Effect of Innovation Strategy on the Performance of Private Solar Energy Companies in Kenya

Abstract

Innovation has emerged as a critical driver of competitive advantage in the energy sector, especially as firms respond to globalization and technological advancements. Despite the growing role of private solar energy companies in Kenya, limited research exists on how innovation strategies influence their performance. This study aimed to examine the effect of innovation strategies on the performance of private solar energy companies in Kenya. An ex-post facto research design was employed, targeting 1,548 middle- and low-level managers from 12 registered private solar companies. Using stratified random sampling and the Taro Yamane formula, a sample of 318 respondents was selected. Data were collected through structured questionnaires and analyzed using content, descriptive, and inferential statistics, with binary logistic regression employed to test the relationship between innovation and performance. The results revealed a statistically significant and positive effect of innovation strategies, particularly product and technology innovation, on company performance (B = 4.605, p < 0.001), with firms implementing technology-based innovations being 10 times more likely to achieve high performance. The study concludes that innovation, especially in product and technology areas, is a significant predictor of business performance in Kenya’s solar energy sector. It recommends that firms invest more in developing and protecting intellectual property, adopt smart-grid and hybrid solar systems, and integrate AI-powered energy management solutions to enhance efficiency and market competitiveness.