Innovation Capabilities and Performance of Fintech Firms in Nairobi

Abstract

The objective of this study was to determine the influence of innovation capabilities on the performance of fintech firms in nairobi. The specific objectives were to investigate the influence of product innovation, market innovation, organizational innovation and process innovation as independent variables on firm performance, the dependent variable. This study was based on dynamic capability, diffusion of innovation theory and resource based View perspectives to explain how innovation capability influnces the performance of fintech firms. A descriptive research technique was used in this study in identifying the existing link between the independent variables (product innovation, market innovation, organizational innovation, and process innovation) and the dependent variable, firm performance. The study was a census approach involving 91 registered fintech companies in Kenya in which a 81% response rate was achieved. Primary data was collected using structured questionnaire in which the respondents were business development managers or marketing managers or strategy managers in these fintech companies. Data was analyzed using SPSS 26. A simple linear regression analysis was done, which established that product innovation, market innovation, organizational innovation and process innovation had a statistically significant and positive effect on frm performance (R square = 0.884, p < 0.100). Adjusted R square value showed that 87.7% of the variation in firm performance was explained by product innovation, market innovation, organizational innovation and process innovation. The results of regression ANOVA test, showed that there was a significant difference between the variable [F (4, 69) = 131.519, P < 0.01 ]. The analysis of regression coefficients revealed that firm performance is negatively influenced by indicators of product innovation (B = -0.033), similarly process innovation (B = -0.011). On the other hand firm performance is positively influenced by market innovation (B = 0.002) as well as organizational innovation ( B = 0.858), however, onlythe effect of organizational innovation is stattistically significant ( p < 0.01). The study established that four types of innovation capabilities: product innovation, market innovation, organizational innovation, and process innovation affect diverse firm performance aspects