Globalization and advancement of the technology compels business organizations to be innovative in order to strive in the market and maintain market share as well as penetrating to the new market. In the past decade’s most of the organization utilized internal resources to survive and maintain competitiveness as it is suggested in closed innovation model. Further, other Scholar suggested that for any organization to be successful and maintain its market share they have to embrace open innovation model which encourages on utilization of both internal and external resources for efficiency and profitability. Currently for a firm to survive in the market they have to focus on innovation strategies. Innovations enables organizations to produce and offer goods and services of high quality, therefore ability of the organization to innovate is significant for an organization to maintain competitive advantage. The objective of this study was to establish the impact of innovation in organization performance a specific case of Tanzania Revenue Authority. The study adopted case study research design and researcher applied both qualitative and quantitative approach to establish the effect of innovation in TRA performance. Secondary data were collected from the records of the organization understudy and other institutions such as Bank of Tanzania, African development Bank and International Monetary Fund; analyses was conducted and establish the impacts of innovation on organization performance at different periods since it was incepted. Development of various systems such as iTAX and TIN in DRD, EFDs in Large taxpayers department, ASYCUDA and TANCIS in Customs and Excise department collectively makes tax administration in TRA efficient and costs effective, reduces processing and clearance time of the goods, reach taxpayers in the remote areas and enhance convenience through online transactions, lessens corruption by avoiding in person transactions. All these benefits derived as a result of process innovation within TRA proves that innovation is indispensable to an organization performance. Findings of this study also revealed that most of the process innovation implemented by TRA considers the ability of users. This work focused on process innovation, other researchers may encompass their research on other factors which affect TRA performance; finally this research may be replicated in other government institutions to establish whether they are affected by innovation in the same way as TRA.

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