Abstract:
Incremental innovations add or sustain value by improving existing products and
services. These incremental changes can be in response to evolving customer needs, or the result
of ideas emerging from research labs or elsewhere. Most product and service innovation is
incremental in nature. Incremental improvements enhance the efficiency and effectiveness of
existing processes and practices. They are based on improving current business and
management processes, such as planning, design, manufacturing, production, marketing and
administration, supply chains, and communications. Despite the fact that many literatures have
been done on incremental innovation, not much has been documented about how it affect a
firm’s competitive advantage in telecommunication and banking industries. The main purpose of
this analysis was guided by its main objective which is to investigate the effect of Incremental
innovation on a firm’s competitive advantage. Explanatory research design was employed in this
study. The unit of analysis comprised of selected service industries which entail 30 commercial
banks and two telecommunication industries based in Eldoret, Municipality. A census survey
technique was used to get the target population which consisted of a branch manager and four
departmental heads from the selected service industries. Questionnaires were used to collect
data and reliability was measured using Cronbach alpha coefficient which was above 0.80 for
internal consistency. Descriptive and inferential statistics were used to test the hypotheses and
analyze data collected. The results showed that, incremental innovation (β=.463, p<.05) did not
support the null hypotheses indicating that incremental innovation is an important determinant
of firm’s competitive advantage. Managers are encouraged to be the lead-innovators and to
employ the staffs who have passion to their work so as to yield greater creativity.
