Product Innovation as a Predictor of Organizational Performance among Micro Finance Banks in Mombasa County, Kenya

Abstract

Microfinance is a way of improving the poor's potential, which is often disregarded by commercial banks and other lending institutions, and leads to long-term entrepreneurial activity through providing financial services such as loans, deposits, and insurance (Anand & Kanwal, 2011).Microfinance is related to services that help clients in developed countries who are facing severe financial difficulties.Microfinance has combined with micro-loans over the years, often without conventional collateral, to better the lives of consumers and their families or to fund small businesses (Addisalem, 2015).Micro finance industry has shown tremendous development and has become critical part of formal financial market.Nonetheless, micro finance firms have been experiencing poor performance in terms of profitability (Central Bank of Kenya [CBK], 2018).This is a risky trend that could negatively impact on stakeholders' returns.For businesses to achieve long-term competitive advantage and financial performance, strategic innovation is needed (Nybakk & Jenssen, 2012).Innovation in strategy is seen as the ability to provide organizational guidance by explaining the path of business activity, concentrating efforts by promoting teamwork, facilitating organizational understanding, and reducing complexity and inconsistency (Mintzberg et al., 2011).It is believed that in a service sector such as the financial sector, where competition can increase rapidly and new entrants can easily join in, it requires sustained strategic thinking about what is happening (Schmenner, 2013).China has developed a strategic innovation plan to address emerging economic and social challenges (Fabre & Grumbach, 2012).With a 19.8% share of global production in 2010, China surpassed the United States as the world's largest producer, ending 110 years as the world's largest and largest producer of goods (Chandra, 2012).Since joining the World Trade Organization (WTO) in 2001, China's Golden Age (2002)(2003)(2004)(2005)(2006)(2007) was fueled primarily by investments in property, production and equipment, and exports, with average annual growth rates of 29 and 24 percent, respectively.The rise