E-banking technology characteristics, adoption, innovative behaviour and performance of Micro and small enterprises in Vihiga County, Kenya

Abstract

Performance of Micro and Small Enterprises (MSEs) not only play a significant role in a country's economy but are essential to the economic stability of the country. However, many challenges affect MSEs and as a result, they perform dismally leading to high mortality rates. Despite the many studies already done in this area, little is still known concerning the interplay of e-banking technology characteristics, e-banking technology adoption, and innovative behaviour and MSE performance, thus the need to interrogate the link between these variables. Therefore, the focus of this study was to examine the effect of e-banking technology characteristics, e-banking technology adoption and innovative behaviour on MSE performance. The study was guided by the following objectives: to examine the effect of e-banking technology characteristics, e-banking technology adoption and innovative behaviour on MSE performance; e-banking technology characteristics on e-banking technology adoption, to ascertain the mediating effect of e-banking technology adoption, and to evaluate the moderating effect of innovative behaviour on these relationships. This study was grounded on Theory of Constraints, supported by Technology Acceptance Model, Diffusion of Innovation and Entrepreneur Innovation Theory. The research paradigm was positivism, hence utilizing quantitative approach. The study employed explanatory research design with a target population of 5915 MSEs in Vihiga County. A sample size of 455 respondents was selected based on Yamane’s formula where multi-stage sampling technique was applied in selecting owner/manager who provided primary data using structured questionnaires. Study hypotheses were tested through hierarchical regression at 0.05 significance level. The findings of the study revealed that E-banking technology characteristics, E-banking technology adoption and Innovative behaviour had a positive and significant effect on MSE performance (β1 =.557, p<0.05); (β2=.225, p <0.05), (β3=.157, p <0.05). E-banking technology characteristics were found to have positive and significant effect on e-banking technology adoption (β1=.798, p <0.05). The findings further revealed that there was a positive and significant mediating effect of e-banking technology adoption on E-banking technology characteristics and MSE performance (β5 =.792 CI=.088, .283). Moreover, the findings revealed that there was a positive and significant moderating effect of Innovative behaviour on E-banking technology adoption and MSE performance (β7=.144, p<0.05). Finally, the findings on moderated mediation relationship with independent and dependent variables was found to be significant at the lower, mean and upper levels (LL=.025, .334; M=.100, .387; UL=.137, .478). From the study findings, it was deduced that e-banking technology adoption mediates e-banking technology characteristics and MSE performance, and innovative behaviour moderates E-banking technology adoption and MSE performance. The finding further indicated that e-banking technology characteristics accounted for the highest significant variance on MSE performance as compared to the other variables. Moreover, at higher innovative behaviour, e-banking technology adoption had a higher effect on MSE performance than at lower level. These findings constituted the major contributions of this study as they enrich the Theory of Constraints, TAM, DOI and entrepreneurship innovation theories. The study recommends that the government, county and private sector to form policies that will support MSEs to switch from cash to e- banking technology adoption hence enhance their performance. Scholars should use these findings to further interrogate other sectors and sub-sectors of the economy.