Business Model Innovation and Firm Performance among E-Commerce Firms in Kenya: An Empirical Literature Review

Timothy M Mwangi and Irungu Mary Nyakarura
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Timothy M Mwangi: School of Business, Economics and Tourism, Kenyatta University, Nairobi, Kenya.
Irungu Mary Nyakarura: School of Business, Economics and Tourism, Kenyatta University, Nairobi, Kenya.

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Abstract: E-commerce firms in Kenya operate in a dynamic digital environment shaped by rapid technological change, shifting consumer preferences, increasing internet penetration and intense competition. Despite the continued growth of the digital economy, many firms in the sector experience persistent challenges related to profitability, sustainability, customer retention and overall performance. This study reviews empirical literature on the influence of business model innovation on firm performance among e-commerce firms in Kenya. It focuses on three dimensions of business model innovation: value proposition innovation, revenue model innovation and process innovation. The review synthesises evidence from global, African and Kenyan studies and is anchored on the Resource-Based View, Dynamic Capabilities Theory, Knowledge-Based View and Diffusion of Innovation Theory. The reviewed literature indicates that value proposition innovation supports firm performance through customer-centred offerings, product differentiation and improved customer experience. Revenue model innovation contributes to performance by enabling revenue stream diversification, digital payment integration, service bundling and more effective value capture. Process innovation supports performance by improving operational efficiency, service quality, responsiveness and cost management through enhanced systems and technology adoption. The evidence further shows that the performance effects of business model innovation are context-dependent and are influenced by organisational capabilities, technological infrastructure, market conditions and the effectiveness of implementation. Overall, the review suggests that business model innovation dimensions influence firm performance collectively rather than in isolation. E-commerce firms that align customer value creation, revenue optimisation and operational efficiency are more likely to strengthen competitiveness and support sustainable performance in the digital economy. Future studies should consider longitudinal and mixed-method approaches to capture the evolving nature of business model innovation in e-commerce settings.

Date: 2026-06-23
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Published in Asian Journal of Economics, Finance and Management , 2026, 8 (1), pp.501-515

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