Influence of Innovation on Financial Performance of SACCOS in Mbeya, Tanzania, with the Mediation Effect of Corporate Governance

Abstract

The purpose of the study was to determine how innovation influences the financial performance of Savings and Credit Cooperative Societies (SACCOS) in Tanzania's Mbeya Region while accounting for the corporate governance mediation effect. The study used an explanatory design and positivist philosophy, testing the Social Innovation Theory hypotheses deductively. A total of 83 of the 105 SACCOS that are registered and running at the time of data collection were randomly selected as study sample. The study used a questionnaire to collect data. Data analysis involved the Structural Equation Modeling (SEM-Smart PLS e: 4.0.9.9). Based on the findings, the study concluded that corporate governance and financial performance are strongly and positively correlated. Corporate governance strongly correlates with innovation. Innovation and financial performance have a marginally positive relationship. Finally, corporate governance acts as a mediator in the relationship between financial performance and innovation. Based on the conclusions, the study recommends that companies ought to welcome innovation as a way to deal with long-term problems in financial performance. Businesses entities must ensure that corporate governance is strengthened in order to enhance the financial performance in a sustainable manner. They must also ensure that innovation and corporate governance go hand in hand in order to achieve financial success. Finally, companies need to make sure that they exhibit excellent corporate governance practices and principles in order to positively impact other aspects of the company's financial success.