Product Innovation and Performance of Digital Credit Providers in Nairobi City County, Kenya

Kevin Okwako Ochima, Dr. Edward Muiruri Maina (PhD)

Abstract


This study examined the effect of product innovation on the performance of Digital Credit Providers (DCPs) in Nairobi City County, Kenya. Product innovation encompassing product diversification, introduction of new products, value addition, and customization was hypothesized to be a significant driver of organizational performance measured through customer satisfaction, market share, and return on investment. A descriptive survey research design was adopted. The target population comprised 222 managers (technology, product, and marketing) from 74 licensed DCPs in Nairobi County. Using Yamane's formula at a 95% confidence level, a stratified sample of 143 respondents was drawn. Primary data was collected via structured Likert-scale questionnaires; secondary data came from CBK reports and DCP annual reports. Reliability was confirmed through Cronbach's alpha, and validity was established via content and construct validity assessments. Simple regression analysis was employed in the analysis. Product innovation emerged as a strong predictor of performance (? = 0.6275, p < 0.05), with an average Likert mean of 4.55. The regression model explained 53.8% of performance variation. Respondents particularly endorsed value addition (M = 4.70) and strategic product diversification (M = 4.58) as dominant innovation practices. DCPs should prioritize investment in product diversification, new product development, and customer-tailored offerings to sustainably improve competitiveness. Regulatory frameworks should create enabling conditions for product-led innovation in Kenya's digital credit ecosystem.

Keywords: Product Innovation, Digital Credit Providers, Organizational Performance, Fintechs


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