Operational Innovation Practices Effect on Performance of Manufacturing Firms: Empirical Evidence from Firms in Kenya

Abstract

The concept of firm performance was premised on operational innovations. The interplay of this factor's dimensions contributes towards the firm's performance outcome. The factors, which include innovations in the marketplace, products, processes, and technologies, make up operational innovation. Thus, achieving ultimate performance requires that the manufacturing firm remains at the market's competitive edge by applying innovative technology manifested through markets, processes, and products. This study focused on the performance of Kenyan manufacturing firms and operational innovation. Positivism criteria are used because it revolves around scientific laws and principles that increase the reliability of the investigation's findings for generalization. A descriptive research design was adopted, which entailed collecting data from many firms, and therefore was the best approach to increase the survey reliability. The number of firms involved in the study was 182, all with active Kenya Association of Manufacturers (KAM) affiliation. The firms were put into 14 subcategories of manufacturing based on the product they manufacture. Statistical Package for the Social Sciences (SPSS) and smart PLS4 tools were used for data analysis. Also, using regression analysis, the results revealed that operational innovation significantly influences manufacturing firms’ performance in Kenya. While looking at the effects of the dimensions of operational innovation on firm performance, the results indicated that process innovation had the most significant impact while technological innovation had the least. The outcome revealed which operational innovation is significant and should be focused by the operation managers during product design to gain competitive edge in the industry.

Keywords:Firm Performance, Market Innovation, Operational Innovation, Process Innovation, Product Innovation.

DOI: 10.7176/IEL/14-1-02

Publication date: January 31^st 2024