Exploring the Mediating Role of New Product Performance in the Link between Service Innovation and Organizational (Financial and Non-Financial) Outcomes in Ghanaian Banks

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This study examines the mediating role of new product performance in the relationship between service innovation and both financial and non-financial performance in selected banks in Ghana using the dynamic capability theory as the theoretical lens. The study employed a descriptive research design to frame the study’s methodology. The target population consisted of 159 commercial and community banks in Ghana. Utilizing a quantitative research approach, a structured questionnaire was used to gather data from 113 sampled respondents through purposive sampling, Structural Equation Modeling (SEM) was employed to analyze the data and assess the proposed relationships. The results reveal that service innovation has a direct and positive impact on the financial performance of banks, with a b coefficient of 0.316, affirming its importance in enhancing profitability and market share. However, the relationship between service innovation and non-financial performance was negative. Despite this, new product performance emerged as a significant mediator, strengthening the positive impact of service innovation on financial performance, with a b coefficient of 0.245 and a t-statistic of 2.409. The mediation effect of new product performance on the relationship between service innovation and non-financial performance was also validated, indicating that while service innovation alone may negatively affect non-financial outcomes, introducing successful new products can mitigate this impact. These findings contribute to the understanding of how service innovation influences different aspects of organizational performance in the banking sector. The study offers practical insights for bank managers, emphasizing the need to focus on new product development to maximize service innovation's benefits.