Stephen MuatheGodfrey KinyuaMuithya, Victor Mwendwa2022-04-272022-04-272021http://ir-library.ku.ac.ke/handle/123456789/23675A Thesis Submitted to the School of Business in Partial Fulfillment of the Requirements for the Award of the Degree of Doctor of Philosophy in Business Administration (Strategic Management) of Kenyatta University, November, 2021The financial sector in Kenya is essential for the economic growth of the country. Moreover, Microfinance Institutions,which form part of the financial sector, are critical stakeholders in achieving the Vision 2030 economic goal.They provide financial services to the low cadre people in Kenya. The government has set up various reforms to ensure Micro Finance Institutions' stable performance. Despite these reforms, Micro Finance Institutions have recorded high losses. The study's main goal was to analyse the effect of Strategic Innovation Orientation on the performance of Microfinance Institutions in Nairobi City County. Precisely, the researcher sought to establish the how product innovation orientation, financial innovation orientation, organizational innovation orientation, and market innovation orientation affected the performance of Microfinance Institutions in Nairobi City County. Moreover, the researcher assessed the mediating effect of customer satisfaction and how the regulatory framework moderated the relationship between strategic innovation orientation and the performance of Microfinance Institutions in Nairobi City County. Balanced Scorecard, resource-based view, dynamic capability view, Unified Theory of Acceptance and Use of Technology, Theory of Innovation, and Institutional theories anchored the variables of the study. The research philosophy was positivism. Descriptive and explanatory research designs were carried out. The target population comprised 13 Microfinance Institutions with 1740 employees, and a proportionate stratified and simple random sampling technique was used to sample 352 respondents. Self-administered semi-structured questionnaires were used for gathering both quantitative and qualitative primary data. Moreover, secondary sources of data included reviews of credible published documents. Data was analyzed using descriptive and inferential statistics using SPSS version 23. The results indicated that the effect of product innovation orientation, financial innovation orientation, and market innovation orientation on performance was significant. However, the study found that organizational innovation orientation had an insignificant effect on the performance of Microfinance Institutions. The research findings also pointed out that customer satisfaction partially mediated the nexus between strategic innovation orientation and the performance of Microfinance Institutions. Finally, the findings indicated that the regulatory framework moderated the relationship between strategic innovation orientation and the non-financial performance of Microfinance Institutions however, the moderating effect of regulatory framework on the relationship between strategic innovation orientation and financial performance of Microfinance Institutions was insignificant. The study concluded that strategic innovation orientation is an essential resource that Micro Finance Institutions and other firms need to leverage for improved customer satisfaction, leading to improved financial and non-financial performance. Firms operate optimally under the control of the regulatory framework. The study recommends that firms’ intelligence cohorts, both at strategic and operational levels, need to focus on all the strategic innovation orientation constructs to enable broad decision-making that leads to improved and sustained performance, especially in a complex and ambiguous environment. Further, focus on customers is prudent as they are the centre of gravity for performance evaluation. Continued update on the regulatory framework ensures that firms operate within the law.enStrategic Innovation OrientationPerformanceMicrofinance InstitutionsNairobi City CountyKenyaThesis