Does Innovation Matter? The Moderating Role of Institutional Innovation on the Relationship Between Financial Partnerships and Financial Sustainability of Public Universities in Kenya

Abstract

Background: Kenyan public universities face chronic financial distress despite diversifying revenue through government, donor, consultancy, and commercialization funding, indicating that funding diversity alone may not guarantee sustainability. Aims: This study examined whether institutional innovation capacity moderates the relationship between four financial partnership streams and the financial sustainability of Kenyan public universities. Method(s): A concurrent mixed-methods design was employed with 382 survey respondents across all 40 public universities, 30 key informant interviews, eight focus group discussions, and document analysis of audited financial statements (2013-2022); hierarchical moderated regression, following Aiken and West (1991), tested the moderating effect of innovation. Results: Innovation significantly moderated the relationship between financial partnerships and financial sustainability, increasing explained variance by 7.9 percentage points (ΔR² = .079, p < .001); all four partnership-by-innovation interactions were positive and significant, strongest for commercialization ventures (β = .226) and weakest for donor funding (β = .162). Conclusions: Financial sustainability in Kenyan public universities depends not only on the volume of financial partnerships secured but on institutional innovation capacity to convert those partnerships into sustainable outcomes.