The Moderating Effects of Service Innovation on the Relationship Between Social Media Usage and Performance of Selected Microfinance Institutions in Meru County

Abstract

In the world today social media platforms have snowballed and sparked both opportunity and concern on how their use affects the financial performance of selected microfinance institutions. Implementation of premeditated plans and practices supports companies to comprehend these set plans hence recognizing how to create strategic adoptions for the impending changes and implement with plans in the accomplishment of the same. Engaging in service innovation as one of the strategies is dire to performance. Service innovation stresses well-organized measures to complement actions that seem erratic hence can withstand their decisions aimed at lessening threats in business. The goal of this study was to determine the moderating impacts of service innovation on the link between social-media usage and the performance of chosen microfinance institutions, Meru County. Social media usage and employee adoption were the independent variables while service innovation was the moderating variable and performance formed the dependent variable. The study was guided by uses and gratifications theory, innovation dissemination theory, and stakeholder’s theory. The study targeted ten Micro-Finance Institutions in Meru County randomly selected from the Association of Microfinance Institutions of Kenya (AMFI-K)’s website. The researcher carried out a pilot study in Key Microfinance Institute in Meru town using the prepared questionnaire, to test its quality, clarity, and length. The study determined that social-media is realistically relevant due to its ease of use and the fact that many consumers prefer it to the traditional method banks and financial institutions have been operating. It further found out that employee’s adoption of service innovation depended on many factors including; religion, personality, perception, values, level of employment in the organization, and leadership. This study thus recommends that there should be a paradigm shift in strategy that can enable the adoption of service innovation so that it can act as an enabler in the performance of Micro Finance Institutions.