Innovation Orientation and Firm Performance: The Role of Organizational Commitment Among Commercial Banks in Meru County, Kenya
DOI:
https://doi.org/10.70619/vol3iss1pp29-47Keywords:
Innovation orientation, organizational commitment, firm performance, commercial banksAbstract
An organization with an innovation orientation can create and deploy innovations, providing it an advantage over rivals. The overall goal of the study was to better understand how organizational commitment influences both innovation orientation and commercial banks' performance in Meru County. Specific objectives included determining: the influence of innovation orientation on performance; organizational commitment’s effect on innovation orientation; organizational commitment’s effect on performance; and the mediating effect of organizational commitment between innovation orientation and performance. A cross-sectional descriptive design was used. The findings indicated that innovation orientation had a favorable and substantial influence on firm performance (β=0.59, p<0.05); and organizational commitment had a favorable and substantial influence on firm performance (β=0.189, p<0.05). Further, results showed that when combined, innovation orientation (β=0.589, p<0.05) and organizational commitment (β=0.187, p<0.05) had a favorable and substantial influence on firm performance. However, innovation orientation (p>0.05) had no substantial influence on organizational commitment. The second condition of mediation was violated, and hence the study concluded that organizational commitment did not substantially mediate the connection between innovation orientation and commercial banks’ output. The research recommended the need for bank management to strengthen their innovation orientation programs. The bank management should also strengthen their organizational commitment policy. Further, the bank management should develop programs and systems that can link innovation orientation and organizational commitment. These aspects when properly combined have the potential to enhance overall firm performance. The research makes a significant contribution to policy, practice, and theory in the field of business management.
References
Abata, M. A., Omokehinde, J. O., & Tijani, O. (2016). Corporate Governance and the Nigerian Banking Sector's Share Price. Journal of Policy and Development Studies, 289(5400), 1-17.https://www.arabianjbmr.com/pdfs/JPDS_VOL_10_4/2.pdf
Abbasi, A., Haghighi, M., Maskan, B. H. H., Ashkani, M., & Mohammadi, A. (2017). The Impact of Internal Marketing Activities on Customer Service Performance in the Healthcare Industry. International Journal of Customer Relationship Marketing and Management (IJCRMM), 8(3), 18-30.https://www.igi-global.com/article
Abdelnour-Nocera, J., & Clemmensen, T. (2018). Theorizing about socio-technical approaches to HCI. In IFIP Working Conference on Human Work Interaction Design (pp. 242-262). Springer, Cham.https://link.springer.com/chapter/10.1007/978-3-030-05297-3_17
Ahmed, A., Khuwaja, M. F., Brohi, A. N., & Othman, I. L. (2018). Organizational Factors and Organizational Performance: A Resource-Based View and Social Exchange Theory Viewpoint. International Journal of Academic Research in Business and Social Sciences, 8(3), 579-599.doi:10.6007/IJARBSS/v8-i3/3951
Anning-Dorson, T. (2017). How much and when to innovate: The nexus of environmental pressures, innovation, and service firm performance. European Journal of Innovation Management, 20(4), 599-619. Retrieved from https://doi.org/10.1108/EJIM-05-2016-
Chipeta, C., & Muthinja, M. M. (2018). Financial innovations and bank performance in Kenya: from branchless banking models. South African Journal of Economic and Management Sciences, 20(1), 1-15. Retrieved from https://doi.org/10.4102/sajems.v21i1.1681
Emery, F. E., Trist, E. L., Churchman, C. W., & Verhulst, M. (1960). Socio-technical systems, Management Science Models and Techniques (pg. 83-97) (Vol. 2). Oxford: UK Pergamon.
Jerop, L., & Juma, D. (2018). Influence of Strategic Innovation on Performance of Commercial Banks in Kenya: The case of Kenya Commercial Bank in Nairobi County. European Journal of Business Management, 2(1), 336-341. Retrieved from http://www.ejobm.org
Kamaku, P., Kahuthia, J., & Njihia, I. N. (2018). Effect of Strategic Innovation on Firm Performance in Commercial Banks Sector in Kenya. The Strategic Journal of Business and Change Management, 5(3), 672-686. Retrieved from http://www.strategicjournals.com
Karanja, D. K. (2016, November). Effects of Innovation Strategies on Performance of Commercial Banks in Kenya. (Unpublished Masters Thesis). University of Nairobi. Retrieved from http://erepository.uonbi.ac.ke/bitstream/handle/11295/75552
Karim, N. H. A., & Noor, N. H. N. M. (2017). Evaluating the psychometric properties of Allen and Meyer's organizational commitment scale: A cross-cultural application among Malaysian academic librarians. Malaysian Journal of Library & Information Science, 11(1), 89-101.https://mjlis.um.edu.my/article/view/7825
Khaliq, I. H., Naeem, B., & Khalid, S. (2016). A Study of Factors Affecting Organizational Commitment among Bank. Journal of Business and Financial Affairs, 6(1), 1-5. doi:10.4172/2167-0234.1000236
Kiende, C. K., Mukulu, E., & Odhiambo, R. (2019). Influence of Strategic Innovation on the Performance of Small and Medium Women-Owned Enterprises in Kenya. Journal of Entrepreneurship & Project Management, 3(1), 50-67.http://stratfordjournals.org/journals/index.php/journal-of-entrepreneurship-proj/article/view/247
Kraaijenbrink, J., Spender, J. C., & Groen, A. J. (2010). The resource-based view: a review and assessment of its critiques. Journal of Management, 36(1), 349-372.https://www.researchgate.net/publication/42243920
Leeds University Business School. (2019). Socio-Technical Systems Theory. Retrieved from University of Leeds Website: https://business.leeds.ac.uk/research-and- innovation/research-centres/stc/socio-technical-systems-theory/
Li, Z., Liu, S., Meng, F., & Sathye, M. (2019). Competition in the Indian banking sector: A panel data approach. Journal of Risk and Financial Management, 12(3), 136.https://researchprofiles.canberra.edu.
Likar, B., Kopa, J. & Fatur, P. (2016). Innovation investment and economic performance in transition economies: Evidence from Slovenia. Innovation: Management, Policy & Practice 16(1), 53–66. Retrieved from http://dx.doi.org/10.5172/impp.2014.16.1.53
Mah, W. L., Ali, N. A., & Zawawi, D. (2018). Assessing the validity of sources of innovation, innovation, and firm performance for variance-based structural equation modeling. International Journal of Accounting, 3(13), 71-87.https://www.researchgate.net
Meira, M. M., Machado, A. G. C., & Gomes, G. R. S. (2019). Dynamic capabilities for accreditation: Evidence in the healthcare sector. BAR-Brazilian Administration Review, 16(1).https://www.scielo.br/scielo.php?pid=S1807-76922019000100303&script=sci_arttext
Mishi, S., Sibanda, K., & Tsegaye, A. (2016). Industry concentration and risk-taking: Evidence from the South African banking sector. African Review of Economics and Finance, 8(2), 113-135.http://scholar.google.com/citations?user=v_SJ8KEAAAAJ&hl=en
Mwangi, A. W. (2018). Effect of increasing core capital on the Kenyan banking sector performance (Master’s Thesis). Strathmore University. Retrieved from http://su- plus.strathmore.edu/handle/11071/5971
Mwashighadi, K. G., & Kising'u, T. M. (2017). Role of Organisational Culture on Organisational Performance of Commercial Banks in Kenya: A Case of Commercial Banks in Voi Sub County. The Strategic Journal of Business and Change Management, 4(14), 241-262. Retrieved from http://www.strategicjournals.com
Nassar, M. A. (2018). Human resource management practices and organizational commitment in four-and five-star hotels in Egypt. Journal of Human Resources in Hospitality & Tourism, 17(1), 1-21.https://doi/abs/10.1080/15332845.2017.1328258
Nduta, R. W., & Wanjira, J. (2019). E-Banking Strategy and Performance of Commercial Banks in Kenya. International Journal of Current Aspects, 3(V), 147-165. http://journals.ijcab.org/journals/index.php/ijcab/article/view/68
Nurhadi, M., & Ilfitriah, A. M. (2020). The Understanding Customer Satisfaction on Internet Banking: A Case Study in Indonesia. Jurnal Organisasi dan Manajemen, 16(1), 36-46. https://sktutor.fkip.ut.ac.id/index.php/jom/article/view/821
Ogunsiji, A. S., & Ladanu, W. K. (2017). A theoretical study of performance measures in the strategic and corporate entrepreneurship of firms. International Journal of Life Sciences (IJLS), 1(1), 49-57. https://pdfs.semanticscholar.org/7236/418d1354b74bc205a620d0dfa0b11b95e981.pdf
Oladokun, M. G., & Adewuyi, T. O. (2016). A critical review of modeling techniques for thesocio–technical systems of household energy and carbon emissions. International Journal on Sustainable Tropical Design Research and Practice, 9(1), 14-27.https://frsb.upm.edu.my/dokumen/FKRSE1_p2.pdf
Omondi, J. S., Rotich, G., Katuse, P., & Senaji, T. (2017). The Relationship between Organization Structure and Performance in Commercial Banks in Kenya: The Mediating Role of Innovation. International Journal of Academic Research in Business and Social Sciences, 7(4), 633-662. doi:10.6007/IJARBSS/v7-i4/2838
Semedo, A. S. D., Coelho, A. F. M., & Ribeiro, N. M. P. (2016). Effects of authentic leadership, affective commitment, and job resourcefulness on employees’ creativity and individual performance. Leadership & Organization Development Journal. https:doi/10.1108/LODJ-02-2015-0029/full/html
Serna, M. C., Martínez, J. E., & Domenech, V. E. (2018). The influence of organizational commitment and learning orientation on innovation in SMEs. Contaduría y Administración Accounting & Management, 63(3), 1-19. Retrieved from http://dx.doi.org/10.22201/fca.24488410e.2018.1411
Shah, T., Wilson, L., Booth, N., Butters, O., McDonald, J., Common, K., ... & Murtagh, M. (2019). Information-sharing in health and social care: Lessons from a socio-technical initiative. Public Money & Management, 39(5), 359-363.https://doi/abs/10.1080/09540962.2019.1583891
Simatele, M., Mishi, S., & Ngonyama, N. (2018). Structure and profitability in the banking sector. Banks & bank systems, (13, Iss. 1), 49-59. http://dx.doi.org/10.21511/bbs.13(1).2018.05
Srivastava, A., Singh, S. K., Tanwar, S., & Tyagi, S. (2017, September). Suitability of big data analytics in the Indian banking sector to increase revenue and profitability. In 2017 3rd international conference on Advances in Computing, communication & Automation (ICACCA)(Fall) (pp. 1-6). IEEE. https://ieeexplore.ieee.org/abstract/document/8344732/
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Ann Kamau, Clement Nkaabu, Vivian Cherono
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
