Abstract:

In an era of unparalleled technological transformation and an escalating demand for greater operational efficiency, innovation has increasingly become a key driver of organizational performance. This study explored the role that innovation has in shaping the performance of Kenya's government commercial institutions with the aim of finding out how various dimensions of innovation affect public sector performance. Grounded on a post-positivist philosophical stance and taking a quantitative research methodology, the study employed a descriptive survey design in collecting and analyzing data from a purposive sample of 34 state-owned enterprises. Questionnaires were constructed and distributed to key institutional personnel to collect primary data, while instrument reliability was established using Cronbach's alpha via SPSS software to determine internal consistency. Descriptive statistics provided information on general trends, and linear regression analysis was employed to analyze the strength and significance of the relationship between innovation variables and organizational performance. The findings revealed that automation of business processes had a positive and significant impact on institutional performance, particularly in terms of improving service delivery and organizational efficiency. Nevertheless, the impact of other forms of innovation—such as process and service innovations—turned out to vary significantly between institutions, which portrays that innovation is not universally applicable. The study concludes that innovation, when deliberately shaped to a specific institution's goals, means, and conditions, can be used as a vehicle for change to improve performance. It recommends that government commercial institutions employ innovation strategies that are not only evidence-based but also context-specific, focusing on measurable impacts and sustainability