The Role of Market Innovation in Shaping Organizational Performance of Dairy Cooperatives

Abstract

Market-oriented organizational strategies in the production, communication, and capture of value have intensified competitiveness in agricultural markets, where performance is no longer determined solely by production capacity but by the ability to generate and communicate value. This shift raises a critical question: to what extent does market innovation influence performance in historically production-oriented cooperative models? This study addresses this question by examining how market innovation shapes organizational performance of dairy cooperatives. Grounded in the Resource-Based View and Dynamic Capabilities Theory, market innovation was operationalized through branding practices, social media activity, and sales channel diversification, while performance was measured using sales growth, return on assets, and market share. The study adopted a positivist philosophy and a descriptive-correlational design. Primary data were collected using structured questionnaires from 416 respondents drawn from a target population of 165 dairy cooperatives (from an initial sample frame of 494 potential respondents), achieving an 84% response rate. The cooperative was the unit of analysis, with respondents drawn from management and operational staff. Reliability and validity were confirmed using Cronbach’s Alpha (α = 0.864) and factor analysis (KMO = 0.790; Bartlett’s test p = 0.001). Data were analysed using descriptive statistics, Pearson correlation, and multiple regression analysis. The findings reveal a high level of market innovation practices (M = 3.89), particularly in digital marketing and branding. Correlation results indicate a strong, positive, and statistically significant relationship between market innovation and organizational performance (r = 0.845, p < 0.01), while simple linear regression results confirm a positive and significant effect (β = 0.845, p < 0.001), with market innovation explaining approximately 71.4% of the variance in organizational performance (R² = 0.714). The study concludes that market innovation is a critical strategic capability that enhances financial and competitive outcomes in dairy cooperatives. Keywords: Market innovation; Organizational performance; Dairy cooperatives; Branding strategies; Digital marketing; Sales channel diversification; Resource-Based View; Dynamic capabilities; Kenya.