An analysis of the effect of information and communication technology on service innovation and competitive advantage: a case of commercial banks in Kenya

Abstract

The research study aimed at broadening understanding about service innovation as a critical organizational capability through which information and communication technology adoption influences the competitive advantage of a firm. In the context of commercial banks, the study examined the effect of Information and communication technology adoption on competitive advantage through service innovation practices. Are search framework and the associated questions were proposed. An empirical survey was conducted and questionnaires mailed to let Managers and Marketing Managers in thirty commercial banks in Mombasa, Kenya. Partial least square technique and Statistical package for social science (SPSS) technique were used to analyze the data. The study found that, first; Information and communication technology adoption has a positive and significant effect on service innovation in process. Second; Information and communication technology adoption has a positive and significant effect on service innovation in product. Third; Service innovation in process has a positive and significant effect on external competitive advantage. Fourth; Innovation in product has a positive and significant effect on external competitive advantage. Fifth; Service innovation in process has a positive and significant effect on internal competitive advantage, and finally; Service innovation in product has a positive and significant effect on internal competitive advantage. The study also found that many commercial banks have made moderate effort to align information and communication technology strategy with business strategy to improve customer service and product offerings