Impact of innovation on the financial performance of KTDA managed tea factories: A case of Meru and Kirinyaga counties

Abstract

Kenya is a key player in global tea industry and especially through Kenya Tea Development Agency (KTDA). However, KTDA has been facing the challenges of increasing cost of production in the recent past. The higher processing cost translates to low returns to the farmers resulting in conflict between the management and the farmers. To address the issue of increasing cost, a number of innovations have been undertaken with the aim of reducing the operational cost. This paper looks at the organizational innovation and process innovations and the effect they have in the reduction of operation costs in KTDA factories in Meru and Kirinyaga counties. The study used both primary and secondary data from sampled respondents. A self-administered questionnaire was used for collecting primary data and financial reports by the companies for the secondary data. Data analysis was by use of SPSS, where descriptive and inferential statistics, t-statistic, were used in assessing the relationship between the variables in the study. The study found out that the innovations adopted by KTDA have had a positive impact on the financial performance of the factories by reducing the operational cost. The paper recommends that KTDA managed factories continue adopting innovations in their operations to lower operational cost and higher returns to the farmers.