EMPIRICAL EXAMINATION OF THE LINK BETWEEN BUSINESS MODEL INNOVATION AND DYNAMIC CAPABILITIES OF MICROFINANCE BANKS IN NORTH CENTRAL NIGERIA

Abstract

Business Model Innovation is believed by many to have the capacity to improve the dynamic capabilities of small firms especially those in the service sector like the Micro Finance Banks. However, the review of recently published relevant extant literature revealed that there is a paucity of empirical studies examining the effect of Business Model Innovation on the dynamic capabilities of MFBs in North Central Nigeria. Therefore, to fill these gaps in literature, the study investigated how BMI affects Dynamic Capabilities of MFBs in North Central Nigeria. To do this, the study employed a structured questionnaire to gather primary data from 301 sampled MFBs across the states in North Central Nigeria inclusive of Abuja utilizing a multi-stage sampling technique. The study employed both descriptive statistics and multiple regression analysis using Statistical Package for the Social Sciences (SPSS) version 23 in the analysis of the data generated. The result showed that value creation (β=-0.272; p=0.000) has a negative but significant effect on DCs. The results also indicate that the effect of value proposition innovation (β = 0.914, p = 0.000) was positive and significant while value capture innovation (β =0.086, p = 0.505) has a positive effect which is not significant on DCs of MFBs in North Central Nigeria. The study recommends among others the entrenchment of a continuous practice of BMI by MFBs in the study area to enhance their DCs.