Abstract:
Innovations entailed various aspects adopted by firms to enhance long and short-term
decisions making towards remaining competitive in the business environment.
Microfinance institutions have adopted innovation strategies such as; institutional
innovation, product innovation, process innovation, and market innovations that are the
drivers of their growth. MFIs in Kenya and more so in Narok Town are no exception.
This study sought to assess the effect of innovation strategies on the growth of
microfinance institutions in Narok Town, Kenya. The study specifically examined the
effect of institutional innovations, product innovations, process innovations, and market
innovation on the growth of microfinance institutions firms in Nark Town, Kenya. The
study was guided by the four theories: Induced Institutional Innovation, Technology
Acceptance Model, Diffusion of Innovation and Economic Value-Added. The study
adopted a cross-sectional research design. The study used census to pick the 180
respondents in the 11 registered MFIs. Data was collected using questionnaires from
primary and secondary. Multiple linear regression model was used to assess the effect
of institutional innovation, product innovation, process innovation and market
innovation on growth of MFIs, a Pearson Correlation was run, and further the four
independent variables were regressed on growth. The results showed that the three
independent variables; institutional innovation, product innovation and process
innovations had a significant and positive effect on growth of MFIs and market
innovation was insignificant. It was concluded that the three innovation strategies
impact MFIs growth positively. Therefore, it is recommended that to sustain MFIs
growth, there is need to invest more on institutional innovation, product innovation and
process innovation which will translate to more customers, higher sales and potentially
higher profits.
