Bank Innovation Capability and Competitive Advantage of Small and Medium Scale Enterprises in Nigeria

Abstract

Bank Innovation Capability and Competitive Advantage ofSmall and Medium Scale Enterprises in Nigeria 1. Introduction Competitive advantage is the heart of a company's performance. It reflects a company's ability to offer consumers greater value either by employing lowering prices or by providing greater benefits and services that justify higher prices. Porter (1985) argues that competitive advantage stems from the many discrete activities a firm performs in designing, producing, marketing, delivering, and supporting its product. Each of these activities can contribute to a firm's relative cost position and create a basis for differentiation. The advantage of the company is grown from the value or benefits that can be created by companies for the buyers. When companies can create excellence through one of the three generic strategies, it will get a competitive advantage (Aaker, 1989). Competitive advantage allows a firm to create superior value for its customers and profits for itself. A firm position itself in the industry through its choice of low cost or differentiation.This decision is a central component of the firm's competitive strategy (Mathenge, 2013).Bank innovations are important vehicles through which banking institutions can turn around performance of small and medium sized enterprises (SMEs) and lead to an incredible change in business performance. Bank/financial innovation is the act of creating and popularizing fresh monetary instruments as well as fresh monetary technologies, institutions, and markets (Cherotich, Sang, Shisia, &Mutung'u, 2015). It involves the design, the development, and the implementation of innovative financial instruments and processes, and the formulation of creative solutions to problems of finance. Bank innovation encompasses institutional, product and process innovations (Alvarez, 2009). Innovation capabilities are the combination of firm abilities to integrate and build resources to develop new products and processes, improve existing products and processes, and new product to market to provide an advantage towards achieving superior performance (Zhang, 2004). Agyei-Mensah (2016) argued that innovationcapability is undoubtedly one primary means by which businesses can adapt to the demands of today's complex and ever-changing business environment.Small and medium sized enterprises around the world encounter constraints and limitations such as limited number of employees, insufficient financial resources, inconsistency in policies, a lack of educational background of the Asikhia, O. U.