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Advances in Social Sciences Research Journal – Vol. 8, No. 4
Publication Date: April 25, 2021
DOI:10.14738/assrj.84.9996. Gioko, S. M., Mukulu, E., & Oloko, M. (2021). The influence of Electronic Innovation on Performance Of Three To Five Star Hotels in
Kenya. Advances in Social Sciences Research Journal, 8(4). 210-217.
Services for Science and Education – United Kingdom
The influence of Electronic Innovation on Performance of Three
to Five Star Hotels in Kenya
Sylvia Mukenyi Gioko
Department of Business Administration, Jomo Kenyatta
University of Agriculture and Technology, Nairobi, Kenya
Elegwa Mukulu
College of Human Resource Development, Jomo Kenyatta
University of Agriculture and Technology, Nairobi, Kenya
Margaret Oloko
Department of Business Administration, Jomo Kenyatta
University of Agriculture and Technology, Nairobi, Kenya
ABSTRACT
The hotel industry heavily depends on the development of information systems so
as to adapt technology, which is the most prominent force that brings about change
in the hospitality industry. In the modern-day hotel industry innovation plays a very
significant role in maintaining competitive advantage, the hotel industry relies on
innovation while adopting new ideas, enhance service practices and improve on
efficiency levels of operation. In addition, it helps the hotels in meeting the needs of
their customers, make sales as well as attain profitability and maintain competitive
advantage by taking part in corporate social responsibility in a dynamic changing
market. The loss that Kenya’s tourism sector has experienced in the year 2020 in
terms of revenue is 74 percent indirect international tourism earnings translating
to 37 billion shillings (336 million US dollars) loss against anticipated revenue of
1.34 billion dollars for the review period. In light of these, this study sought to
establish the influence of electronic innovation on performance of three to five star
hotels in Kenya. The study adopted a descriptive research design, in addition, a
qualitative and quantitative research approach was utilized. The target population
for the study was one hundred and twelve three to five star hotels in Kenya. Multiple
regression model was used to draw inference from the data collected, the Statistical
Package for Social Science (SPSS) was utilized for statistical analysis. Findings
reveal that electronic innovation had an average of 3.7192 with a standard
deviation .39845. In addition, there was a significant R square value of 0.362
between electronic innovation and performance of three to five star hotel. This
suggests that 36.2% of variation in hotel performance is explained by electronic
innovation. The study recommends that greater focus on electronic innovation in
hotels could bring competitive advantage and increased performance through
increase of number of online purchases, raised customer satisfaction by time- saving.
Key words: Electronic innovation, Electronic Customer Relationship management,
Performance.
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Gioko, S. M., Mukulu, E., & Oloko, M. (2021). The influence of Electronic Innovation on Performance Of Three To Five Star Hotels in Kenya. Advances
in Social Sciences Research Journal, 8(4). 210-217.
URL: http://dx.doi.org/10.14738/assrj.84.9996
INTRODUCTION
Blerton (2016) concluded in his study that electronic innovation allows companies to enjoy
competitive advantage as a result of increasing their online purchases, ensuring high customer
satisfaction by engaging in time saving activities. The study concluded that this results to
increased performance among companies. Electronic innovation creates value for a company
by ensuring that the company has efficient customer markets. This in return allow the company
to have easier customer access, through mass customization and extending customer reach.
Firms that adopt electronic innovation early are in apposition to cumulate more customer
knowledge and thus can compete better by increasing their competitive advantage and
business performance. As a conclusion, the study indicated that, higher electronic innovation
in terms of product innovation is correlated with higher market share. Electronic innovation
makes it possible for addressing specific customer needs better, facilitates opening up new
markets and positioning a firm’s product on the market with the intention of increasing firm’s
sales (Dzhandzhugazovaa, Blinovaa, & Romanova, 2016).
In a tumultuous hospitality industry, both chains and independent hotels are continually under
pressure to boost efficiency, prestige, cut costs, and raise revenue and profits. Electronic
innovation is one way that hotels can use to achieve their goals which is increased performance.
Electronic innovation should be perceived and implemented as an opportunity that leads to the
development of a new, or enhanced, products or services. This turns a novel problem-solving
approach into a practical implementation (Shaw, Ottenbacher, & Lockwood, 2006).
In the hotel industry, electronic innovation has become a key profit engine, as well as the
foundation for customer loyalty, financial efficiency, customer retention, and hotel credibility
on a local and international level. Service companies are searching for new ways to put
themselves in the industry. The hotel service sector has refocused on shifts in electronic
innovation and the climate in which the industry operates, as well as the political, social, and
economic hotel position, as a result of evolving segments and responses to changing
preferences (Chivandi, Chinomona, & Maziriri, 2014).
Problem Statement
The Kenyan Tourism and hotel sector has recorded dismal performance compared to other
sectors, statistics from the Kenya National Bureau of Statistics that the sector performed
dismally compared to other sectors with a growth rate of 3.9 per cent, between the year 2019
to 2020. The construction sector grew by 6.4 per cent, transport and storage sector grew by
12.1 per cent (Kenya National Bureau of Statistics, 2020). The main argument goes that use e- CRM in the has a positive impact on business performance, in terms of their profits through
increased customer satisfaction and retention, (Shahram & Farhad, 2013; Ishmael, 2015;
Macharia & Thuo, 2011; and Mang’unyi, Khabala, & Govender 2017).
Empirical studies have shown mixed factors that influence performance of hotels in Kenya,
Ongori, Iravo, & Munene (2013), in their study factors affecting performance of hotels and
restaurants in kenya: a case of kisii county. Indicated that successful and sustainable
performance of hotels and restaurants relies on top management ability to strategically analyze
both external and internal environment and plan for strategic service offerings. Makau, Lagat,
& Bonuke, (2017), in their study the role of Information Quality on the Performance of Hotel
Industry in Kenya. Concluded that hotel performance depends on information quality and that
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 4, April-2021
Services for Science and Education – United Kingdom
it was found that information quality and performance have a significant correlation. Mwaura
(2019), in their study, the iinfluence of Total Quality Management practices on performance of
hotels; case of star rated hotels in greater Nairobi region. Concluded that hotel is adopting
quality management practices such Total Quality Management (TQM), Lean Operations among
others to enable them to meet the dynamic customer demands and gain a competitive edge in
the market.
The above studies present the various factors that influence hotel performance. This therefore
puts across the need for a study to fill the existing gaps and clear the doubt on the influence of
electronic innovation on hotel performance. It is on this background that the study sought to
answer the question; can electronic innovation influence the performance of three to five star
hotels in Kenya?
Research Objectives and Justification
To assess the influence of electronic innovation on performance of three to five star hotels in
Kenya.
LITERATURE REVIEW
Theoretical Review
According to (Schumpeter (1983), who developed the Innovation Theory of Profits, he states
that companies may gain economic benefits through implementing successful innovations. The
main goal of a company should be able to implement innovations, and benefit in terms of
increased performance. Anyone company that wants to pursue increased performance, must
innovate. Electronic innovation is innovation whose delivery platform digital technologies
whose main toll is the Internet. Electronic Innovation seems to be one of the means for an
organization to embrace and convert organizational change into opportunities and thus
succeed. Therefore electronic Innovation has been concluded as one determinants of
organizational (Chivandi, Chinomona, & Maziriri, 2014).
A study by Kiveu (2019), linked innovation to firm competitiveness and concluded that,
enterprises can thus implement innovation to improve their competitiveness. Another research
by Marques et al. (2011), found that encouraging companies to innovate electronically
contributes to increased market and financial results. Productivity increases as a result of
creativity. They stressed that one of the most significant determinants of organizational success
has been shown to be creativity. Certainly, electronic innovation efforts are carried out to
achieve production and marketing goals such as improving product quality, controlling
production costs, maintaining market share, expanding into new markets, increasing
production versatility, and improving management efficiency, amongst others.
In adittion, a study by (Zhang & Enemark (2016), concluded that electronic innovation bring
competitive advantage for companies through increase of number of online purchases and
raises customer satisfaction by time-saving. All of this adds up to improved results. Likewise
Zhuang (2005), concluded that electronic innovation has created new capabilities that generate
growth by developing more competitive markets, facilitating greater access, increasing the
productivity of value and supply chains, it enables mass customization, and expanding
customer reach. Early adopters of electronic innovation in their business would amass more
expertise and thus be better placed to succeed in the digital economy.