Abstract
Innovation is considered a key driver for long-term success of firms in today’s competitive markets. This study explored the effect of innovation adoption on performance of banks in Ghana. Data for the study were obtained from 450 respondents comprising bank employees and customers in the Kumasi metropolitan area in Ghana. An exploratory factor analysis, confirmatory factor analysis, and structural equation modeling were used to analyze the data via SmartPLS 3 and SPSS V.22. Findings from this study revealed that the innovation dimensions that contribute to bank innovation are organizational, product, process, and marketing innovations. The study further revealed a direct and positive relationship between innovation dimensions (product, marketing, and organizational innovations) and bank performance. In addition, findings from this study showed a positive relationship between innovation capability and the four dimensions of innovation (organizational, product, process, and market innovations). Also, the findings revealed a significant and positive relationship between the dimensions of innovation (market, process, and product innovations) and firm performance. The practical implication is that, choosing the appropriate innovation types can enhance bank performance as well as satisfy customer needs. This study extends the literature on innovation adoption and organizational performance in the financial services from an emerging market context.
Highlights
The concept of innovation is gaining ground and plays a significant role in an increasingly competitive and dynamic banking sector
Innovation capability has a positive influence on the dimensions of innovation: organizational innovation (0.813), product innovation (0.716), and market innovation (0.500) in that order
Process innovation was seen to have a negative relationship with organizational performance (–0.323)
Summary
The concept of innovation is gaining ground and plays a significant role in an increasingly competitive and dynamic banking sector. To be successful and to obtain stability in performance, banks should seek new opportunities and be highly innovative (Tajeddini et al, 2006). Innovation is essential for achieving a competitive advantage in startups and established companies (Lichtenthaler, 2020). Innovation is considered as a key driver for long-term success of firms in today’s competitive markets (Baker & Sinkula, 2012; Darroch & McNaugton, 2002). The right kind of innovation and investments in new technologies and strategies would help banks improve their productivity and general performance and growth (Beck et al, 2012; Stiglitz, 2010)
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