Does Firm Innovation have an effect on Financial Performance? Evidence from Insurance Firms in Kenya

Abstract

The purpose of this study was to examine the effect of firm innovation on financial performance of insurance firms in Kenya. The study was informed by balanced score card theory and stakeholder theory. The study employed explanatory research design. The study population comprised of 5273 employees drawn from 49 Kenyan insurance firms who are members of Insurance Regulatory Authority. A sample size of 372 employees was drawn using Yamane‟s formula. Data for this study was collected using a survey questionnaire. Reliability of data collection ensured through pre-testing of the instruments and statistically, the Cronbach‟s alpha was adopted to assess the level of reliability of the instrument. Findings from multiple regression models and Pearson correlation analysis indicated that innovation had significant and positive effect on performance of insurance firms. A firm innovation always led to the financial performance insurance firms.