| Summary: | Innovation is considered a key driver for long-term success of firms in today’s competitive markets. This study explored the effect of innovation adoption on performance of banks in Ghana. Data for the study were obtained from 450 respondents comprising bank employees and customers in the Kumasi metropolitan area in Ghana. An exploratory factor analysis, confirmatory factor analysis, and structural equation modeling were used to analyze the data via SmartPLS 3 and SPSS V.22. Findings from this study revealed that the innovation dimensions that contribute to bank innovation are organizational, product, process, and marketing innovations. The study further revealed a direct and positive relationship between innovation dimensions (product, marketing, and organizational innovations) and bank performance. In addition, findings from this study showed a positive relationship between innovation capability and the four dimensions of innovation (organizational, product, process, and market innovations). Also, the findings revealed a significant and positive relationship between the dimensions of innovation (market, process, and product innovations) and firm performance. The practical implication is that, choosing the appropriate innovation types can enhance bank performance as well as satisfy customer needs. This study extends the literature on innovation adoption and organizational performance in the financial services from an emerging market context.
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