Effect Of Service Innovation On Organisational Performance ——Evidence From The Banking Sector Of Ghana

Services and innovations in services are considered as one of the key economic developmental drivers and engines of growth.Service innovation is being acknowledged for bringing economic well-being and growth and may have a positive impact on the whole economy.Despite the increase in research interest on service innovation there remain some gaps to be looked at as innovation research on other sectors far outweighs that of service.Again,even though there is a huge number of studies focusing on innovation management,there is a lack of studies focusing on the aspect of service innovation measurement and performance especially from a developing country context like Ghana.This study therefore investigated Effect of Service Innovation on Organisational Performance: Evidence from the Banking Sector of Ghana.Specifically,the study examined this with regards to organisational performance,customer satisfaction and employee productivity.The study was anchored on some concepts and theories including the diffusion of innovation theory(DOI),the Signalling Theory(ST)and Absorptive capacity theory(ACAP).Data for the study were obtained from three samples(Management,bank employees and bank customers)of banks operating in Ghana.The cluster,convenient and simple random sampling techniques was used to select respondents for the study which is made up of management respondents(250 samples),bank employees(450 samples)and bank customer(450 samples)respectively.The Hierarchical linear modelling(HLM)was used to statistically analyse the data structure where organisational level factors(level-1)were nested within individual level factors(level-2).Of specific interest was the relationship between organisational performance(level-1 outcome variable)and service innovation and innovation capabilities(level-1 predictor variables)and customer satisfaction and employee productivity(level-2 predictor variables).The findings revealed that,the cross-level interaction between service innovation and customer satisfaction was statistically significant(b = 0.056,p =.007);however,the cross-level interaction between service innovation and employee productivity revealed an insignificant relationship(b =-0.002,p =.847).Again,findings from this study revealed that service innovation had a positive and significant effect on organisational performance and employee productivity.However,service innovation was found to have a positive but insignificant relationship with customer satisfaction.Furthermore,the findings revealed that organisational performance is influenced by customer satisfaction and innovation capability.Additionally,the study found that,employee productivity mediated the relationship between service innovation and organisational performance.Also,with regards to the moderation test conducted,findings from this study indicated that,innovation capability moderates the relationship between service innovation and organisational performance.The study offers theoretical contribution in understanding the effect of service innovation on organisational performance especially from developing economies.The investigation of the mediating and moderating analysis in the conceptual model is an endeavour towards the expansion of the literature on service innovation.This study thus,contributes theoretically by integrating various concepts from different disciplines such as marketing,innovation,human resource and banking to investigate the effect of service innovation on bank performance in Ghana.An important recommendation for banking organisations is discussed in details through considering the empirical results of the effect of effect of service innovation on organisational performance,the mediating effect of employee productivity and customer satisfaction,and the moderation role of innovation capability on the relationship between service innovation and organisational performance.