Financial Innovation and Organisational Performance of Non-Deposit Taking Saccos in Elgeyo Marakwet County, Kenya

Purpose: To examine the effect of financial innovation on the organisational performance of non-deposit-taking SACCOs in Elgeyo-Marakwet County, Kenya. Specifically, the study assessed the individual and combined effects of product, process, market, and technological innovations on organisational performance, addressing the limited evidence on disaggregated innovation effects in rural and resource-constrained contexts. Methodology: The study adopted a cross-sectional correlational design, drawing on Schumpeter’s Theory of Innovation, the Resource-Based View, and the Technology Acceptance Model. Data were collected from 89 respondents across 34 audited non-deposit-taking SACCOs using structured questionnaires and triangulated with secondary data from audited financial statements for 2021–2023. Descriptive statistics, Pearson correlation, and multiple linear regression were employed for data analysis. Findings: All four innovation dimensions had positive and statistically significant effects on organisational performance. Technological innovation had the strongest effect (β = 0.354, p < 0.001), followed by process innovation (β = 0.268, p = 0.001), product innovation (β = 0.231, p = 0.005), and market innovation (β = 0.156, p = 0.043). Collectively, the four dimensions explained 63.2% of the variance in organisational performance (R² = 0.632, F(4, 84) = 36.47, p < 0.001). Secondary data revealed positive trends between 2021 and 2023, with net income increasing by 55.6%, the loan portfolio by 41.7%, and active membership by 22.6%. However, loan default rates remained above the prudential guideline, indicating persistent credit risk management challenges. Unique Contribution to Theory, Practice and Policy: Innovation should be complemented by strengthened credit risk management practices. SACCO managers should prioritise investments in technological and process innovations while maintaining effective risk controls. Policymakers and regulators should also support innovation-oriented strategies that enhance the organisational performance and sustainability of rural non-deposit-taking SACCOs.