EFFECT OF INNOVATION ON ORGANIZATIONAL PERFORMANCE USING JUMIA AS A CASE STUDY
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Background of the study
The increasingly competitive business climate has made it necessary for organizations to implement systems and procedures that will ensure commendable performance of the organization in the interests of its stakeholders. According to Muigai1i and Gitau (2018), companies must constantly deal with the challenge of changing market demands and meeting changing customer expectations, especially because the marketplace is stated to be a battleground for enterprises yet governed by ethical principles. As a result, businesses must continually enhance their existing processes and goods, develop new items that meet market demands, and, if required, establish new markets for existing or new products (Njeri 2017). According to, in a highly volatile economy, innovation is a critical component for a corporation to establish a dominating position and larger profitability. According to Bekkenutte (2016), a company's existence in a highly competitive market is determined by how well it can embody its creative ideas in products and services that fulfil evolving client demands, wants, and expectations.
Etymologically, Schumpeter (1934) invented the word innovation in the early twentieth century and described it as organizational, process, and product organization changes that do not result from scientific discovery but rather from a combination of already existing technology and their application in a novel way (Daragahi 2017). Schumpeter (1934) referenced in Karabulut (2015) described several types of innovation, including new goods, new techniques of production, new sources of supply, the exploitation of new markets, and new company structures. Similarly, the OECD Oslo Manual (2005), as mentioned in Nwachukwu (2018), recognized four types of innovation. Product innovation, process innovation, marketing innovation, and organizational innovation are examples of these. Product and process innovations are inextricably connected to technology advancements. A product innovation is the launch of a new or hugely enhanced good or service in response to the desires of the intended users; it also has substantial improvements in technical requirements, components, incorporated software, user friendliness, or other functionality (OECD Oslo Manual, 2005 referenced in Daragahi 2017). Marketing innovation refers to the implementation of a new marketing strategy that involves major changes in product design or packaging, product positioning, product promotion, or price (OECD Oslo Manual, 2005). A process innovation is the implementation of a new or considerably enhanced manufacturing or distribution technique. Significant advancements in procedures, equipment, and/or software. Process innovations might be intentional in order to lower unit costs of manufacturing or delivery, improve quality, or develop or distribute novel or dramatically changed goods (OECD Oslo Manual, 2005). Finally, organizational innovation entails implementing a new organizational approach in a company's commercial processes, workplace organization, or external interactions. Organizational innovations have the potential to boost business performance by lowering administrative and transaction costs, increasing workplace happiness (and hence labour productivity), getting access to nontradable assets (such as non-codified external knowledge), or lowering supply costs.
Intuitively, as firms in the global market seek to survive while maintaining high performance, Gunday, Gunduz, Kemal, and Lutfihak, (2011) stated in Karabulut (2015) that innovativeness is one of the unique instruments of growth strategies and a better way to enter new markets, increase existing market share, and provide a competitive edge. According to Al-Battaineh (2018), innovation strategies are a way of promoting the implementation and development of new services and products, as well as achieving organizational goals and high financial performance. According to D'cruz and Rugman (1992), as cited in Saka (2021), an organization will be more competitive and perform better if it can create, manufacture, and sell services and goods that are better produced than its rivals. To accomplish this, the firm must identify the unmet needs of the competitor's customers and design a strategy based on innovation (process, product, technology, etc.) to take advantage of an unoccupied market by the competitors and gain their customers' attention, or create an entirely new market using the promotional innovation strategy to win an uncovered market or customers.
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