Value Innovation Strategy and Competitive Advantage of NCBA Bank, Kenya

Abstract

The banking sector in particular has witnessed significant disruptions fueled by technological advancements, regulatory shifts, and changing consumer behaviour. NCBA Bank, despite being among Kenya’s tier-one banks, is grappling with increasing challenges in preserving market share. This study aimed to evaluate the effect of value innovation strategy on the competitive advantage of NCBA Bank. The specific objectives were: to examine the effect of product differentiation on the competitive advantage of NCBA Bank, Kenya, to assess the effect of market redefinition on the competitive advantage of NCBA Bank, Kenya, to investigate the effect of cost effectiveness on the competitive advantage of NCBA Bank, Kenya, and to establish the moderating effect of industry regulations on the relationship between value innovation strategy and the competitive advantage of NCBA Bank, Kenya. This study is anchored on the Blue Ocean Strategy Theory, which is supplemented by Disruptive Innovation Theory, Theory of Competitive Advantage and Institutional Theory. The study adopted a positivist philosophical approach and a cross-sectional- explanatory research design. The target population comprised of all 69 senior managers at NCBA Bank and a census method was employed to select the unit of study. Primary data was collected through structured questionnaires administered via google forms, electronically. A pretest was done on 7 respondents from KCB. Data was entered into SPSS version 29.0, and was analysed both descriptively, and inferentially. Descriptive results revealed high agreement on NCBA’s innovation practices: product differentiation. Inferential analysis demonstrated that product differentiation significantly predicted competitive advantage (R²=.533, p<.05), as did market redefinition (R²=.672, p<.05) and cost effectiveness (R²=.689, p<.05). However, industry regulations did not significantly moderate the relationship between value innovation and competitive advantage (β=.104, p=.077), despite independently explaining variance (R²=.137, p=.004). The findings align with pivotal insights in strategic management, confirming that innovation, efficiency, and market agility are critical levers for competitiveness in the banking sector. They further reinforce Kenya Vision 2030 and Africa Vision 2050 objectives on inclusive financial access, innovation, and sustainable economic growth, while supporting SDGs such as Goal 8 (decent work and economic growth), Goal 9 (industry, innovation, and infrastructure), and Goal 10 (reduced inequalities). The study concludes that NCBA’s internal strategies remain the strongest drivers of competitiveness, with regulatory frameworks exerting influence but not overriding innovation.