ABSTRACT
Background
The success and competitiveness of every SACCO is determined by its responsiveness to its evolving environment. Innovativeness is regarded as one of the significant drivers to SACCO economic growth and success, with the ability to innovate being considered one of the main competitive advantages for firms.
Problem
There is need for SACCOs to grasp and master the concepts of innovativeness and innovation in their environment. Existing studies have been derived from the first world countries, whose economy, infrastructure, and resources are vastly different from the African setting. Consequently, the resulting insights they provide are in most cases inapplicable to the East African context.
Purpose
This study aimed to establish how innovativeness takes place in SACCOs and the influence of ICT use on SACCO innovativeness, innovations, and performance. The study focused on Deposit Taking SACCOs in the Nairobi County and provides an explanatory journey into how innovations take place in SACCOs.
Methodology
The study adopted mixed method sequential explanatory approach; first collecting quantitative data using document analysis and questionnaires in a pre-study phase, and thereafter using a case study as the overarching qualitative data collection approach to complete the research.
Findings
The study reveals ICT use in SACCO operations significantly increases its capability for innovativeness.
Conclusion
The study reveals innovativeness process in Deposit Taking SACCOs in Nairobi.
Value
The study implies that SACCOs need to value the impact of ICT use on the innovation capability of their firms. It underscores the importance of the use of ICTs which significantly increased the capability to be innovative and achieve higher operational and financial performance.
Table of Contents
DECLARATION 2
ACKNOWLEDGEMENT 3
DEDICATION 4
ABSTRACT 5
ACRONYMS AND ABBREVIATIONS 8
LIST OF FIGURES 9
LIST OF TABLES 10
DEFINITION OF TERMS 12
CHAPTER ONE
INTRODUCTION
1.1. BACKGROUND 13
1.2. PROBLEM STATEMENT 14
1.3. RESEARCH QUESTIONS 14
1.4. STUDY SIGNIFICANCE 14
CHAPTER TWO
LITERATURE REVIEW
2.1. THE GROWTH AND TRANSFORMATION OF SACCOS 16
2.2. CHARACTERISTICS OF INNOVATIVE SACCOS 16
2.3. TECHNOLOGY ADOPTION IN SACCOS 17
2.4. ICTS USAGE IMPACT ON INNOVATIONS AND PERFORMANCE 17
2.1. TYPES OF INNOVATIONS 19
2.2. INNOVATION MODELS 21
2.1. DRIVERS AND BARRIERS TO INNOVATIVENESS AND INNOVATION 24
2.2. SYNTHESIS OF INNOVATIVENESS 25
2.3. INNOVATION PROCESS 27
2.4. THE GUIDING FRAMEWORK 35
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. RESEARCH DESIGN 37
3.2. TARGET POPULATION 37
3.3. SAMPLING FRAME 38
3.4. QUANTITATIVE DATA COLLECTION METHODS 38
3.5. QUALITATIVE DATA COLLECTION METHODS 39
CHAPTER FOUR
DATA ANALYSIS, RESULTS, AND DISCUSSION
4.1. INTRODUCTION 41
4.2. PRELIMINARY QUANTITATIVE STUDY FINDINGS 42
4.2.1. PART I - SECONDARY DATA COLLECTION AND ANALYSIS 42
4.2.2. PART II – ICT USAGE QUESTIONNAIRE 50
4.3. THE CASE STUDY 55
4.3.1. BACKGROUND OF STUDY 55
4.3.2. DEMOGRAPHICAL INFORMATION 58
4.3.3. TYPES OF INNOVATIONS 61
4.3.4. INFLUENCE OF INNOVATIONS ON SACCO OPERATIONS 64
4.3.5. INDICATORS OF INNOVATIVENESS IN SACCOS 65
4.3.6. SOURCES OF IDEAS 66
4.3.7. TRIGGERS OF INNOVATIVENESS 67
4.3.8. BARRIERS OF INNOVATIVENESS AND INNOVATIONS 68
4.3.9. THE PROCESS OF INNOVATION 70
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
REFERENCES 85
APPENDICES 90
A1. APPENDIX 1 – RESEARCH PERMIT 90
A2. APPENDIX 2 – SASRA RESEARCH SECONDARY DATA 91
A3. APPENDIX 3 – SASRA RESEARCH SECONDARY DATA 91
A4. APPENDIX 4 - CASE STUDY INTERVIEW GUIDE 102
A5. APPENDIX 5 - AUDIO FILES AND TRANSCRIBED INTERVIEWS 106
List of Figures
FIGURE 1: LINEAR AND STAGE MODELS 29
FIGURE 2: STAGE MODEL 30
FIGURE 3: TECHNOLOGY PUSH 30
FIGURE 4: COMBINED OR COUPLED MODEL 31
FIGURE 5: SECOND GENERATION MODEL 31
FIGURE 6: THE PROCESS OF INNOVATION 33
FIGURE 7: FRAMEWORK FOR INNOVATIVENESS IN SACCOS 36
FIGURE 8: THE RESEARCH DESIGN 42
FIGURE 9: CORRELATION BETWEEN MEMBERSHIP AND TOTAL ASSETS 44
FIGURE 10: CORRELATION BETWEEN MEMBERSHIP TO TOTAL REVENUES 45
FIGURE 11: CORRELATION BETWEEN MEMBERSHIP AND TOTAL DEPOSITS 45
FIGURE 12: CORRELATION BETWEEN TOTAL REVENUE AND ASSETS TO SACCO ASSETS 46
FIGURE 13: GROWTH RATE FORMULA 47
FIGURE 14: SORTING OF SACCO RANKS 47
FIGURE 15: SACCO DEMOGRAPHICAL INFORMATION 53
FIGURE 16: THE DATA ANALYSIS STAGES 56
FIGURE 17: HOW INNOVATION HAS IMPACTED SACCO OPERATIONS 64
FIGURE 18: REFINED PROCESS OF INNOVATION 70
FIGURE 19: IDEATION TO REALISATION PROCESS 75
FIGURE 20: IDEATION TO INITIATIVE FUNDING PROCESS 75
FIGURE 21: CONSULTATIONS, JUSTIFICATION, ADVOCACY TO APPROVAL PROCESS 75
FIGURE 22: IDEA IMPLEMENTATION PROCESS 78
FIGURE 23: INFLUENCE OF INNOVATION ON THE SACCO 80
FIGURE 24: TOP 3 BENEFITS OF INNOVATIVENESS 81
List of Tables
TABLE 1: SUMMARY OF INNOVATION TYPES 21
TABLE 2: INNOVATION MODELS 21
TABLE 3: MODEL OF INNOVATION - FACTORS AND CONCEPTS 22
TABLE 4: SUMMARY OF ATTRIBUTES AND FACTORS THAT SUPPORT INNOVATION 23
TABLE 5: SYNTHESIS OF INNOVATIVENESS 26
TABLE 6: MODELS OF THE PROCESS OF INNOVATION 32
TABLE 7: INDICATORS OF SACCO PERFORMANCE 43
TABLE 8: CORRELATION BETWEEN MEMBERSHIP AND FINANCIAL PERFORMANCE - BASED ON 2013 TO 2020 FINANCIAL RECORDS 44
TABLE 9: DATA SOURCE: 2019 – 2020 SACCO FINANCIAL STATEMENTS AS SUBMITTED TO SASRA 48
TABLE 10: : SACCO CORRELATIONS BASED ON 2019 TO 2020 FINANCIAL RECORDS 49
TABLE 11: NAIROBI COUNTY SACCOS GROWTH PERCENTAGE PERFORMANCE RANKING 2019 – 2020 50
TABLE 12: SACCOS PARTICIPATION IN SURVEY 51
TABLE 13: CRONBACH ALPHA RELIABILITY STATISTICS 54
TABLE 14: INTERVIEW QUESTIONS THEMES 58
TABLE 15: RANKING OF MOST IMPORT TOOL BY SACCO STAFF 59
TABLE 16: TOOLS AND LEVEL OF IMPORTANCE 59
TABLE 17: INTENSITY OF ICT USE 61
TABLE 18: SUMMARISED CODE FREQUENCY – TYPES OF INNOVATIONS 62
TABLE 19: RELIANCE ON ICTS FOR INNOVATIONS 62
TABLE 20: TOOLS RATING VALIDITY 63
TABLE 21: RESPONSES CVR RATING 64
TABLE 22: INNOVATIVENESS TRAITS WITHIN SACCOS 65
TABLE 23: SOURCE OF IDEAS/FREQUENCY 66
TABLE 24: INNOVATION TRIGGERS AND FREQUENCY 67
TABLE 25: BARRIERS TO INNOVATION – CASE STUDY FINDINGS 68
TABLE 26: BARRIERS TO INNOVATION - SACCO SURVEY FINDINGS 69
TABLE 27: FACTORS SUPPORTIVE OF INNOVATIVENESS 69
TABLE 28: CODING SCHEME 71
TABLE 29: EXTENDED CODING SCHEME 73
TABLE 30: IDEATION TO PROJECT APPROVAL STEPS 73
TABLES 31 : IDEATION PROCESS CONTENT VALIDITY RATION 74
TABLE 32: STEPS TOWARDS ACTUALISATION OF AN INNOVATIVE IDEA 76
TABLE 33: FROM APPROVAL OF IDEA TO IMPLEMENTATION AND ACTUALISATION OF IDEA 77
TABLE 34: OPERATIONAL RELIANCE OF ICTS 79
TABLE 35: INNOVATION IMPLEMENTATION TIMELINES 79
TABLE 36: PERCEIVED BENEFITS OF INNOVATION 81
TABLE 37: SACCO STAFF RESOURCES 83
DEFINITION OF TERMS
Use of ICTs - Computer technology, encompassing software and hardware, as well as telecommunications tools such as voice networks, data and image.
ICT Enabled Innovation - New modes of creating and using new processes, products, services, and market innovations that has been made possible using ICT.
Intensity of ICT use - The ICT infrastructure that provides the SACCO environment to support innovativeness and to launch innovative ICT applications in SACCOs.
Frequency of ICT use - The number of times ICTs are used in SACCOs during the process of innovations. This covers the frequency of using all ICT tools, including communication tools, in the process of innovativeness and to implementation of innovations.
Proficiency of ICT use - This is the ability of SACCO team members to use appropriate ICT tools efficiently and effectively.
Innovativeness - The imagination and skill to create novel ways of doing things.
Innovation - Creative process through which new ideas, practices and items are developed.
Performance - Outcome of the combination of the firm strategy and capabilities to achieve their specific set goals, for example financial growth.
CHAPTER ONE
INTRODUCTION
1.1. Background
The SACCO sector has been crucial in providing of financial services to Kenyans, continuing to have a key role contributing to the country’s savings, hence boosting social development and the economy in general. In its Vision 2020, the Kenya Government underscored the importance of the SACCO movement as a major contributor to financial success, reaching 13 per cent of the population. The government also recognizes ICT as a key foundation of the country’s economic development (The National Treasury, 2013). The government noted that for companies to grow and continue to be successful, they need to be innovative. The Kenya Vision 2030 has singled out ICT as a key enabler that can accelerate innovations, development, and competitiveness in all sectors to create economic wealth.
SACCOs account for just 10% of assets of deposit-taking intermediaries — they provide financial services to over four million Kenyans and frequently offer services that cannot be found elsewhere (AFI, 2017). However, though the SACCO movement in Kenya has been reported as the best in Africa, there has been general growing apathy towards their products vis-à-vis competitive products that are being offered by well-established commercial banks. Banks and MFIs on the other hand have been encroaching on the SACCOs traditional market to the point of taking over some of the age-old cooperative ideals of banking the unbanked low income and informal sector population (Tsuma, et al., 2015).
This competitive environment underscores the need for SACCOs to be more adaptive and innovative in order to survive (Maorwe, 2012). The Societies Regulatory Authority (SASRA), states that “SACCOs must continuously innovate to be responsive to the market needs of members”, (The SACCO Societies Regulatory Authority (SASRA), 2019 ). SACCOs must utilise innovative approaches in their operations to attain proficiency by utilizing systems that assure their sustainability and growth (Mutuku, 2014). The race to maintain competitive dominance has established innovation as an important enabling factor. (Porter, 1990, p. 579). SACCO’s need to be innovative and more responsive to their customer base, while maintaining low operational costs.
1.2. Problem Statement
The need to be innovative in order to maintain competitiveness in the SACCO sector has become increasingly apparent. The sector needs to understand what enables innovativeness and the barriers that exist towards the creation of innovations. Few studies have attempted to assess how innovativeness in SACCOs take place and the influence of ICTs in enabling it. SACCOs need to have a systematic process of encouraging and managing their innovative process in a replicable manner that ultimately monitors the impact of their innovativeness over time. This study looks closely at how innovativeness takes place and the influence that implementation of ICTs has as a catalyst to innovativeness in SACCOs.
1.3. Research Questions
• How does innovativeness and innovations take place in SACCOs? What is the experience of SACCO staff engaged in innovation?
• What factors influence the ability to be innovative?
• What barriers exist that SACCO staff need to overcome to be innovative? How do they overcome these barriers?
• What benefits are derived from innovativeness?
1.4. Study Significance
This study purposes to discover the process that SACCOs undergo in order to be innovative, the influence of ICT tools in enabling innovativeness, and perceived impact on the SACCO’s performance. It is envisaged that the study findings will be beneficial to the SACCO sector players who will be interested to establish how innovativeness takes place, how it is triggered, how to build and sustain innovative teams, and find out if technology truly contributes to innovativeness and competitive performance.
The study will also be able to provide insights into what is hindering SACCOs from taking innovations to the next level, identifying the factors that lead to the effective innovations that contribute to the growth of this important industry.
The study will also aid in the establishment of factors that determine innovativeness, which the Government may utilize as an aid to replicating these in other sectors and regions. Government policy makers, economy planners and regulators will be interested in the verification of the importance of ICT tools in facilitating innovativeness.
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