Effect of Digitalization on Firm Revenue Growth in Kenya

Abstract

Due to the availability of rapid and affordable communication between vendors, buyers, investors, and advertisements everywhere in the world, digital operations have completely changed the commercial sector. However, because many businesses are unaware of the potential of their digital power, there is a digital gap between consumers and retailers. This disconnect between customer expectations and retail offerings puts physical retailers' ability to make money from online sales at considerable risk, as well as their ability to respond to and predict customers' shopping habits. The study sought to determine how digitization has affected Kenyan corporate revenue growth. The specific aims were evaluating how website usage affects revenue growth of a firm in Kenya, the impact of internet usage on firm revenue growth in Kenya, and the Technology Acceptance Model guided the impact of mobile money usage on firm revenue growth in Kenya. The paper. The research used secondary panel data for 168 firms extracted from World Bank Enterprise Survey reports for two periods (2013 and 2018). The data was analyzed using panel regression procedures. The results showed that website usage had a positive and significant impact on Kenyan business revenue growth. The use of mobile money and the internet was also found to have a positive but negligible impact on Kenyan business income growth. The results further demonstrated that firm age and size had a positive impact on firm revenue growth in Kenya, more so the impact was also significant. Further findings showed that area, industry, and managerial experience all contributed positively but insignificantly to the rise of the firm's revenue in Kenya. According to the study, the use of websites in Kenya increased corporate revenue in a good and significant way. The study recommends that firms without websites should invest in developing company websites that will attract more business thus enhancing revenue growth. Firms with websites should invest in further improvement of the websites to incorporate changes within the firm or from external market. Firms should invest in digital oriented personnel to help in capitalizing on the gains of digitalization. The government of Kenya should review policies on digitalization aimed at making them friendly to firms. The government through relevant ministries should develop programs aimed at training firms on the importance of digitalization.