Innovative Strategies and the Performance of Savings and Credit Cooperatives in Nyeri County, Kenya
Mung’ora, Muriuki Nahashon
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Reforms in banking industry have brought about many structural changes in the sector and encouraged competition. As a result, financial institutions like SACCOs have adopted competitive strategies including innovation strategies. Despite the recognized importance of financial innovation and an extensive descriptive literature, there have been surprisingly few empirical studies. This situation has denied SACCOs the much needed information regarding this important area of financial innovations sometimes leading to reverse causality in the innovation-financial performance relationship. The purpose of this study was to investigate innovative strategies and the performance of SACCOs in Nyeri County, Kenya. The study was guided by the following objectives: to establish how product innovation influences the performance of SACCOs, to assess the influence of organizational innovation on the performance of SACCOs, to determine the influence of process innovation on the performance of SACCOs, and to find out how marketing innovation affect the performance of SACCOs. The study utilized descriptive research design. It was carried out as a Census among the 6 licensed SACCOs in Nyeri County. The main instruments for primary data collection were questionnaires which consisted of structured and unstructured questions. Validity and reliability of the instruments were tested through a pilot study of 2 randomly selected SACCOs. A correlation coefficient of 0.84 was obtained which was an indication that the instrument was reliable. The data was then analyzed using descriptive statistics and inferential statistics. Multiple regression was done to determine the relationship between the dependent and independent variables. The study findings were presented in tables and charts. Based on the findings of the study, it was concluded that the four independent variables (product innovation, organizational innovation, process innovation and marketing innovation) were important predictors of performance of SACCOs since each was statistically significant. The findings showed a positive correlation between the independent variables and the dependent variable. The study recommends that SACCOs should find creative ways of adopting and implementing product innovation but within the rules and guidelines of the banking industry. Organizational innovation could be improved through the human resource department getting better ways of freedom and autonomy among the employees. The services within the financial intermediaries in the SACCO should also be improved to become more helpful in facilitating the needs of the customers.