Effects of innovation on growth of independent oil and gas companies in Kenya

Abstract

The purpose of this study was to examine the effects of innovation on the growth of independent oil and gas companies in Kenya. Innovation is a tool of management for strategic change within an organization since it provides a way how to create the conditions that make proactive change a natural way of life. The innovation aims at developing a change-adept organization that anticipates, creates, and responds effectively to change in the external and internal environments to increase the profit potential of an organization. The study used descriptive design and made use of descriptive statistics, exploratory factor analysis, correlation analysis, and Analysis of Variance. Descriptive analysis was used to determine the means and standard deviation of the variables with the overall mean and standard deviation used to rank according to importance. Exploratory factor analysis was used to determine the key factors influencing innovation, correlation analysis to establish the relationship and significance of the variable, and Analysis of Variance to determine the interactions. All the Fifteen PIEA member companies that are independent oil companies in Kenya were surveyed. The questionnaires were administered to departmental heads, section heads, and top management of the organizations. The results of the study showed five types of innovation dominant in the oil and gas companies in Kenya namely process, market, business model, technology, and product innovation. These were adopted at various levels and degrees in the independent oil and gas companies in Kenya. The respondents agreed that process innovation activities were the most prevalent in their organizations followed by activities geared towards business model and market innovation. The three main factors established through factor analysis that influence innovation were identified as organizational culture, organizational structure, and visionary leadership in that order. The study further established that there was a significant relationship between some types of innovation and growth in independent oil and gas companies in Kenya. These were identified as business model innovation, which ranked the highest in significance and had a positive relationship with growth, in particular market share growth. The study recommends that management in the oil and gas industry in Kenya focus on activities that relate to business model innovation since it had the highest impact on market share growth which is key in the long-term sustainability of independent oil and gas companies. Continuous appraisal and re-evaluation of business models should be carried out by the board to ensure strategic fit with the changing industry dynamics.