innovations adopted by the NGOs so as to evaluate them against financial performance of these institutions.