Strategic Digital Innovations and Organizational Performance of Electronic Msmes in Nairobi City County, Kenya

Abstract

The advancement of digital technologies has transformed business operations across various industries. The current business environment is marked by rapid digital transformation, which is redefining competitive dynamics and reshaping industries. The purpose of this study was to assess the effect of strategic digital innovations on the performance of electronic MSMEs in Nairobi City County. The specific objectives were: to determine the effect of using cloud computing services, e-commerce platforms, and mobile applications on the organizational performance of Electronic MSMEs in Nairobi City County. The study also sought to establish the moderating effect of Government policies on the relationship between strategic digital innovations and the organizational performance of Electronic MSMEs in Nairobi City County. The study was anchored on three theories, namely, the Diffusion of Innovations Theory, Resource-Based Theory, and the Technology-Organization-Environment Framework. This study adopted a descriptive and correlational research design. The targeted population of the study was 3818 electronic MSMEs in Nairobi County. This study used both stratified and simple random sampling techniques. Using a confidence level of 95 percent, Yamane’s formula was used to estimate a representative sample size from the targeted population. A sample of 362 owners/managers of electronic MSMEs in Nairobi County was used in the study. Data collection was done using questionnaires. The questionnaire’s validity was ensured by aligning its questions with the study objectives and refining it based on feedback from external peer reviewers. Reliability in the study was ascertained using Cronbach's Alpha coefficient, with a threshold of 0.70 or above confirming reliability. Descriptive statistics, that is, percentages and frequencies, were used to describe the data. Pearson Correlation coefficient was used to explain the strength of the relationship between variables, while Regression analysis was used to establish the relationship between variables. This was accomplished using version 26 of SPSS. The findings revealed that the use of cloud computing services, e-commerce platforms, and mobile applications has a positive and significant correlation with the performance of electronic MSMEs in Nairobi County. It was further established that government policies function as a critical moderating factor that either amplifies or weakens the influence of strategic digital innovations on organizational performance. As such, the study concluded that the use of cloud computing services, e-commerce platforms, and mobile applications has a positive and significant effect on the performance of electronic MSMEs. The study recommends that electronic MSMEs invest in cloud computing to enhance operational efficiency, adopt e-commerce platforms to expand market reach and competitiveness, and leverage mobile applications to improve customer engagement and service delivery. Moreover, it was recommended that future research should extend to other sectors and counties for comparative analysis, explore emerging innovations like AI, blockchain, and big data, and assess the effects of specific government policies individually